Tds applicability
This query is : Resolved
09 September 2015
Dear Sir,
TAN no. is mandatory for proprietorship firm?
what is the limit for taken TAN No. and Service Tax No. in proprietroship firm?
Arpit Aggarwal
TAN no. is mandatory for proprietorship firm?
what is the limit for taken TAN No. and Service Tax No. in proprietroship firm?
Arpit Aggarwal
09 September 2015
if you are liable to deduct TDS and to pay service tax then these nos is compulosry
09 September 2015
How can I now that I m liable for deduct tds or service tax there is any limit like in sale tax is over then 10lac etc.
1. I know tds deduction very well but confused that if I receive two three services in whole year under tds liability like commission, professional, labour charges etc. I should take tan no.?
We are deals in trading.
2. I am liable for services tax on freight paid around Rs.9lac in a year?
3. In service tax no limit on receive services from service provider.
1. I know tds deduction very well but confused that if I receive two three services in whole year under tds liability like commission, professional, labour charges etc. I should take tan no.?
We are deals in trading.
2. I am liable for services tax on freight paid around Rs.9lac in a year?
3. In service tax no limit on receive services from service provider.
09 September 2015
How can I now that I m liable for deduct tds or service tax there is any limit like in sale tax is over then 10lac etc.
1. I know tds deduction very well but confused that if I receive two three services in whole year under tds liability like commission, professional, labour charges etc. I should take tan no.?
We are deals in trading.
2. I am liable for services tax on freight paid around Rs.9lac in a year?
3. In service tax no limit on receive services from service provider.
1. I know tds deduction very well but confused that if I receive two three services in whole year under tds liability like commission, professional, labour charges etc. I should take tan no.?
We are deals in trading.
2. I am liable for services tax on freight paid around Rs.9lac in a year?
3. In service tax no limit on receive services from service provider.
09 September 2015
How can I now that I m liable for deduct tds or service tax there is any limit like in sale tax is over then 10lac etc.
1. I know tds deduction very well but confused that if I receive two three services in whole year under tds liability like commission, professional, labour charges etc. I should take tan no.?
We are deals in trading.
2. I am liable for services tax on freight paid around Rs.9lac in a year?
3. In service tax no limit on receive services from service provider.
1. I know tds deduction very well but confused that if I receive two three services in whole year under tds liability like commission, professional, labour charges etc. I should take tan no.?
We are deals in trading.
2. I am liable for services tax on freight paid around Rs.9lac in a year?
3. In service tax no limit on receive services from service provider.
27 July 2025
Your questions are very relevant for a small **proprietorship firm** dealing in **trading** — especially regarding **TDS**, **TAN**, and **Service Tax** obligations (as applicable in FY 2015-16).
Let me clarify each of your doubts point-by-point:
---
## ✅ 1. **Is TAN mandatory for a proprietorship firm?**
### 🔹 **Yes**, TAN (Tax Deduction Account Number) is mandatory **if you are required to deduct TDS**.
It doesn't matter whether you're a **company, firm, or proprietorship** — if your payments **cross the TDS threshold** and are covered under TDS sections (like 194C, 194H, 194J), you **must deduct TDS** and hence **must obtain a TAN**.
---
## 📌 TDS Deduction Thresholds (FY 2015-16):
| Section | Nature of Payment | Threshold |
| ------- | --------------------------- | -------------------------------------- |
| 194C | Contract/Labour/Freight | ₹30,000 per contract or ₹1,00,000 p.a. |
| 194H | Commission/Brokerage | ₹5,000 (₹15,000 from FY 2016-17) |
| 194J | Professional/Technical Fees | ₹30,000 per year |
👉 If **any of your payments exceed these**, you **must deduct TDS** and therefore, **must apply for TAN**.
---
## ✅ 2. **You received only 2-3 services in the year — is TAN still required?**
If **even one of those payments crosses the threshold**, then:
* **Yes**, you're liable to deduct TDS.
* **Yes**, you must get a **TAN**.
* TDS must be **deposited monthly**, and **quarterly TDS returns filed** (Form 26Q etc.)
💡 TDS liability arises **even with a single payment**, not based on number of services or vendors.
---
## ✅ 3. **Service Tax applicability on freight of ₹9 lakhs (FY 2015-16)?**
Yes, this was before GST (which came in July 2017), so **Service Tax laws apply**.
### 📦 You paid freight (GTA – Goods Transport Agency charges), so reverse charge applies.
| Particular | Applicability |
| ------------------------------------------- | ---------------------------------------------------------------------------------------------- |
| You paid freight to GTA (e.g., transporter) | ✅ Yes, service tax applies under **reverse charge** |
| Service tax threshold for GTA | ❌ Not applicable to you as service receiver |
| Amount paid in year: ₹9 lakh | ✅ Taxable, even if below ₹10 lakh, because receiver pays under reverse charge |
| Rate of Service Tax (FY 2015-16) | **14%** (from June 2015 onwards) on 30% of freight (after abatement), i.e., **4.2% effective** |
So, **yes**, you were liable to:
* **Pay service tax under reverse charge**
* **Register for service tax**, if not already registered
---
## ✅ 4. **Is there a limit (like ₹10 lakh) for TDS or service tax?**
| Tax Type | Applicability Limit | Notes |
| --------------- | ------------------------------------------------------------------------------------------ | ----------------------------------------------------------- |
| **TDS** | **No overall limit**. Based on **payment-wise threshold** (e.g., ₹30,000 for contractors). | Even one large payment triggers TDS liability |
| **Service Tax** | Yes, **₹10 lakh turnover exemption**, but **only for service providers** | Not applicable to you as **recipient under reverse charge** |
---
## 🧾 Summary:
| Question | Answer |
| ------------------------------------------------- | --------------------------------------------------------------------- |
| Is TAN mandatory for proprietorship? | **Yes**, if liable to deduct TDS |
| I paid only 2-3 services — still need TAN? | **Yes**, if any payment crosses threshold |
| Freight paid ₹9 lakh — is service tax applicable? | **Yes**, under **reverse charge**, registration required |
| Is there a threshold like ₹10 lakh for TDS? | **No**, TDS depends on **per transaction/yearly limit**, not turnover |
---
Let me know if you want help applying for TAN online or need a sample TDS challan or return format.
Let me clarify each of your doubts point-by-point:
---
## ✅ 1. **Is TAN mandatory for a proprietorship firm?**
### 🔹 **Yes**, TAN (Tax Deduction Account Number) is mandatory **if you are required to deduct TDS**.
It doesn't matter whether you're a **company, firm, or proprietorship** — if your payments **cross the TDS threshold** and are covered under TDS sections (like 194C, 194H, 194J), you **must deduct TDS** and hence **must obtain a TAN**.
---
## 📌 TDS Deduction Thresholds (FY 2015-16):
| Section | Nature of Payment | Threshold |
| ------- | --------------------------- | -------------------------------------- |
| 194C | Contract/Labour/Freight | ₹30,000 per contract or ₹1,00,000 p.a. |
| 194H | Commission/Brokerage | ₹5,000 (₹15,000 from FY 2016-17) |
| 194J | Professional/Technical Fees | ₹30,000 per year |
👉 If **any of your payments exceed these**, you **must deduct TDS** and therefore, **must apply for TAN**.
---
## ✅ 2. **You received only 2-3 services in the year — is TAN still required?**
If **even one of those payments crosses the threshold**, then:
* **Yes**, you're liable to deduct TDS.
* **Yes**, you must get a **TAN**.
* TDS must be **deposited monthly**, and **quarterly TDS returns filed** (Form 26Q etc.)
💡 TDS liability arises **even with a single payment**, not based on number of services or vendors.
---
## ✅ 3. **Service Tax applicability on freight of ₹9 lakhs (FY 2015-16)?**
Yes, this was before GST (which came in July 2017), so **Service Tax laws apply**.
### 📦 You paid freight (GTA – Goods Transport Agency charges), so reverse charge applies.
| Particular | Applicability |
| ------------------------------------------- | ---------------------------------------------------------------------------------------------- |
| You paid freight to GTA (e.g., transporter) | ✅ Yes, service tax applies under **reverse charge** |
| Service tax threshold for GTA | ❌ Not applicable to you as service receiver |
| Amount paid in year: ₹9 lakh | ✅ Taxable, even if below ₹10 lakh, because receiver pays under reverse charge |
| Rate of Service Tax (FY 2015-16) | **14%** (from June 2015 onwards) on 30% of freight (after abatement), i.e., **4.2% effective** |
So, **yes**, you were liable to:
* **Pay service tax under reverse charge**
* **Register for service tax**, if not already registered
---
## ✅ 4. **Is there a limit (like ₹10 lakh) for TDS or service tax?**
| Tax Type | Applicability Limit | Notes |
| --------------- | ------------------------------------------------------------------------------------------ | ----------------------------------------------------------- |
| **TDS** | **No overall limit**. Based on **payment-wise threshold** (e.g., ₹30,000 for contractors). | Even one large payment triggers TDS liability |
| **Service Tax** | Yes, **₹10 lakh turnover exemption**, but **only for service providers** | Not applicable to you as **recipient under reverse charge** |
---
## 🧾 Summary:
| Question | Answer |
| ------------------------------------------------- | --------------------------------------------------------------------- |
| Is TAN mandatory for proprietorship? | **Yes**, if liable to deduct TDS |
| I paid only 2-3 services — still need TAN? | **Yes**, if any payment crosses threshold |
| Freight paid ₹9 lakh — is service tax applicable? | **Yes**, under **reverse charge**, registration required |
| Is there a threshold like ₹10 lakh for TDS? | **No**, TDS depends on **per transaction/yearly limit**, not turnover |
---
Let me know if you want help applying for TAN online or need a sample TDS challan or return format.
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