Production Agency-Advertisement film+TDS

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CS.Sreejan (Querist)
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15 March 2010 Our company enters in to an agreement with a production agency to produce a 30 minute advertisement film. The production agency consists panel of film technicians, art directors, commentator, camera men etc. The payment towards this production agency is subject to TDS. My doubt is what will be the rate of TDS applicable. Is it TDS rate under section 194J (fee for technical service) or 194C (contract)?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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15 March 2010 Dear Sreejan,

TDS will have to be deducted u/s 194C as it is an advertising contract.

Regards.

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B.Chackrapani Warrier

B.Chackrapani Warrier (Expert)
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15 March 2010 As per my understanding, section 194C applies. Pl refer question 3 in CBDT Circular 715 dated 08/08/1995 reported in 215 ITR (St) 12.

CS.Sreejan

CS.Sreejan (Querist)
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15 March 2010 Sir, The production agency i refered above is not a advertisement agency. It is a PSU...

CS.Sreejan

CS.Sreejan (Querist)
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15 March 2010 1st of all thanks for the quick reply. The end result of the agreement is that, the production agency has to give us the 30 minute film about our company in a video format..... so whether this amounts to a professional service?

CA SANJAY MUKHERJEE

CA SANJAY MUKHERJEE (Expert)
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15 March 2010 Hi Srijan,

Please refer to the answer to the question number 3 & 4 of the Circular referred by Expert Warrier. The link is given below.

http://law.incometaxindia.gov.in/TaxmannDit/DispCitation/ShowCit.aspx?fn=http://law.incometaxindia.gov.in/directtaxlaws/cbdt/dtccontents/PARA1119.htm

It would be 1 % if contractor is advertiser, if the contractor is production house then 2 % and if the agent is neither advertiser nor production house and simply mediator then also 2 % as there must be some technical work to be done by the contractor to attract Sec. 194 J.
Cheers,

Sanjay