Yes, **TDS may be applicable** — but it depends on the nature of payment to the retainer.
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### 🔹 Case 1: If the **retainer is an individual professional**
(e.g., consultant, accountant, software developer, designer, etc.) and is **not on payroll**, then:
* **Section 194J** applies (Fees for professional or technical services) * **TDS Rate**: 10% * **Threshold**: If total payment **exceeds ₹30,000 in a financial year**, TDS applies.
👉 So, at ₹12,000/month × 12 months = ₹1,44,000/year → **TDS will apply** ✅ Deduct **10% TDS = ₹1,200/month**, deposit to govt, and issue **Form 16A**
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### 🔹 Case 2: If treated as **employee/salary** (on payroll with PF, etc.)
* Then it's **salary income** → TDS under **Section 192** based on **income tax slab rates** and deductions. * You’ll have to compute taxable salary, apply slab-wise TDS.
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### ✅ What you should do:
* If it's a **contractual/professional retainer**, deduct **10% TDS under 194J** * Make sure to collect **PAN**, else **TDS @ 20%** will apply under **Section 206AA** * File TDS returns and issue **Form 16A** to the retainer
Let me know if you need a sample TDS calculation or Form 16A format.
CAclubindia
