23 April 2009
MY CLIENT IS HAVING FRANCHISE OF GTEC, COMPUTER EDUCATION. THE FRANCHISE IS PAYING ROYALTY TO GTEC. FRANCHISE'S INCOME IS BELOW 40LACS. I WANT TO KNOW WHETHER THE FRANCHISE HAVE TO DEDUCT T.D.S ON THE ROYALTY PAID TO GTEC OR NOT. THE PAYMENT MADE IS ABOVE 20000. KINDLY ADVICE ME REGARDING THIS
24 April 2009
I understand that the payment of royalty is made to a resident. If yes, the royalty payment is subject to TDS under section 194J as the amount paid is > 20,000. If the payment made is to non resident the deduction is u/s 195 and the limit of Rs 20000 is not applicable. In such a situation the tax is deductible even if the payment is < Rs 20000.
24 April 2009
Thanks for the replay. But the answer did't mention about the fact that 'INCOME IS BELOW 40LACS'. Since their income is below 40lacs,Is it necessary to deduct TDS?
The income limit of < 40Lac is applicable only in the case of HUF and Individuals. In case if your client is only HUF or Individual engaged in the business of frenchie, having income less then 40 Lac, then they are not liable to deduct tax. In any other case the assessee is liable to deduct tax even if the sale is < 40 Lac.
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