Please let us know why and under which sectionof the income tax act, the tds need to be deducted for the call centre services rendered to clients. The profit percentage of any domestic call centre service, in the BPO industry is not more than 5-6%. Since the BPO business model is based on, high turnover , capital intensive , with a thin profit margin, it is in approprite for the clietns to deduct 10% TDS on every bill treating this service is equating it to ' Professional services or Technical services' bringing TDS attraction u/s 194J of the Income Tax Act. Personally feels that, for all the domestic call center services should be brought u/s 194 C.
Pleaes help me understand better.
Call Center Services TDS: Section 194C Applies as 'Works Contract', Not Section 194J for Professional Services A query was raised about the appropriate section of the Income Tax Act under which TDS should be deducted for call center services, arguing against the 10% deduction under section 194J for professional or technical services. It was suggested that call center services, characterized by high turnover and low profit margins, should fall under section 194C as a 'works contract' due to their labor-intensive nature. The response supported this view, emphasizing that call center activities are not professional or technical services, aligning more with labor and capital-intensive work, similar to engineering activities. (AI Summary)
TaxTMI 
TaxTMI 
