Section 194C

[Asked by Guest]

CBDT two circular namely No 4 of 28/4/2008 and 275/73/2007IT(B) dt 30/06/2008 clearly states TDS would be deductable from gross amount including serv tax however same is not applicable for 194J. what about the situation for 194C for contractor and subcontractor casess

The said exclusion is available only for 194 J and not for deductions under other sectons

The logic given by the Board in the above Circular is while Sec.194I requires deduction of tax on 'any income by way of rent', Sec.194J requires deduction of tax on 'any sum'. On the basis of same logic, Sec.194C also requires deduction of tax on 'any sum' and thus needs to be applied on the gross amount including service tax component, if any.

[DEV KUMAR KOTHARI]

The circular in relation to professional fees is wrong. The board has considered few words and nto all words in S. 194 J. The TDS is to be from fees and nothing else. For detaied discussion refer articles on this website.

AI Summary

TDS on contractor payments may include service tax component, affecting gross up withholding under tax rules.
The query addresses whether TDS under Section 194C must be deducted from the gross amount inclusive of service tax. Responses recorded: CBDT circulars treat service tax as part of gross for TDS but exclude professional fees; that exclusion is not stated to apply to other sections. Applying the Board's wording, Section 194C's reference to 'any sum' suggests TDS should be on gross including service tax. A dissenting view argues the circular misreads the statute and withholding should be confined to the fee component alone.