Tds
This query is : Resolved
16 January 2015
Whether payment to universities is subject to TDS ?? Do we have to deduct TDS or is Sec 196 of Income Tax Act is applicable for this payments.
Kindly reply
Kindly reply
16 January 2015
pls mention the nature of payment made to them?
16 January 2015
its payment made by trust to universities on contract basis
16 January 2015
see i need to know the purpose of making such payment?
16 January 2015
An educational trust is entered into a contract with university and the trust is making a payment to university. Do we have to deduct tds
16 January 2015
i understood that but contract is made for what purpose and how much is the amount as we need to check whther sec 194C is applicable or not?
16 January 2015
you are collecting the fee and pay fee as per university norms agreement on regular basis then you have to deduct the tds u/s 194c
19 January 2015
194C is applicable when university makes paymnet to contractor and also Income of university is exempt from tax U/S 10(23)..
Do we need to deduct tds on the payment to university which is exempt from income tax...
Do we need to deduct tds on the payment to university which is exempt from income tax...
27 July 2025
This is a good question and a nuanced one. Here's the proper breakdown:
---
### ✅ **Question:**
*Whether TDS is to be deducted on payments made to a university (which is exempt under section 10(23C)) by a trust under a contract?*
---
### ✅ **Short Answer:**
**Yes, TDS may still be required to be deducted u/s 194C**, **even if** the university is exempt under section **10(23C)**, **unless it falls under the scope of section 196** — but that depends on the specific **status** and **notification** of the university.
---
### 🧾 **Explanation:**
1. **Section 194C** – TDS on payments to contractors/sub-contractors:
* Applicable when any specified person (like a trust) pays any sum to a **resident** for carrying out any work (including supply of manpower or services) under a contract.
* If the trust has entered into a **contract with the university** for services/work (not merely as an intermediary), **TDS u/s 194C may apply**.
2. **Section 196** – No deduction of tax:
* It applies when payments are made to **government, RBI, corporations**, or other bodies **exempt under specific notifications**.
* Some **universities and institutions** are specifically notified under section 10(23C)(iv)/(v)/(vi)/(via) or are **statutorily exempt**.
* However, just because an institution is exempt under section 10(23C) does **not automatically** mean that **TDS is not applicable**.
👉 **Only if** the university is:
* **Wholly exempt from tax** **and**
* Covered by **a specific CBDT notification under section 196** or listed as **excluded in TDS circulars**, **then TDS is not required.**
---
### 📌 **What Should You Do?**
1. **Check whether the university is notified under section 196 (i.e., no TDS applicable)** — You’ll need to verify with the latest **CBDT notifications or official exemption lists**.
2. **If NOT specifically notified**, then:
* If it's a **contractual payment for work/services**, and the amount exceeds thresholds under 194C (₹30,000 per payment or ₹1,00,000 p.a.), **TDS should be deducted**.
---
### 📚 **Judicial View / CBDT Circulars:**
* There are rulings that **TDS must be deducted** even if the payee’s income is exempt, **unless there’s a specific notification under section 196**.
* Example: [CBDT Circular No. 18/2017](https://incometaxindia.gov.in/communications/circular/circular-no-18-2017.pdf) clarified certain exemptions from TDS, but these are limited.
---
### ✅ **Conclusion:**
* **TDS is applicable u/s 194C** unless the university is **specifically notified for TDS exemption**.
* Being exempt under **section 10(23C)** **alone is not sufficient** to avoid TDS.
* So, you **should deduct TDS** unless you have **documented evidence** (like a CBDT notification) confirming exemption from TDS under section 196.
---
Would you like help checking if the specific university is on the notified exemption list from TDS under section 196?
---
### ✅ **Question:**
*Whether TDS is to be deducted on payments made to a university (which is exempt under section 10(23C)) by a trust under a contract?*
---
### ✅ **Short Answer:**
**Yes, TDS may still be required to be deducted u/s 194C**, **even if** the university is exempt under section **10(23C)**, **unless it falls under the scope of section 196** — but that depends on the specific **status** and **notification** of the university.
---
### 🧾 **Explanation:**
1. **Section 194C** – TDS on payments to contractors/sub-contractors:
* Applicable when any specified person (like a trust) pays any sum to a **resident** for carrying out any work (including supply of manpower or services) under a contract.
* If the trust has entered into a **contract with the university** for services/work (not merely as an intermediary), **TDS u/s 194C may apply**.
2. **Section 196** – No deduction of tax:
* It applies when payments are made to **government, RBI, corporations**, or other bodies **exempt under specific notifications**.
* Some **universities and institutions** are specifically notified under section 10(23C)(iv)/(v)/(vi)/(via) or are **statutorily exempt**.
* However, just because an institution is exempt under section 10(23C) does **not automatically** mean that **TDS is not applicable**.
👉 **Only if** the university is:
* **Wholly exempt from tax** **and**
* Covered by **a specific CBDT notification under section 196** or listed as **excluded in TDS circulars**, **then TDS is not required.**
---
### 📌 **What Should You Do?**
1. **Check whether the university is notified under section 196 (i.e., no TDS applicable)** — You’ll need to verify with the latest **CBDT notifications or official exemption lists**.
2. **If NOT specifically notified**, then:
* If it's a **contractual payment for work/services**, and the amount exceeds thresholds under 194C (₹30,000 per payment or ₹1,00,000 p.a.), **TDS should be deducted**.
---
### 📚 **Judicial View / CBDT Circulars:**
* There are rulings that **TDS must be deducted** even if the payee’s income is exempt, **unless there’s a specific notification under section 196**.
* Example: [CBDT Circular No. 18/2017](https://incometaxindia.gov.in/communications/circular/circular-no-18-2017.pdf) clarified certain exemptions from TDS, but these are limited.
---
### ✅ **Conclusion:**
* **TDS is applicable u/s 194C** unless the university is **specifically notified for TDS exemption**.
* Being exempt under **section 10(23C)** **alone is not sufficient** to avoid TDS.
* So, you **should deduct TDS** unless you have **documented evidence** (like a CBDT notification) confirming exemption from TDS under section 196.
---
Would you like help checking if the specific university is on the notified exemption list from TDS under section 196?
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