Definition - professional services - tds applicability

[pardeep bisht]

please define the professional services and contract services and tds rate applicable on the same

[DEV KUMAR KOTHARI]

Dear Friends, This is discussion forum and not column like "your queries". To effectively use the discussion forum I suggest that the querist should send his own material, analysis and view on the subject of query with reference to provisions and case laws. Some efforts should be amde by the author of the issue.

[Dinesh Gupta]

For the purpose of meaning of contract services - you may refer to (iii) and (iv) of the Explanation to Section 194C and for the purpose of professional services refer to (a) and (b) of the Explanation to Section 194J. Further, the rate of TDS for contract service is 2% and in case of sub contract it is 1%. On the other hand rate of TDS on professional services is 10% [plus cess]

AI Summary

TDS on professional services: professional fees attract higher withholding while contract and sub contract services have lower withholding. Definitions distinguish contract services (as per Explanation to Section 194C addressing supply of labour and execution of work) and professional services (as per Explanation to Section 194J including specified categories of professional or technical service). Classification determines withholding: contract payments attract a lower withholding rate, subcontract payments a reduced rate, and professional service payments a higher withholding rate; statutory cess applies where provided.