Tds on website hosting
Querist : Anonymous
thanks,
anuj goel
No Tax to be withhold on Server and Web hosting Charges under Indo-USA DTAA.
Thanks!!
Querist : Anonymous
Can this service inside under section 194-I. Because we use space on server.
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### Is TDS applicable on website hosting?
**Yes, TDS is applicable** on payments made for website hosting services.
---
### Which Section applies — 194C or 194J or 194I?
* **Section 194J**: This section applies to payments for professional or technical services, including **consultancy, fees for technical services, professional fees**, etc. Website hosting charges generally fall under **technical services** because it involves use of technical infrastructure and services.
* **Section 194C**: Applicable for payments to contractors for works contract and transport services. Not relevant here.
* **Section 194I**: Applicable to rent payments (like rent for land, building, machinery). Website hosting is NOT rent for physical property or machinery.
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### So, **website hosting charges** attract **TDS under Section 194J at 10%** (if the recipient is a resident Indian and not exempted).
---
### What about Indo-USA DTAA and non-residents?
* If the hosting service provider is a **non-resident (e.g., USA based)**, then the **DTAA between India and USA should be checked** to determine the withholding tax rate. Often, under DTAA, the rate may be reduced or zero for certain services.
* Some rulings or interpretations say that **server and web hosting charges are royalty or technical service fees** under DTAA. In that case, TDS may be applicable at the DTAA rate or nil if exempt.
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### Is it covered under Section 194I (rent)?
* No, website hosting is **not treated as rent** for the purpose of Section 194I. Renting space on a physical server might sound like rent, but legally it is treated as a **service**, not rent.
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### Summary:
| Situation | TDS Section | Rate |
| -------------------------------------- | ----------- | --------------------------- |
| Resident Indian service provider | 194J | 10% |
| Non-resident USA provider (check DTAA) | As per DTAA | Could be 0% or reduced rate |
| Not rent, so 194I not applicable | - | - |
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If you want, I can help draft a note or clause to mention in your contracts or invoices related to TDS on hosting charges. Would you like that?
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