LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

If some company pays to a company, is tds applicable?

Sushovan Mukherjee (6 Points)

09 February 2016

A software development company wants to pay another software development company. Is TDS applicable?

Reply
Follow
Share

9 Replies

(Guest)

For the applicability of chapters of TDS - Status of Payer is not relevant - With Few Exception -

Pls clarify as to the purpose for which payment is made. - If the amount to be paid is taxable in india in the hands of payee - Tax is to be deducted at source by the payer.

CA Piyush Jhawar (Chartered Accountant) (545 Points)
Replied 09 February 2016

Yes rightly said above.You need to check the nature of transaction to put it under the respective section!

Sushovan Mukherjee (6 Points)
Replied 10 February 2016

Actually these are subcontract/part of main software development work.

(Guest)

In that case - TDS provisions under section 194C would be attracted.

No distinction of a contract or a sub-contract.

Hope your query is resolved.

1 Like

Ashish Bansal (CA) (936 Points)
Replied 12 February 2016

Agreed with CA Prateek Jain.

1 Like

Rahul Verma (CA-Final) (484 Points)
Replied 13 February 2016

Genrally TDS having nothing to do with status. so if company is paying to another company so TDS will be applicable.

Also as u mentioned that payment is in relation with Sub-Contractor so this will be come under section of 194C and TDS will be liable to deduct @ 2%.

1 Like

Sushovan Mukherjee (6 Points)
Replied 13 February 2016

Originally posted by : Rahul Verma
	Genrally TDS having nothing to do with status. so if company is paying to another company so TDS will be applicable. Also as u mentioned that payment is in relation with Sub-Contractor so this will be come under section of 194C and TDS will be liable to deduct @ 2%.

Thanks Mr. Rahul Verma, I have understood that TDS is applicable, but what will be the percentage? 2% or 10%? Because one of my client has shown me Section 194J, and they are deducting 10%. Thanks in advance.