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Tds partnership firm - professional consultancy

vivek ahuja (consultant) (34 Points)

26 November 2012

Hello, we have just started a partnership firm and expect total turnover in entire current FY to be less than 8-9 Lakhs. We have billed customer and got payment with 10% TDS deduction, now we have got some work done by technical expert and intend to pay him about 50,000 and we may pay him more in this FY. approx. 1.5 lakhs. Do we need to deduct TDS of this technical expert? Some places it says no relation of TDS and turnover, some places it says less than 15 Lakh turnover, no need for TDS on vendor payment and hence no need for TAN number too?

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7 Replies

Nithin Chettoor (Assistant Manager) (388 Points)
Replied 26 November 2012

TAN is required for all who are responsible for deduction of TDS and we can remit and furnish the TDS returns only on the basis of this TAN. Also, a person is liable to deduct tax when the amount of payment in the defined nature as per Income tax act exceeds the limit. Hence in your case, it is a payment for Technical services which will fall under the category of payments under section 194j of Income tax act and the limit is Rs.30,000/- p.a. Hence the limit is crossed and hence you have to deduct tax in the prescribed rate in the schedule to the person and remit the same to the government and also file the TDS return.

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Varshit Shah (Self Employed) (676 Points)
Replied 26 November 2012

Sir you have to apply for TAN number because for partnership it is mandatory to obtain the TAN number. Only Individual and HUF got limit for obtaining TAN number.

In your case you have deduct TDS @ 10% (If PAN of Deductee Available or else 20%) on such payment or bill as it exceeds the threshold limit of Rs.30000/- p.a. specified for Technical fees under TDS.

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vivek ahuja (consultant) (34 Points)
Replied 26 November 2012

Thank you, So means I will need to apply for TAN, then once I get TAN i should make payment after 10% deduction and pay the same to bank via challan # 281; with selection of 0021 as non company deductee?

also, section for nature of payment will be 94J - professional Fees technical fees and type of payment will be 200 tds / tcs.

Is my assumption correct?

Thanks for your replies.

Varshit Shah (Self Employed) (676 Points)
Replied 26 November 2012

Yes sir you are 100% correct. But only thing is the person to whom you are making payment is other than Company then select option NON COMPANY DEDUCTEE , If it is Company then select COMPANY DEDUCTEE and if you have both then pay through indicidual challan for the deductees.

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Varshit Shah (Self Employed) (676 Points)
Replied 26 November 2012

Please read Individual insted Indicidual

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vivek ahuja (consultant) (34 Points)
Replied 26 November 2012

thanks, yes its individual and has pan...thanks a lot.

Nithin Chettoor (Assistant Manager) (388 Points)
Replied 27 November 2012

Clarifying the last part of your main question, the said 15 lakhs limit is for Individual or Hindu Undivided Family. Section 194J shall not apply to Individual or HUF unless they have a turnover specified in Section 44AB, which in case of profession is 15 Lakhs. Since yours is a partnership this clause does not apply to you. Hence the deduction of tax is mandatory.

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