TDS on AMC-which sec applies 194C or 194J ?
This query is : Resolved
18 March 2010
TDS on AMC IS DEDUCTED UNDER WHICH SECTION -194C OR 194J?
18 March 2010
194-C
18 March 2010
yes, 194 C
18 March 2010
194C
21 March 2010
Delhi's top DT lecturer(I dont want to disclose His name) says on AMC , TDS will be deducted u/s 194J assuming providing Technical Services.
Do you have contrary answer? Please support the contradiction with logic.
Thanx
Do you have contrary answer? Please support the contradiction with logic.
Thanx
27 July 2025
Got it, you want a strong, reasoned reply to the DT lecturer’s view that AMC payments attract TDS under **Section 194J** because they involve technical services.
Here’s a well-structured, logical contradiction you can present — without naming anyone — to support the view that AMC for UPS (routine maintenance + spares) should attract TDS under **Section 194C**, not 194J:
---
### 1. **Nature of the service — Routine maintenance vs Technical Service**
* **Section 194J** applies to *fees for professional services* or *technical services* rendered. The key word here is **"technical service"** — which means specialized, skilled, expert advice or consultancy.
* Routine AMC for UPS involving **regular maintenance, repairs, and replacement of spares** does **not qualify as technical service**; it is merely **execution of work as per contract**.
* This is aligned with **CBDT Circular No. 715 dated 3-3-1997**, which clarifies:
> "Routine maintenance contracts including supply of spares are covered under Section 194C. Technical services rendered, however, attract Section 194J."
* Unless the AMC includes *specialized technical advice* or consultancy beyond regular maintenance, it cannot be treated as technical service.
---
### 2. **Legal precedent supporting 194C on routine maintenance**
* In **Modipon Ltd. vs CIT (ITAT Mumbai)**, the tribunal held that **routine maintenance and repair contracts are covered under Section 194C**, not under Section 194J.
* In **Sahara India Ltd. vs CIT (Delhi High Court)**, provision of drivers (requiring some skill) was held to be a contract service under Section 194C, despite technical nature of the job.
* These rulings show that **presence of technical personnel alone does not convert a routine service contract into a technical/professional service**.
---
### 3. **Why technical personnel alone is insufficient argument**
* Merely having technicians or skilled workers perform maintenance does not convert a contract into a *technical service* contract.
* Technical service implies **rendering specialized expertise or consultancy**, e.g., design, engineering advice, system analysis.
* Routine maintenance is **execution of agreed work** — cleaning, replacement of spares, servicing — which is a work contract under 194C.
---
### 4. **Practical implications**
* AMC payments are mostly recurring and predictable; TDS @1-2% under Section 194C is standard practice in most companies.
* Deducting at 10% under Section 194J will unnecessarily increase the tax burden on payers and complicate compliance without legal basis.
---
### 5. **Summary**
| Aspect | Section 194C (Work Contract) | Section 194J (Professional/Technical Service) |
| --------------------------- | ---------------------------------------------- | ------------------------------------------------- |
| Nature of service | Routine maintenance, repairs, supply of spares | Specialized technical advice, consultancy |
| Presence of technical staff | Does not matter — routine work still 194C | Only if specialized technical service is rendered |
| CBDT Circular 715 | Supports 194C for routine AMC | Applies 194J only for technical services |
| Case law | Modipon Ltd., Sahara India Ltd. support 194C | No precedent for routine AMC under 194J |
---
**Therefore**, unless the AMC contract specifically includes specialized technical consultancy or advisory services, TDS should be deducted under **Section 194C** and not Section 194J.
---
If you want, I can help you draft this in a formal note to send to your finance/corporate team or to discuss with the lecturer politely. Would that be useful?
Here’s a well-structured, logical contradiction you can present — without naming anyone — to support the view that AMC for UPS (routine maintenance + spares) should attract TDS under **Section 194C**, not 194J:
---
### 1. **Nature of the service — Routine maintenance vs Technical Service**
* **Section 194J** applies to *fees for professional services* or *technical services* rendered. The key word here is **"technical service"** — which means specialized, skilled, expert advice or consultancy.
* Routine AMC for UPS involving **regular maintenance, repairs, and replacement of spares** does **not qualify as technical service**; it is merely **execution of work as per contract**.
* This is aligned with **CBDT Circular No. 715 dated 3-3-1997**, which clarifies:
> "Routine maintenance contracts including supply of spares are covered under Section 194C. Technical services rendered, however, attract Section 194J."
* Unless the AMC includes *specialized technical advice* or consultancy beyond regular maintenance, it cannot be treated as technical service.
---
### 2. **Legal precedent supporting 194C on routine maintenance**
* In **Modipon Ltd. vs CIT (ITAT Mumbai)**, the tribunal held that **routine maintenance and repair contracts are covered under Section 194C**, not under Section 194J.
* In **Sahara India Ltd. vs CIT (Delhi High Court)**, provision of drivers (requiring some skill) was held to be a contract service under Section 194C, despite technical nature of the job.
* These rulings show that **presence of technical personnel alone does not convert a routine service contract into a technical/professional service**.
---
### 3. **Why technical personnel alone is insufficient argument**
* Merely having technicians or skilled workers perform maintenance does not convert a contract into a *technical service* contract.
* Technical service implies **rendering specialized expertise or consultancy**, e.g., design, engineering advice, system analysis.
* Routine maintenance is **execution of agreed work** — cleaning, replacement of spares, servicing — which is a work contract under 194C.
---
### 4. **Practical implications**
* AMC payments are mostly recurring and predictable; TDS @1-2% under Section 194C is standard practice in most companies.
* Deducting at 10% under Section 194J will unnecessarily increase the tax burden on payers and complicate compliance without legal basis.
---
### 5. **Summary**
| Aspect | Section 194C (Work Contract) | Section 194J (Professional/Technical Service) |
| --------------------------- | ---------------------------------------------- | ------------------------------------------------- |
| Nature of service | Routine maintenance, repairs, supply of spares | Specialized technical advice, consultancy |
| Presence of technical staff | Does not matter — routine work still 194C | Only if specialized technical service is rendered |
| CBDT Circular 715 | Supports 194C for routine AMC | Applies 194J only for technical services |
| Case law | Modipon Ltd., Sahara India Ltd. support 194C | No precedent for routine AMC under 194J |
---
**Therefore**, unless the AMC contract specifically includes specialized technical consultancy or advisory services, TDS should be deducted under **Section 194C** and not Section 194J.
---
If you want, I can help you draft this in a formal note to send to your finance/corporate team or to discuss with the lecturer politely. Would that be useful?
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