Tax Deducted at Source

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C V RATNAM DHAVEJI (Querist)
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20 August 2008 A company pays a lumsum amount for implementation of SAP across its various divisions. The title of the agreement says it is a "statement of work" while in the same, the consideration is mentioned as "professional fees".
Now the question is whether provisions of 194C or 194J will apply to this payment?
Whether the answer would be different if softwar is billed separately and implementation cost is billed separately.

Amit Sharma

Amit Sharma (Expert)
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20 August 2008 Dear Sir,

Firstly there would be no impact of TDS on material supplied.

Tds applicability will come into force when services are rendered. If you can in -turn break the bill into 2 parts i.e. materials and services. The impact of your TDS would come down to the extend of services rendered.

TDS would be charged u/s 194 J.

Hope your queries are solved now.

Amit Sharma

Amit Sharma (Expert)
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C V RATNAM DHAVEJI

C V RATNAM DHAVEJI (Querist)
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20 August 2008 Thanks a lot. Can you please elaborate on reasons. Why is it under 194J and not under 194C?

CA Nallathambi Srinivasan

CA Nallathambi Srinivasan (Expert)
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21 August 2008 Because, the implementation of software requires Techincal Skill / professional skill and it will not be done by an ordinary person. Person one who has the technical knowledge only do the implementation work.

So TDS should be deducted under sec 194J.

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