Tds as Contractor or professional services ???

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CMA. Subhash Kumar Jha (Querist)

16 January 2009 Sir,

We are a IT company. We are having a contracts with a prop. concern for creative designing to be further used for our software products.

Now they are serving us under a proper contract.

While making payment to them should we deduct TDS under 194C or 194J ??

Pl reply soon.

Subhash Jha

Ram Avtar Singh

Ram Avtar Singh (Expert)

16 January 2009 Since the Creative Designing is a result of Special or technical Knowledge hence as per the Provisions of Sec 194J of the Income Tax Act 1961, the TDS is to be deducted @ 10% plus applicable Cess,

Also providing the professional or Technical Services which requires special Knowledge, the creative Designing in the above case, are covered under the provisions of above section referred.

Further if a contract is made for providing the Professional services, the TDS have to be deducted u/s 194J and not u/s 194C. A contract between parties concerned is not a ample proof that the payment is towards the contractor

Feel free to ask for any further queries if any

Thanks & Regards

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