TDS on forex rate services
This query is : Resolved
24 September 2010
We are using forex services of one of our party Mecklai Financial Services for various purpose whether tds is applicable on this or not
24 September 2010
If you are simply purchasing the forex, there is no TDS.
24 September 2010
Application of TDS is depens upon the nature of the transaction.Mere purchse and sales of forex will not attract TDS.
13 October 2010
to be specific party provides us various including export data of, updates of forex rates on daily basis, buyers creditibility status etc
27 July 2025
Thanks for the clarification — your situation involves more than just buying/selling forex. You're receiving **value-added advisory/consulting-type services** (like forex rate updates, export data, buyer credibility reports) from **Mecklai Financial Services**, not just executing foreign exchange transactions.
---
### ✅ So, is **TDS applicable** in your case?
Yes — **TDS is likely applicable**, and **the applicable section is Section 194J**, as the services appear to be **technical or professional in nature**.
---
### 📌 Here's how the logic works:
| Component | Nature | TDS Section | Rate |
| ------------------------------- | -------------------------------- | ----------- | ---- |
| Forex rate updates, export data | Technical/advisory service | 194J | 10% |
| Buyers’ credit reports | Professional/consultancy service | 194J | 10% |
| Mere forex buying/selling | Sale/purchase of goods | No TDS | N/A |
> TDS under **Section 194J** applies to fees for professional or technical services, including consultancy and advisory services.
---
### ⚠️ Important Notes:
* No threshold limit for TDS under 194J once total payments exceed **₹30,000 in a financial year** to the same party.
* **Invoice bifurcation**: If the invoice includes both exempt forex transactions and taxable advisory services, TDS should be deducted **only on the advisory portion** (if separately identifiable).
* If **no bifurcation**, safer to deduct TDS on the **entire amount**.
---
### ✅ What should you do?
1. **Review agreement/invoices** with Mecklai to identify the nature of services billed.
2. Deduct **TDS at 10% under Section 194J** if professional/advisory services are involved.
3. File the TDS return in the applicable quarter and issue **Form 16A**.
---
Let me know if you'd like help drafting a TDS deduction note or email to Mecklai!
---
### ✅ So, is **TDS applicable** in your case?
Yes — **TDS is likely applicable**, and **the applicable section is Section 194J**, as the services appear to be **technical or professional in nature**.
---
### 📌 Here's how the logic works:
| Component | Nature | TDS Section | Rate |
| ------------------------------- | -------------------------------- | ----------- | ---- |
| Forex rate updates, export data | Technical/advisory service | 194J | 10% |
| Buyers’ credit reports | Professional/consultancy service | 194J | 10% |
| Mere forex buying/selling | Sale/purchase of goods | No TDS | N/A |
> TDS under **Section 194J** applies to fees for professional or technical services, including consultancy and advisory services.
---
### ⚠️ Important Notes:
* No threshold limit for TDS under 194J once total payments exceed **₹30,000 in a financial year** to the same party.
* **Invoice bifurcation**: If the invoice includes both exempt forex transactions and taxable advisory services, TDS should be deducted **only on the advisory portion** (if separately identifiable).
* If **no bifurcation**, safer to deduct TDS on the **entire amount**.
---
### ✅ What should you do?
1. **Review agreement/invoices** with Mecklai to identify the nature of services billed.
2. Deduct **TDS at 10% under Section 194J** if professional/advisory services are involved.
3. File the TDS return in the applicable quarter and issue **Form 16A**.
---
Let me know if you'd like help drafting a TDS deduction note or email to Mecklai!
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