Tds on individual model payment

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Querist : Anonymous

Querist : Anonymous (Querist)

23 May 2014 Dear All

Please advise if we paid directly to Two or three models for an event and he generate a bill about 60000/- with pan no. mentioned on it. then guide me about the TDS Applicability on this with circular..

Thanks

CA John Abraham Austin ACA

CA John Abraham Austin ACA (Expert)
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23 May 2014 As per the details provided by you, this payment is covered under Sec 194 J of The Income Tax Act, 1961- TDS on Professional/Technical Services. Since the payment has exceeded INR 30,000 in a year as prescribed by the Act, you need to deduct tax at source at 10 % on the face amount and pay to the govt. within the 7th of the following month of Credit into the accounts/ Payment whichever is earlier.

Querist : Anonymous

Querist : Anonymous (Querist)

23 May 2014 Thanks John.

Just one more thing. do we have any notification for the same to justify the same. So that we can share it with the management.

And if the vendor don't have service tax no. and not charging Service tax on bill then there is any chance to we do not deduct TDS on this payment.

CA John Abraham Austin ACA

CA John Abraham Austin ACA (Expert)
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23 May 2014 I am not sure whether there exists a notification for the same. But Sec 194 J specifically provides the explanation for this.
You may show this section as the conclusive evidence for your issue.

Regards,

John

Querist : Anonymous

Querist : Anonymous (Querist)

23 May 2014 Hi John

And if the vendor don't have service tax no. and not charging Service tax on bill then there is any chance to we do not deduct TDS on this payment.

Regards
Gaurav

CA John Abraham Austin ACA

CA John Abraham Austin ACA (Expert)
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23 May 2014 CBDT had issued a Circular No. 4/2008 dated 28.04.2008, wherein it was clarified that tax is to be deducted at source under Section 194-I of the Income-tax Act, 1961 on the amount of rent paid/payable without including the service tax component.

Representations/letters have been received seeking clarification whether such principle can be extended to other provisions of the Act also.

Board had actually clarified in Letter F.No. 275/73/2007-IT(B), dated 30-6-2008 as follows:

Deduction of Tax at source on Service Tax - The payments made under section 194-I differ significantly from payment made under section 194J in the way that in the case of 194-I TDS has to be deducted on any income paid as rent. However, in the case of section 194J TDS has to be deducted on any sum paid as professional and technical fees. The Board had decided to exclude TDS on service tax component on rental payment because it was construed that service tax payment cannot be regarded as income of the landlord. Since section 194J covers any sum paid, therefore the Board has decided not to extend the scope of Circular No. 4/2008, dated April 28, 2008 to such payment under section 194J.

Anyway Board seems to have forgotten this letter. They are reminded of a recent judgement of the Rajasthan High Court dated 01.07.2013, in the case of CIT(TDS) Jaipur vs Rajasthan Urban Infrastructure - 2013-TIOL-663-HC-RAJ-IT, holding that if as per the terms of the agreement between the payer and the payee, the amount of service tax is to be paid separately and was not included in the fees for professional services or technical services, no TDS is required to be made on the service tax component u/s 194J of the Act.

On re-examination of the matter, in exercise of the powers conferred under section 119 of the Act, the Board has decided that wherever in terms of the agreement/ contract between the payer and the payee, the service tax component comprised in the amount payable to a resident is indicated separately, tax shall be deducted at source under Chapter XVII-B of the Act on the amount paid/payable without including such service tax component.

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Querist : Anonymous

Querist : Anonymous (Querist)

04 June 2014 And if the vendor don't have service tax no. and not charging Service tax on bill then there is any chance to we do not deduct TDS on this payment. Regards Gaurav