Tds on manpower agency bill

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Samir Mehta (Querist)
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08 May 2019 I am in a State Government office. We have hired two manpower agencies to provide outsourced manpower. We deduct 2% TDS on their invoice for service charge under section 194-C. The Pay and accounts office of our state doesn't understand and insists on deducting 10% TDS under section 194-J giving a reason that it is a contract for providing Professional services and is covered under section 194-J.
Please guide what can be done in this regard ? The service charge of the agency is only 1.4% of CTC of an employee and when 10% is deducted, it is cut from the salary of an employee which should not be the case. Please guide.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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08 May 2019 Only 2% TDS applicable under section 194c. TDS of 10% applicable in case of professional engaged directly not through agencies.

KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)
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08 May 2019 Deduct TDS on entire bill exclude GST of agency, if manpower is of professional or Technical outsource deduct TDS @ 10% otherwise 2%

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