TDS on sponsorship

[Guest]

Our company paying sponsorship payment to an association. Whether tds is applicable u/s 194C or not?

Similarly we are participating in exhibition etc. The payment of participation fee is also liable for tds u/s 194C. pl. clarify.

[Ganeshan Kalyani]

Sponsorship is an activity which is in the nature of Advertisement and therefore, TDS is required to be deducted under section 194C.

Participation fee is not for any service to be received. It is just a kind of permission sought to participate in the exhibition and therefore in my view TDS should not be deductible in this case.

AI Summary

TDS on sponsorship treated as advertising expense requiring deduction; participation fees generally not subject to TDS. Sponsorship payments are treated as promotional activity in the nature of advertisement and therefore attract withholding under the tax provision applicable to contractor/service-like payments, requiring deduction of tax at source. Participation or exhibition fees, being a permission to participate rather than payment for a service, are not regarded as subject to withholding under that provision and TDS is not required to be deducted on such fees.