TDS on Internet leased Line

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Ami (Querist)
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10 July 2009 Hi,
Can somebody tell me what is the TDS rate applicable on Internet Leased Line & Why ?

Thanks & Regards
Ami

taxindiaconnect

taxindiaconnect (Expert)
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10 July 2009

CA Kartik Pandya

CA Kartik Pandya (Expert)
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10 July 2009 Dear Ami,
tds is not required on internet & telephone bill as there are no any provison in the income tax for deduction of tax. Moreover Sec 194 J Fees for Professional or Technical Services or Royalty or Non Compete Fee

a. Any person paying

1. Fes for Professional services

"Professional Services" means Services rendred by a person in ocurse of carrying on legal, engineering, or architectural profession or th profesion of accountancy or technical consultancy or interior decoration or advertising or information technology or other such profesion as is notified by board for purposes of sec.44AA or of this section.

Internet Doesnt Fall under the Information Technology or Technical Consultancy as it inculdes only softwares and Training Etc..

It also wont come under 194C as there is no specific Contract..

There is no Need to Deduct TDS for Interent under Any Sec. It has also been held in the case of Skycell Communications Ltd. v. Deputy CIT[2001] 251 ITR 53 (Mad.).

Feel free to get more clarification on 9924195661.

Ami

Ami (Querist)
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10 July 2009 Hi Thanks for the reply But Tata Tele sevises told us that since you are not on the TDS list they have of customer we have to deduct TDS @ 2.26% on Contract & our CA says it is a rent on Leased Line so it should be 11.33% what to do ?

CA Kartik Pandya

CA Kartik Pandya (Expert)
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10 July 2009 There is strong logic behind deduction of TDS. We need to understand the difference between allowance and re-imbursement. If it is an allowance ie to say that the contractor/vendor's margin is included it shall be subject to TDS u/s 194C. If it is in the nature of pure re-imbursement ie. payment on the basis of actuals then no TDS shall be deducted.

Ami

Ami (Querist)
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13 July 2009 Hi Mr. Kartik,

The service provider here is Tata Tele services Maharashtar LTD - providing Leased Line to a customer so think the way a person is using a telephone line Should it be considered as Re-imburesement or allowance. I think allowance is that right?