TDS on freelance services.

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This discussion clarifies the applicability of Tax Deducted at Source (TDS) on payments made to freelancers. The nature of the freelance service is crucial in determining the correct TDS section, with Section 194J often cited for professional fees, technical services, or royalty payments exceeding £30,000 annually. However, if the service is primarily advertising or commission-based, Sections 194C or 194H might apply respectively. It's essential to ascertain the exact nature of the work performed by the freelancer to ensure correct TDS deduction.

ASHISH SINGH ADHIKARI

ASHISH SINGH ADHIKARI (Querist)

03 May 2020 Dear Sir,
We are paying 200 000 in a year to a freelancer for business promotion,
Will there TDS applicable and under which section,
Should we take as technical service or as contractor which will better?

RAJA P M

RAJA P M (Expert)

04 May 2020 What service you received...?

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

05 May 2020 Section 194J Of Income Tax Act, 1961-
According to Section 194J of Income Tax Act of 1961, an individual ought to deduct TDS at the rate of 10% when the following payment is made to an occupant, in a financial year (higher than Rs.30,000):

Amount charged as professional services fee or
Non-compete fee according to the Income Tax Act of Section 28(VA) or
Amount charged as technical service fee or
Royalty.

RAJA P M

RAJA P M (Expert)

05 May 2020 Without knowing the job, works or service how to You define it's u/s 194J...? Better to get back details from Querist after give solutions. It's better for understanding the query...

KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)

05 May 2020 Freelance if it is relates technical , royalty need to be deduct tds u/s 194j
Where it's mere related advertising services than you can deduct 194c if it is commission for promoting businesses than tds applicable u/s 194 H

But nature of freelance services is important to consider applicable tds percentage.

RAJA P M

RAJA P M (Expert)

05 May 2020 Very well reply by Mr KAVIRAJA ADDANGADI Sir...

Nature of Freelance Work is important for deducting TDS. It will be rectify by Querist only.

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