TaxTMI 
TaxTMI 
TaxTMI 
Query Regarding TDS on Office Utility Expenses
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....uery Regarding TDS on Office Utility Expenses<br> Query (Issue) Started By: - Ramanathan Seshan Dated:- 24-4-2025 Last Reply Date:- 28-4-2025 Income Tax<br>Got 4 Replies<br>Income Tax<br>I had a quick question regarding TDS applicability. Are we required to deduct TDS on the following expenses incurred for office use? * Internet charges for the office connection * Landline telephone bills....
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.... for the office * Postpaid mobile bills used for office purposes If TDS needs to be deducted then under which section should TDS be deducted Regards, S Ram Reply By YAGAY andSUN: The Reply: Great question - and it's a practical one many businesses come across during day-to-day expense management. Here's a clear breakdown regarding TDS applicability on these office utility expenses: &....
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....#128269; 1. Internet Charges (for office use) * TDS Applicability: ✅ Yes, if paid to a non-telecom service provider (e.g., leased line from IT company or service bundled with support/maintenance). * Section: 194J - Technical Services * Threshold: Rs.30,000 per annum (per party) 💡 However, if internet charges are paid to a telecom operator (like Airtel, Jio, BSNL, etc.) as a re....
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....gular bill, then: * Treated as a standard service, not liable for TDS under 194J. 🔍 2. Landline Telephone Bills (for office use) * TDS Applicability: ❌ Not applicable * Reason: Treated as a service rendered by a telecom company, considered as a contract of service, not "technical service" under Section 194J. 🔍 3. Postpaid Mobile Bills (used for official purposes) *....
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.... TDS Applicability: ❌ Not applicable (in most cases) * Reason: Same as landline - if the bills are in the company's name and are regular telecom services, TDS is not deductible. ✅ However, if there is a retainer contract or consolidated service agreement (e.g., mobile + internet + IT maintenance), then TDS under Section 194J or 194C may apply, based on the nature of the contract. ....
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....📌 Summary Table Expense Type TDS Required? Section Conditions Internet (from IT vendor) Yes 194J If bundled with technical support/leased line Internet (from telecom co.) No - Regular telecom bill Landline (telecom co.) No - Standard office utility Postpaid Mobile No - If billed by telecom company and used for official purposes 🧾 Note on Compliance * Ensure t....
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....hat invoices are in the company's name and not reimbursed to employees - otherwise, TDS implications may differ. * Keep track of the vendor type: if it's an IT service provider or aggregator, TDS may apply under 194J. *** Reply By Ramanathan Seshan: The Reply: Dear Yagay and Sun-sir, Thank you for the detailed response. Could you please explain further why TDS does not apply when s....
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....ervices are procured from regular operators? Regards, S Ram Reply By YAGAY andSUN: The Reply: Absolutely - this is a great follow-up, and understanding why TDS does not apply on bills from regular telecom operators like Airtel, Jio, BSNL is key to ensuring correct compliance. ✅ Why TDS Is Not Applicable on Regular Telecom Bills 📘 1. Nature of Service: Not "Technical Services" u....
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....nder Section 194J Section 194J of the Income Tax Act mandates TDS on payments for "fees for professional or technical services." However, courts and CBDT circulars have clarified that: Routine telecom services (like landline, postpaid mobile, broadband for general use) do not qualify as "technical services". These are standard utility services, delivered identically to all customers - without ....
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....customization or specialized technical involvement. 💬 CBDT Circular No. 715 (1995): "Payments made to telecom companies for use of telephone lines are not in the nature of technical services and hence, not liable to TDS under Section 194J." 📘 2. No Contractual Relationship Under Section 194C Section 194C covers payments to contractors for "carrying out any work" under a contrac....
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....t. In the case of telecom bills, there is no such contract for work - it's a standard service agreement, not a contract for carrying out specific work. So, Section 194C also doesn't apply. 📘 3. Not a Royalty or Equipment Use (Section 194-I / 194J Explanation) Sometimes confusion arises around the use of network infrastructure being "royalty" or "equipment use." But courts have rule....
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....d that: Passive usage of infrastructure (like mobile towers, exchanges) by end-users does not constitute royalty. Therefore, TDS is not applicable under Section 194J (explanation for royalty) either. 📌 Key Case Law: Skycell Communications Ltd. v. DCIT - 2001 (2) TMI 57 - MADRAS HIGH COURT (Madras HC) Held that mere use of telecom facilities doesn't constitute technical service under 194....
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....J. ✅ TDS Is Applicable Only If: The internet or telecom service is part of a customized managed service or dedicated leased line. Or, when the vendor is an IT services provider, bundling connectivity with technical/consultancy support. In such cases, TDS may apply under: Section 194J for technical services, or Section 194C for a bundled managed service contract. 🧾 Summary: Se....
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....rvice Regular Telecom (Airtel, Jio, BSNL) IT Vendor or Custom Lease Internet (office use) ❌ TDS not applicable ✅ TDS under 194J Landline ❌ TDS not applicable ❌ TDS not applicable Postpaid mobile (official use) ❌ TDS not applicable ✅ Possible if bundled *** Reply By Manish Kumar: The Reply: No TDS on these three charges.<br> Discussion Forum - K....
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