TDS ON BANDIWIDTH NETWORK INFRASTRUCTURE AND LEASED LINES U/S 194I OF THE I.T. ACT

[SRINIVAS PALAKODETI]

CAN THE CHARGES PAYABLE TO INFORMATION SERVICE PROVIDERS FOR PROVIDING BANDIWIDTH NETWORK INFRASTRUCTURE SUBJECT TO TAX DEDUCTION AT SOURCE U/S 194I OF THE Income Tax Act, 1961. SIMILARLY ARE THE CHARGES PAYABLE TO TELECOM SERVICE PROVIDERS FOR PROVIDING LEASED LINES SUBJECT TO TAX DEDUCTION AT SOURCE U/S  194I OF Income Tax Act, 1961.

AI Summary

TDS Applicability on Payments for Network Infrastructure and Leased Lines Under Section 194I Explained A query was raised about whether charges paid to information service providers for bandwidth network infrastructure and to telecom service providers for leased lines are subject to Tax Deduction at Source (TDS) under Section 194I of the Income Tax Act, 1961. The response clarified that if the network infrastructure or leased lines qualify as 'machinery or plant or equipment,' TDS must be deducted from these payments. It was emphasized that determining the nature of the transaction is crucial, and simply having a telephone line does not automatically trigger TDS under Section 194I.