TDS on Broadband Leased line Internet Service

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CA Jigisha (Querist)
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12 July 2011 Hello All,

Do the Broadband Leased line Internet service attract TDS?? under which section? 194C, 194I or 194J? It is clear from the case of Skycell that 194J is not attracted but whether 194C or 194I is also not attracted??? The assessee in question is not the end user to use the internet service but the company is the mediator. The company purchases Lease line for 45 MBPS internet from a company who purchases lease line from Reliance. The assessee company again sells the Internet services to end user customers.

Please note that the company doesn't use internet for its own business but it sells it forward. Which section is attracted?

CS Bijoy

CS Bijoy (Expert)
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13 July 2011 TDS is not deductible on services using technology -- telephone charges, Internet charges, cable TV, leased lines. Payments for use of standard facilities by the public at large in which some form of technical service is inherent are not covered under section 194J. It has also been held in the case of Skycell Communications Ltd. v. Deputy CIT[2001] 251 ITR 53 (Mad.).

Other payments outside the purview of TDS are
(a) Statutory payments -- fees, cess, taxes,
(b) Clearing house charges, stock exchange charges, demat charges,
(c) Subscription to databases.

CS Bijoy

CS Bijoy (Expert)
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