TDS on Installation chgs for Supply of PCs

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Sumeet Bucha

Sumeet Bucha (Querist)
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31 March 2011 Is TDS on Installation chgs for Supply of PCs with separate contracts applicable

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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31 March 2011 Yes TDS to be deducted u/s 194C on Crossing threshold limit.

Rate:
Ind /HUF @ 1%
Others @ 2%
No PAN 20%.

Limit:
Single Bill 30000/-
Annual Payment 75000/- p.a.

CS ,CMA Shambhu Kr. jha

CS ,CMA Shambhu Kr. jha (Expert)
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31 March 2011 agreed with the expert

CA.ViVeK M ACA

CA.ViVeK M ACA (Expert)
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31 March 2011 TDS is required to be deducted. The relevent section shall be 194 C. Contract and the tem work is wide enough to cover the above transactions.

Rate

There are two rates specified.

Ind /HUF @ 1%
Others @ 2%

However, it is subject to Threshold Limit.

Threshold limit

One time payment 30,000/-
Aggregate payment in an year 75,000/-

Sumeet Bucha

Sumeet Bucha (Querist)
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04 April 2011 Thank you everyone for your valuable insights on the subject.

But it would be very kind if you could clarify further on the following:

1. What if Installation is being integral to the supply made though the contracts are made separate.

2. What if the supply is for Software available in the market (not custonised).

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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27 July 2025 Great question! Let me clarify the TDS applicability on **installation charges for supply of PCs**, especially when the contract is separate, and also on **software supply**:

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### 1. **Installation charges for PCs (Separate contract)**

* **TDS is applicable under Section 194C** (Contract payments), provided threshold limits are crossed.

* **Why Section 194C?** Because installation is a *service* involving work, i.e., "work contract" in a broad sense, even if the contract is separate.

* **Rates and Thresholds:**

* **Individual/HUF**: 1%
* **Others**: 2%
* **Thresholds**: Rs. 30,000 per single payment or Rs. 75,000 aggregate per year.

* **If installation charges are billed separately from the supply of PCs**, TDS applies only on the installation charges, not on the PC cost.

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### 2. **What if installation is integral to the supply (even if contract separate)?**

* If installation **cannot be separately identified** or is part of the overall *goods supply*, then TDS on installation might **not apply separately**.

* But since contracts are separate here, the **installation service can be treated independently**, so TDS should apply on installation charges.

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### 3. **Supply of software available in market (not customized)**

* Supply of **off-the-shelf software** is generally treated as *sale of goods* (not services).

* **No TDS under 194C** on such software purchase.

* However, if there are separate charges for *installation* or *customization* of software, then:

* TDS under **Section 194J (Professional fees)** or **Section 194C (work contract)** may apply on those separate service components.

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### Summary Table:

| Service/Transaction | Section | TDS Rate | Threshold | Applicability |
| ---------------------------------------------- | --------- | ------------------------- | ---------------------------- | --------------------------------------------- |
| Installation charges (separate contract) | 194C | 1%/2% | Rs. 30k single/Rs.75k yearly | Yes, TDS applies on installation charges only |
| Installation integral to supply (not separate) | NA | NA | NA | No separate TDS on installation |
| Off-the-shelf software purchase | NA | NA | NA | No TDS on software purchase |
| Separate software installation/customization | 194J/194C | 10% (194J) or 1-2% (194C) | Threshold limits apply | TDS applies on service component |

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**Hope this clarifies your doubts!** If you want, I can help you draft the relevant TDS entries or circular references.

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