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Tds on consultancy fee of rs 10,000

JD ( Business) (352 Points)

23 March 2015

We have hired a person for consultancy & would pay him 10,000 per visit for his services . How to calculate TDS on this amount ? & is it applicable?

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25 Replies

J. K. Ratan (Compliance Advisor) (794 Points)
Replied 23 March 2015

Dear Sir

As per section 194J of income tax act 1961

A person (other than Individual or HUF subject to condition 44AB) will have to deduct TDS @ 10% on payment made or credit given (whichever earlier)

-to any person for

-techenical or professional service

-Exceeding INR 30000

In your case if you have signed a contract or expecting to receive service in future on regular basis than start deduct TDS on 1st paymet of INR 10000 (as you Mentioned)

1 Like

CA AnKiT BoHrA (AB) (Manager) (25955 Points)
Replied 23 March 2015

TDS @ 10% under 194j, if crosses the limit... if you knows that limit wil b crossed than only deduct tds from the first bill... else wait until it crosses the limits, and then charge on the whole amount altogether

JD ( Business) (352 Points)
Replied 23 March 2015

Hi Jay ,

Thanks fr the info , But as you mentioned Rs. 30,000 - is it per month? i dont think he would visit regularly , maybe once in a month . Assuming that we would be paying him Rs. 10,000 every month .

Thanks in advance

CA AnKiT BoHrA (AB) (Manager) (25955 Points)
Replied 23 March 2015

its for complete financial year limit under 194 J

if 10000 for every month, then u need to deduct tds from 1st bill

JD ( Business) (352 Points)
Replied 23 March 2015

Is there anything we can do to cut down his tax bill like paying it as food & conveyance allowance, etc?

JD ( Business) (352 Points)
Replied 23 March 2015

TDS @ 10 % would sum upto Rs. 1000 . Well So i would end up paying him Rs. 9000.

Well i am a newbie in the above context , hope my calculations are correct.

CA AnKiT BoHrA (AB) (Manager) (25955 Points)
Replied 23 March 2015

if he can raise separate bill for these, then amount can b shown as reimbursment of expenses

if for a single bill both items are there u need to deduct tds on the overall amount...

for reimbursment of expenses, also u need to have a clause in ur contract

also refer this

https://sktyagidt.com/upload/article/66.pdf

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CA AnKiT BoHrA (AB) (Manager) (25955 Points)
Replied 23 March 2015

yup exactly, one more thing as he is providing u consultancy... i think he wil charge service tax also in the bill... then u need to deduct tds only on the service amount, not on the tax part

for better explanation c this eg. service charges = 10000

Consultancy charges = 10000

Service tax @ 12.36 = 1236

total bill amount 11236

TDS deducted = 10% only on 10000 = 1000

payment to party 10236

if no service tax in the bill then simple 10000-1000(TDS)= 9000 Payable to party

1 Like

JD ( Business) (352 Points)
Replied 23 March 2015

Hi i just went through

section 194J of income tax act 1961

It states for a particular FY year the amount should not exceed 30,000.

Our consultant guy has just visited in the month of march 2014 , & the payment would only be generated for the month of march ,so for the ongoing FY year , i guess TDS is not required? am i correct ?

CA AnKiT BoHrA (AB) (Manager) (25955 Points)
Replied 23 March 2015

Originally posted by : CA AnKiT BoHrA
	its for complete financial year limit under 194 J if 10000 for every month, then u need to deduct tds from 1st bill

yes then u need not to deduct TDS... As i had already mentioned you this that the limit is for financial year....

JD ( Business) (352 Points)
Replied 23 March 2015

Serivce tax as well? How can i get a confirmation on this .

JD ( Business) (352 Points)
Replied 23 March 2015

But Ankit , What about the service tax? is that applicable?

CA AnKiT BoHrA (AB) (Manager) (25955 Points)
Replied 23 March 2015

you can c the bill na... if service tax is charged than dont deduct TDS on that part only.... you need to deduct tds only on the consultancy amount i.e. as u said 10000