Tds on franchise fee

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Aishwarya (Querist)
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11 September 2017 Hi All,

My client is a franchisee and pays a fixed percentage on turnover each month to the franchisor which he considers as royalty paid, and another single payment of a lumpsum amount is made to the franchisor which he booked it as Franchise fee, I am clear that royalty paid is subject to TDS u/s 194J, but I am not sure whether franchise fee is subject to TDS pleae help

Thank you
Regards
Aishwarya

CA Deepak Pardeshi

CA Deepak Pardeshi (Expert)
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18 June 2018 Fees for professional or technical services.68
194J. (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of—
(a) fees for professional services, or
(b) fees for technical services, or
(ba) any remuneration or fees or commission by whatever name called, other than those on which tax is deductible under section 192, to a director of a company, or
(c) royalty, or
(d) any sum referred to in clause (va) of section 28,

And section 28 covers Franchise fees

Non-Compete Fees as per section 194J is the amount that is received by a person that binds him from sharing any License, Franchise, Patent, Trademark, Know-how or any Business or Commercial rights, Information or Techniques that may be used elsewhere for manufacturing or Processing
check section 28

CA Deepak Pardeshi

CA Deepak Pardeshi (Expert)
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