Tds deduction (Professional or Contractor)

[Pradeep Kumar]

Dear all

Kindly provide the reply of following observation :

a) Company has taken the services of Salt spray test from Chennai Mettex Lab Pvt. Ltd. and

b) CMM Inspection charges

Both the expenses debited under the head of Testing charges. Are they required to deduct TDS @ 10% or 2%.

Further, any reference of law/case laws can be given then please share the same.

Regards

Pradeep Kumar

[Ganeshan Kalyani]

Professional service, TDS @ 10% applicable.

[DR.MARIAPPAN GOVINDARAJAN]

They are coming under Section 194J of Income Tax Act, 1961 and liable to deduct TDS @ 10%.

[Pradeep Kumar]

Thanks for your reply.

Do you have any case law or any reference for such type of observation since client has opinion that such type of services can be done by anyone, so we can't assume it technical services.

Regards

Pradeep Kumar

[Ganeshan Kalyani]

I am astonished from your post. How can any one do the lab testing job. It needs special skills and qualification. The reply is rightly provided.

AI Summary

TDS on technical services applies to testing and inspection charges, requiring deduction under service tax provisions. Payments for laboratory salt spray testing and CMM inspection were treated by forum respondents as professional/technical services, and thus as subject to withholding tax under the tax code's provisions for professional and technical service payments; the only substantive dispute recorded was whether such tasks necessarily involve specialised skill sufficient to classify them as technical/professional services for withholding purposes.