Tds on hospitals u/s 194J

[anmol bohra]

plz solve my query that if TPA make payment to hospital then should he liable for tds on hospital u/s 194J,,, plz give some reason and reference why for 194J not for 194C....plz solve it....

[Rama Krishana]

Before discussion let us understand the facts: TPA is a third party administrator appointed by the Insurance Companies. The claim of patient is being paid by the insurance companies through TPA. The commission to TPA is paid by the insurance companies which is ultimately born by the insured as part of premium. - In view of above facts, my view is the commission received by TPA is subject to deduction of TDS only. Since it is a contractual payment but not in the nature of professional service, TDS requires to be deducted u/s 194C. The payment to hospitals by the TPA is not liable for any deduction of tax at source.

AI Summary

TDS on hospital payments: payments by TPAs for insured claims need not be deducted, while TPA commission attracts contractual-payment TDS. The TPA acts as agent for insurers and receives commission which is subject to tax deduction at source as a contractual receipt rather than a professional fee; payments made by the TPA to hospitals for claim settlement are not liable to deduction of tax at source under that withholding classification.