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Very very urgent

manik (ca in practice) (420 Points)

25 April 2011

ours is construction company, we sometimes go for testing of construction material for eg rmc, sand, steel, iron, bricks etc. and pay testing charges to the agency, my question is that whether payment of testing charges attracts provision of TDS, if yes then under which section, the payment is nearly 100000.

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U S Sharma (glidor@gmail.com) (21063 Points)
Replied 25 April 2011

¹³[Fees for professional or technical services.¹⁴

¹⁵194J. (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of—

(a) fees for professional services, or

(b) fees for technical services,

shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to five per cent of such sum as income-tax on income comprised therein :

Provided that no deduction shall be made under this section—

(A) from any sums as aforesaid credited or paid before the 1st day of July, 1995; or

(B) where the amount of such sum or, as the case may be, the aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year by the aforesaid person to the account of, or to, the payee, does not exceed—

(i) twenty thousand rupees, in the case of fees for professional services referred to in clause (a), or

(ii) twenty thousand rupees, in the case of fees for technical services referred to in clause (b) :

¹⁶[Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such sum by way of fees for professional services or technical services is credited or paid, shall be liable to deduct income-tax under this section :]

¹⁷[Provided also that no individual or a Hindu undivided family referred to in the second proviso shall be liable to deduct income-tax on the sum by way of fees for professional services in case such sum is credited or paid exclusively for personal purposes of such individual or any member of Hindu undivided family.]

(2) ¹⁸[***]

(3) ¹⁸[***]

Explanation.—For the purposes of this section,—

(a) “professional services” means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purposes of section 44AA or of this section;

(b) “fees for technical services” shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9;

(c) where any sum referred to in sub-section (1) is credited to any account, whether called “suspense account” or by any other name, in the books of account of the person liable to pay such sum, such crediting shall be deemed to be credit of such sum to the account of the payee and the provisions of this section shall apply accordingly.

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U S Sharma (glidor@gmail.com) (21063 Points)
Replied 25 April 2011

Particulars				Rates from 1.4.10 to 31.03.2011
*Section*	*Nature ofPayment*	*Criteria forDeduction* *(payment in excess of) upto* *30th June 2010*	*Criteria forDeduction(payment in excess of) w.e.f. 1st July 2010*	*If the recipient is a Company, Co- operative Society, Firm*	*If recipient is an Indivudual or HUF*
194 A	Interest from a Banking Company	Rs.10,000/- p.a	Rs.10,000/- p.a	10.00	10.00
194 A	Interest other than from a Banking Co.	Rs.5,000/- p.a	Rs.5,000/- p.a	10.00	10.00
194 C	Contractors	Rs.20,000/- per contract or Rs.50,000/- p.a	Rs.30,000/- per contract or Rs.75,000/- p.a	2.00*	1.00*
194 H	Commission or Brokerage	Rs.2500/- p.a	Rs.5,000/- p.a	10.00	10.00
194 I	Rent other than Plant, Mach.& Eqp.	Rs.1,20,000/-p.a	Rs.1,80,000/-p.a	10.00	10.00
194 I	Rent of Plant , Machinery & Equipments	Rs.1,20,000/-p.a	Rs.1,80,000/-p.a	2.00	2.00
194 J	Professional Charges	Rs.20,000/- p.a	Rs.30,000/- p.a	10.00	10.00

mahesh (Will soon be a CA !) (168 Points)
Replied 25 April 2011

Testing comes under "Technical Services". So u should deduct TDS as per above discussed rates.

shammi (service) (50 Points)
Replied 14 May 2011

testing is done through a professional firm and services will be coming under technical services. so it will attract TDS under 'Fee for professional & technical services'.

pl. refer the above reply and rates.