Tds

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Querist : Anonymous

Querist : Anonymous (Querist)

03 March 2016 what will be rate of Tds in case of revenue sharing agreement

Ankur Singhal

Ankur Singhal (Expert)
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03 March 2016 Dear pls explain the case properly.
What type of revenue shared and tds on which item??

Querist : Anonymous

Querist : Anonymous (Querist)

04 March 2016 Facts:

Can Pvt Ltd. act holding company of LLP

For example one pvt Company ABC formed with Two Directors
Now One LLP Created By MD of ABC company " ABC LLP " in which ABC company and MD of ABC company was Designated partners with 80:20 ratio

ABC LLP made revenue sharing agreement with one Pvt company . pvt company will assist and give consultancy to ABC llp

1 what will be relation b/w ABC company and ABC LLP (holding & subsidiary ???)

2 how accounts will be prepared by ABC LLP and ABC company (Individually)
3 what will be tds rate when ABC LLp make payment to pvt company for his services.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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27 July 2025 Got it! Let me break this down for you step-by-step:

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### 1. **Can a Pvt Ltd act as holding company of an LLP?**

* Technically, yes. A Pvt Ltd company can be a designated partner in an LLP and hold profit-sharing rights.
* The Pvt Ltd company and the LLP are separate legal entities.
* So, Pvt Ltd can be considered as a holding entity in LLP’s context if it holds major share or controlling interest.

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### 2. **Relation between ABC Pvt Ltd and ABC LLP**

* They are separate legal entities.
* The Pvt Ltd company is not a subsidiary in the conventional sense because LLP structure is different.
* It’s more like the Pvt Ltd company is a partner or stakeholder in the LLP.
* No strict holding-subsidiary relationship unless equity structure and ownership clearly define so.

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### 3. **How will accounts be prepared?**

* **ABC LLP:**
Prepares its own financial statements as per LLP Act.
* **ABC Pvt Ltd:**
Prepares financial statements as per Companies Act.
* Both need to maintain separate books and comply with respective regulations.

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### 4. **What will be TDS rate when ABC LLP makes payment to Pvt Ltd company for consultancy services?**

* Payment for consultancy services generally falls under **Section 194J** of the Income Tax Act.
* **TDS Rate:** 10% on the payment made for professional or technical services.
* However, if the Pvt Ltd company does not provide PAN, the TDS rate will be 20%.
* If the payment is for business contract or works contract, then **Section 194C** might apply with 1% or 2% TDS depending on the nature.
* But since you mentioned consultancy services, **194J @ 10%** is applicable.

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