TDS on Job Work Done

This query is : Resolved

Pramila Bargode (Querist)
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11 August 2010 Hi All,

Our company is in IT Services, we have develop one software. On this software data entry work done by another party. They generate the invoice on work done basis like, no. of entry x their rate. We don't have any work contract with them.

This is come under Contractor or Professional Fees???

We have TDS deducted u/s 94J @10%, is this right or Wrong??

Pls. reply soon

Thanks & Regards
Pramila Bargode
Sr. Accounts Executive

CMA. Subhash Kumar Jha

CMA. Subhash Kumar Jha (Expert)
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11 August 2010 Right..

Professional Fees under section 194 J.

Pramila Bargode

Pramila Bargode (Querist)
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11 August 2010 thank u very much...........

CA. Pradeep Nayak

CA. Pradeep Nayak (Expert)
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11 August 2010 The bill charged is for data entry service on piece-rate basis. Hence TDS u/s 194C is applicable - 2% or 1%, as the case may be.

CMA. Subhash Kumar Jha

CMA. Subhash Kumar Jha (Expert)
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11 August 2010 A plain data entry like letters etc can be understood as a non-technical job, but in my view, catering service to an IT services firm & that too in a software application , leads to professional / technical service & hence the safer would be to deduct under section 194 J.

Method of charging in the bill is immaterial in this case, the basic thing is nature of job, which in my opinion is professional / technical service.

CA. Pradeep Nayak

CA. Pradeep Nayak (Expert)
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12 August 2010 Software is delevoped by the IT firm. The data entry firm does only the data entry part. They are not writing any codes or further developing the software.

It appears as the nature of work is plain data entry & nothing technical about it.

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