Applicability on TDS on revenue share

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A medical lab operating on a revenue share basis with a pharmaceutical partner is seeking clarity on Tax Deducted at Source (TDS) applicability. The arrangement involves the pharma partner providing space, with the lab liable for 20% of gross revenue. The discussion explores whether this falls under Section 194I (rent) or 194C (commission), with the latter suggested as potentially applicable based on the agreement's terms. GST implications at 18% are also confirmed.

SHYAM KRISHNAN K

SHYAM KRISHNAN K (Querist)

18 June 2022 I am running a medical lab. For the expansion purpose, i have jointly operate medical lab with some other parties who are dealing pharma business(medical store) on r revenue share basis. Medical store provide some area of their building to us and we collect swab from there. As per our agreement we are liable to 20% of gross revenue to party. In this scenario, what section of TDS applicable.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

18 June 2022 194 I TDS on rent for using the premises applicable.

Message likes : 1 times

CA Puja Sharma

CA Puja Sharma (Expert)

18 June 2022 Whether the 20% share in the form of commission? It will depend upon the terms mentioned in the agreement.

SHYAM KRISHNAN K

SHYAM KRISHNAN K (Querist)

19 June 2022 Is the income generated in this way covered under GST. If covered what is the rate of GST

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

20 June 2022 Yes, it's covered under GST 18% applicable.

SHYAM KRISHNAN K

SHYAM KRISHNAN K (Querist)

20 June 2022 We have collect the amount as based on an revenue share agreement/contract. Is it covered u/s 194 I. Can we collect TDS u/s 194 C as based on this agreement.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

20 June 2022 Yes you can do it......

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