Tds Applicability
This query is : Resolved
28 December 2010
Is tds required to be deducted on bulk sms service...
Eg: Sending of new yr greeting message for clients...
Eg: Sending of new yr greeting message for clients...
14 January 2011
No. TDS not applicable
20 January 2011
Is it not applicable even if the company contracted for the same service??
Do u think tds is applicable as is applicable to contractors in the above case????
Do reply ASAP..
Do u think tds is applicable as is applicable to contractors in the above case????
Do reply ASAP..
27 July 2025
This is a good and often misunderstood question: **Is TDS applicable on payments made for bulk SMS services**, like sending **New Year greetings to clients**, especially **if there is a contract with the service provider**?
---
## ✅ Short Answer:
**Yes, TDS may be applicable under Section 194C** if there is a **contract** with the service provider for sending bulk SMS on your behalf.
---
## 🔍 Detailed Explanation:
### 📘 **Section 194C – TDS on Contracts**
> TDS under Section 194C applies when **any person** pays any sum to a **contractor** for **carrying out any work**, including advertising, broadcasting, carriage of goods or people, etc.
The term “work” under Section 194C includes:
* Advertising (explicitly mentioned)
* Customised services where a contract exists
### 💬 **Bulk SMS services** (like marketing campaigns, festival greetings, etc.):
* If **you engage a vendor** under a **contract** (written or oral) to send messages on your behalf, it's a **contractual service**, not a sale of goods or simple tech access.
* The service provider is carrying out **work** for you — sending messages with your content to your clients.
* So, **TDS under Section 194C applies**.
---
## 🧾 Thresholds & Rates (As per FY 2010-11):
* TDS applicable **if single payment > ₹30,000** or **aggregate annual payments > ₹1,00,000**
* TDS rate:
* **1%** – If recipient is Individual/HUF
* **2%** – For others (Firm, Company, etc.)
---
## 📌 Example:
* You contract with "XYZ Bulk SMS Pvt. Ltd." to send 10,000 promotional or greeting messages for ₹50,000.
* The work is **customized**, and the messages are **on your behalf**.
* **TDS under Section 194C applies**, and **2% (₹1,000)** must be deducted if XYZ is a company.
---
## ❌ When TDS is *not* applicable:
* If you're simply **buying SMS credits** through a self-service platform (like buying server time or using a portal), **and no service is rendered on your behalf**, it may be treated as **purchase of service over platform**, not contractual work — **TDS may not apply** in such fully automated cases.
---
## ✅ Final Conclusion:
| Situation | TDS Applicability | Section |
| ----------------------------------------------------------------------------------------- | ----------------- | -------- |
| Sending bulk SMS via a **contracted vendor** with content and client list provided by you | **Yes** | **194C** |
| Buying SMS credits via self-service online platform without human support | Possibly **No** | N/A |
---
Let me know if you're dealing with an invoice or want to draft the correct journal entries in Tally for TDS on such services.
---
## ✅ Short Answer:
**Yes, TDS may be applicable under Section 194C** if there is a **contract** with the service provider for sending bulk SMS on your behalf.
---
## 🔍 Detailed Explanation:
### 📘 **Section 194C – TDS on Contracts**
> TDS under Section 194C applies when **any person** pays any sum to a **contractor** for **carrying out any work**, including advertising, broadcasting, carriage of goods or people, etc.
The term “work” under Section 194C includes:
* Advertising (explicitly mentioned)
* Customised services where a contract exists
### 💬 **Bulk SMS services** (like marketing campaigns, festival greetings, etc.):
* If **you engage a vendor** under a **contract** (written or oral) to send messages on your behalf, it's a **contractual service**, not a sale of goods or simple tech access.
* The service provider is carrying out **work** for you — sending messages with your content to your clients.
* So, **TDS under Section 194C applies**.
---
## 🧾 Thresholds & Rates (As per FY 2010-11):
* TDS applicable **if single payment > ₹30,000** or **aggregate annual payments > ₹1,00,000**
* TDS rate:
* **1%** – If recipient is Individual/HUF
* **2%** – For others (Firm, Company, etc.)
---
## 📌 Example:
* You contract with "XYZ Bulk SMS Pvt. Ltd." to send 10,000 promotional or greeting messages for ₹50,000.
* The work is **customized**, and the messages are **on your behalf**.
* **TDS under Section 194C applies**, and **2% (₹1,000)** must be deducted if XYZ is a company.
---
## ❌ When TDS is *not* applicable:
* If you're simply **buying SMS credits** through a self-service platform (like buying server time or using a portal), **and no service is rendered on your behalf**, it may be treated as **purchase of service over platform**, not contractual work — **TDS may not apply** in such fully automated cases.
---
## ✅ Final Conclusion:
| Situation | TDS Applicability | Section |
| ----------------------------------------------------------------------------------------- | ----------------- | -------- |
| Sending bulk SMS via a **contracted vendor** with content and client list provided by you | **Yes** | **194C** |
| Buying SMS credits via self-service online platform without human support | Possibly **No** | N/A |
---
Let me know if you're dealing with an invoice or want to draft the correct journal entries in Tally for TDS on such services.
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