TDS under 194C or 194J

[Shyam Naik]

Dear Experts,

We have engaged a firm of Geo Technical Engineers to carry out Geotechnical invistigation to ascetrain whether the land is suitable for setting of the factory.

The job/work involves the following.

1. Shifting of equipments to the site

2. Drilling of bore holes

3. Field Test/laboratory Test of soil,rock etc.

4. Submission of Geo-technical recommaedation

The firm has represented that the job involves a lot of field work, labour charges for mobilisation, de-mobilisation, drilling & shifting of machinery. As such it qualifies for TDS u/s. 194C.

They have further represented that, had they rendered only consultancy service, Section 194J would have been attracted.

Please opine, whether 194C is attracted or 194J is attracted.

Regards,

SL Naik

[CA Rachit Agarwal]

M/s Geo Technical Engineers has been assigned the job of testing. It seems to us that during the course of testing lot of fields work has been carried out involving labour charges and shifting and drilling by machinery. Hence section 194J would be attracted. Refere Circular No. 715 dated 08.08.1995.

 

If the Geo Technical services has been given the job involving labour charges and shifting/drilling  by machinery, then the same would be definitely classifed under section 194C.

[Dhirendra Srivastava]

Dear Sir

The dominating essence of entire contract is Professional. Therefore TDS should be dedcuted under section 194J. However what can be done is have seperate billing for professional services and for Contract related services.

 

Hope it will resolve your query

 

CA Rahul Sivastava 

AI Summary

TDS classification for geotechnical services depends on dominant contract nature: labour/machinery points to 194C, professional to 194J. TDS applicability between 194C and 194J turns on the contract's dominant character: where field operations, labour and use of machinery predominate the engagement aligns with 194C, whereas where professional skill and advisory reporting predominate the payments are chargeable under 194J. Parties may separate billing for professional services and contract-related services to clarify withholding obligations.