Tds applicability and liability

[sunil mehta]

A sub-travel agent purchases air/rail tickets from main travel agent and issues to his clients by charging 'service chgs.'@rs.100/-per ticket over and above the ticket purchase price.If the 'service chgs.' exceeds rs.50000/- in case of his particular client in a fin.year whether the tax has to be deducted at source by his client if the payer falls under 'specified categories' u/s 194C.?Note:The invoice is not inclusive of 'service chgs.'Ticket service chgs are shown separately in bill. 2)If not liable to tds u/s 194C.then under which clause the payer is liable to deduct TDS?

[Surender Gupta]

In the instant case, as apparent from the facts, TDS u/s 194C is not warranted. The nature of activity mentioned in the query is of Commission. Therefore, you may consider the provisions of 194H as more relevant for the purpose of deduction of tax at source. In this case, it is the commission portion only on which TDS is to be deducted.

AI Summary

TDS on commission applies where ticket service charges are commissionable; payer must deduct tax from the commission portion. The service charges charged by the sub-travel agent are commission-like receipts; therefore TDS under Section 194C is not appropriate, and tax should be deducted under Section 194H. The payer must withhold tax only on the commission portion of the service charges.