Tds

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Sunil (Querist)
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23 December 2011 Hello

I have TDS queries wrt the following issues:

1) We are into consultancy services & hire other consultants for carrying out assignments. Do we have to deduct TDS from their payments? If Yes, what % should be deducted upon payment of Rs 20000 or more as professional fees to them.

2) We are going to buy a sofware for our firm costing around Rs 50000. Do we have to deduct TDS for the vendor? If Yes at what rate?

Thanks in advance for your valuable inputs.

regards

SUNIL

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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23 December 2011 1) Yes you need to deduct TDS u/s 194J.

2) In case you purchase Off The Shelf software TDS not required to be deducted. If the software is customized according to your need in that case TDS required to be deducted u/s 194J.

CA. RAGHAV GARG

CA. RAGHAV GARG (Expert)
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23 December 2011 Dear Mr. Sunil,

you have asked very good questions,

as far as you Question No. 1

You have to deduct TDS. Now the Question is at what rate and under which section?

If you are paying them professional chargess, i.e. for providing any service to you, then it is covered under section 194J i.e. @ 10%

on the contrary, if you have paid them Contract Price, i.e. now they will carry on the assignment, and you have paid lumpsum amount, for that particular assignment, then its a contractual payment Deduction of 1% or 2 % under 194C.

As far as 2nd question is concerned:

TDS is never deducted on Purchase of any software or any other material. You have to pay the full amount including VAT. you cann't deduct TDS on same. If they are Charging you for services provided by them, then you need to deduct TDS on same under 194J.

You may for any other query may contact me @ ca.raghavgarg@gmail.com

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