Hi,
What would be the rate of deduction of TDS for payroll processing charges to be paid to an outsourced consultancy firm. Would deduction be under Sec 194C or 194J??.
Pls suggest.
Sec 194C(1) : Any person responsible for paying any sum to any resident contractor for carrying out any work (including supply of labour for carrying out any work) in persuance of a contract between a specified person and the resident contractor is required to deduct tax at source.
Sec 194J : Professional services means "services rendered by a person in the course of carrying on a legal, medical, engineering or architectural profession or the profession of [b]accountancy[/b] or technical consultancy or interior decoration or such other profession as notifed"
Conclusion: Payroll processing do not involve supply of material or labour but it requires rendering combined pofessional services of accountants, software professionals. Hence liable to be deductged U/s 194 J @ 5% +SC+cess
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