Tds on professional service

This query is : Resolved

Harikrishnan (Querist)
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17 March 2012 Presently our company is availing the service of some Animation Specialists on a contract basis. These guys are professionally qualified and are already working as premanant employees in another company. My query is

1. Under which category they will come for the purpose of TDS? (Whether they come under professional service or contractors or contract employees)

2. If they come under contract employees whether we have to follow the same procedure that we follow for calculating tds of regular employees?

Pankaj Gandhi Jaiswal

Pankaj Gandhi Jaiswal (Expert)
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17 March 2012 For employee there must be a relationship of employee and employer.So TDS on salary is not applicable. Though he has a contract for services, the rule of substance over form will be applicable and TDS u/s 194J i.e. professional services will be applicable. Generally people think that if we have contract then 194C is applicable, one thing need to be cleared that everything may have an agreement of contract but the nature may fall rent agreement contract, professional service contract or works contract so each contract agreement will not come under perview of 194C

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Harikrishnan

Harikrishnan (Querist)
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17 March 2012 Thank you for your valuable advice sir

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