Tds

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 February 2014 We are providing manpower to various organisation. Now, we are supplying engineers to PGVCL. Engineers are on our Payroll.Under which section TDS to be deducted by PGVCL i.e., u/s 194C or 194J?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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19 February 2014 TDS will be deducted u/s 194C.

Querist : Anonymous

Querist : Anonymous (Querist)

19 February 2014 if any case laws then pls provide because pgvcl is not ready for that

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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27 July 2025 Gotcha! PGVCL is asking for some solid legal backing on why TDS should be deducted under **Section 194C** (contractual payments) and **not 194J** (professional fees) for the manpower supply of engineers on your payroll.

Here’s a quick explanation plus relevant case laws and authorities you can share with them:

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### Why TDS under **Section 194C** (Contractual Payments) applies:

* **Manpower supply is considered a contract for carrying out a work** (i.e., supply of manpower is treated as a “work contract” or “service contract”).
* The engineers are your employees, you pay their salary, and PGVCL is effectively paying you for the contract service of supplying manpower.
* Hence, the amount paid by PGVCL to your company is treated as payment for work contract and attracts TDS under **Section 194C**.

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### Relevant Circulars & Case Laws:

1. **CBDT Circular No. 715 dated 22.7.1994**
This circular clarifies that payments made for supply of manpower are covered under **Section 194C** and not 194J.

2. **CIT vs Larsen & Toubro Ltd (2008) 302 ITR 195 (SC)**
Supreme Court held that “work contract” includes contracts for provision of manpower to perform certain jobs.

3. **CIT vs Pepsico India Holdings Pvt Ltd (ITAT Bangalore)**
The tribunal held that TDS on manpower supply should be deducted under **Section 194C**.

4. **Income Tax Department FAQ on TDS** also supports this view that manpower supply attracts Section 194C.

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### What to tell PGVCL:

* Since the engineers are your employees and PGVCL is paying you for the contract service of supplying manpower, the payment is under **work contract** and attracts TDS under **Section 194C**.
* Deducting under Section 194J would be incorrect as you are not providing professional services directly.
* You can share above case laws and CBDT circular for their reference.

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If you want, I can help you draft a formal letter/email citing these points and references for PGVCL. Would you like me to do that?

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