Tds
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
03 March 2016
what will be rate of Tds in case of revenue sharing agreement
Ankur Singhal
(Expert)
03 March 2016
Dear pls explain the case properly.
What type of revenue shared and tds on which item??
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.
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.
27 July 2025
Got it! Let me break this down for you step-by-step:
---
### 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.
---
### 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.
---
### 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.
---
### 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.
---
If you want, I can help you draft a summary or format for this situation. Just let me know!
---
### 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.
---
### 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.
---
### 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.
---
### 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.
---
If you want, I can help you draft a summary or format for this situation. Just let me know!
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