Tds Applicability

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Soumya (Querist)
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28 December 2010 Is tds required to be deducted on bulk sms service...

Eg: Sending of new yr greeting message for clients...

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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14 January 2011 No. TDS not applicable

Soumya

Soumya (Querist)
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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..

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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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**?

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## ✅ 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.

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## 🔍 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**.

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## 🧾 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.)

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## 📌 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.

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## ❌ 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.

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## ✅ 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 |

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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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