TDS Deduction

[siddharth desai]

i m working on an annual cotract with an MNC. my monthly retainer fees is inr 200,000 + 18% GST. company's taxation department is pressing for 10% TDs deduction under section 194J wherin all these years, my previous companies has always deducted 2% under section 194C. my nature of work is providing them with techincal man power to make creative artworks. need some expert opinion / clarity on what shud i do

[DR.MARIAPPAN GOVINDARAJAN]

TDS under section 194C is for works contract and under section 194J is for professional services. Your fees amounts to professional services and therefore the contention of the taxation department is correct.

[YAGAY andSUN]

In our view it should be 10% as you providing technical/creative artworks as a professional.

[YAGAY andSUN]

2018 (5) TMI 850 - ITAT MUMBAI

ACIT (LTU) -1, Mumbai Versus M/s WTI Advance Technology Ltd. (Now merged with Tata Consultancy Ltd.)TDS u/s 194C OR 194J - scope of work of the contracts entered into by the assessee with the parties/contractors - tds liability - TCS had entered into an agreement with the assessee company for creation of Geographical Information system in the State of Maharashtra and Gujarat - Held that:- As the payments made to the vendors for the work done by them by deploying semi-skilled personnel, did not involve any technical or professional knowledge on their part, the same could not be brought within the sweep of Sec. 194J and had rightly been subjected to deduction of tax at source by the assessee under Sec. 194C.

We thus being of the view that the assessee had correctly deducted tax at source on the payment made to the vendors, therefore, no disallowance under Sec.40(a)(ia) as regards the same was liable to be made in the hands of the assessee. We thus finding no infirmity in the order of the CIT(A), uphold the same in context of the issue under consideration.- Decided against revenue

[Ganeshan Kalyani]

In my view , TDS is deductible @2% under 194C.

AI Summary

Tax Deduction Dispute: 10% TDS Under Section 194J for Professional Services vs. 2% Under Section 194C for Works Contracts An individual working under an annual contract with a multinational company is facing a tax deduction issue. The company's tax department insists on a 10% TDS deduction under section 194J for professional services, whereas previous employers deducted 2% under section 194C for works contracts. The individual provides technical manpower for creative artworks and seeks expert advice. Responses indicate that the 10% deduction under section 194J is appropriate for professional services. However, one response references a case where similar work was subject to a 2% deduction under section 194C, suggesting differing interpretations.