TDS U/S 194J FOR TECHNICAL SERVICE (FY 2020-21)

[MAHESH M]

Is there any provision in income tax whereby we could get a certificate from the assessing officer or from TDS department that TDS is to be deducted @ 2% U/s 194J if we give our reasons/explanation that the services rendered by us fall under Technical services for purpose of TDS U/s 194J?

The assessee does maintenance works of mobile/cell towers and falls under Technical service. (called as IME SERVICES) The deductor is insisting for a certificate from IT dept that TDS can be deducted @2% for the payments made to client treating as technical services. If not given they will deduct TDs @ 10%. We wrote a letter to the deductor explaining how the services rendered by us will fall under Technical service and not professional service as per Section 194j and attract 2% TDS, but the deductor is still asking for a certificate from Dept in this regard.

In the earlier years, when the TDS RATE U/S 194j is 10% with out distinction between technical or professional services, we used to apply for lower deduction in Form 13 and get a certificate for TDS @5/6% instead of 10%. Eventhough there is an amendment regarding tds @ 2% for technical services, the deductor is saying it still as 10%. We cannot go for a lower deduction application this year because if tds is deducted @ 2%, there will be tax payable by the assessee. If tds is deducted @ 10%/ 7.5% reduced rate, there will be a huge refund and case is getting selected for scrutiny.

I didn't find any section in income tax for applying to dept regarding this. Can anyone throw some light on any provisions in this regard or any other options available to deductee to get a certificate from dept that TDS HAS TO BE DEDUCTED @ 2% ON TECHNICAL SERVICES PROVIDED BY THE DEDUCTE

AI Summary

Taxpayer Seeks 2% TDS Deduction for Mobile Tower Services Under Section 194J; Faces 10% Without Certificate A taxpayer engaged in mobile tower maintenance services, classified as technical services, is seeking guidance on obtaining a certificate from the tax department to ensure TDS deduction at 2% under Section 194J. The deductor insists on a certificate to apply this rate, otherwise, they will deduct TDS at 10%. Previously, a lower deduction certificate was obtained, but changes in TDS rates have complicated this process. The taxpayer is concerned about potential scrutiny and refund issues if TDS is deducted at a higher rate. The response clarifies the TDS provisions under Section 194J, including applicable rates and conditions.