TDS Query
This query is : Resolved
08 November 2016
Sir,
I have 2 questions
1. Our consultant is raising an Invoice of Rs. 27,000 plus ST @ 15% = 31,050. Here if TDS is applicable than it would be deducted on 27000 @ 10% = 2700.
my question is, TDS is deductible or not ? (cut off limit u/s 194J is 30,000).
2. we have credited and paid Rs. 74,000 to contractor (form) u/s 194c without any TDS deduction during April-Feb of F.Y. in march we credited contractor account with Rs. 1,000.
It totals to 75,000.
so we have to deduct tds @ 2% on firm
75,000 @ 2% = 1,500
what to do in this type of situation ?
08 November 2016
1 Here the amount payable exceeded the thresh hold so TDS applicable.
2 Here the payment not exceeded the threshold so no TDS applicable.
2 Here the payment not exceeded the threshold so no TDS applicable.
30 November 2016
For Q-1 I have discussed with 2 chartered accountants and both of them are saying that we have to compare threshold limit with Invoice amount (excl. Serv. Tax) and therefore TDS is not deductible.
28 July 2025
Great questions! Let me clarify both points with respect to TDS provisions:
### 1. TDS applicability on consultant invoice under Section 194J (Professional Fees):
* The threshold limit for deduction of TDS under Section 194J is **Rs. 30,000 in a financial year** (excluding service tax).
* Since your invoice is Rs. 27,000 plus service tax Rs. 4,050 (15%), total Rs. 31,050.
* **TDS should be deducted only if the amount payable (excluding service tax) exceeds Rs. 30,000.**
* Here, since Rs. 27,000 < Rs. 30,000, **no TDS deduction is required on this invoice.**
**So the chartered accountants are correct:** the service tax is excluded when calculating the threshold.
---
### 2. TDS under Section 194C on payments to contractor (firm):
* Threshold for TDS deduction on payments to contractors is Rs. 30,000 per contract (or Rs. 1,00,000 in case of others like individuals).
* You made payments of Rs. 74,000 + Rs. 1,000 = Rs. 75,000 during the financial year.
* Since the **total payments exceeded Rs. 30,000**, TDS is applicable on the entire amount of Rs. 75,000.
* TDS rate under section 194C is 2% for payments to a firm.
* Since you did not deduct TDS earlier, you should deduct TDS on the outstanding amount payable now (Rs. 1,000), and file a TDS return accordingly.
* Additionally, you should deposit the TDS and explain the late deduction (if any) in the return.
---
**Summary:**
| Situation | Threshold | Is TDS applicable? | Remarks |
| -------------------------- | ---------- | -------------------- | -------------------------------------- |
| Consultant invoice (194J) | Rs. 30,000 | No (Invoice Rs. 27k) | Threshold based on amount excluding ST |
| Contractor payments (194C) | Rs. 30,000 | Yes (Total Rs. 75k) | Deduct TDS on entire amount in March |
---
If you want, I can help you draft the TDS return and advise on how to handle the late TDS deduction for the contractor payment. Would that be helpful?
### 1. TDS applicability on consultant invoice under Section 194J (Professional Fees):
* The threshold limit for deduction of TDS under Section 194J is **Rs. 30,000 in a financial year** (excluding service tax).
* Since your invoice is Rs. 27,000 plus service tax Rs. 4,050 (15%), total Rs. 31,050.
* **TDS should be deducted only if the amount payable (excluding service tax) exceeds Rs. 30,000.**
* Here, since Rs. 27,000 < Rs. 30,000, **no TDS deduction is required on this invoice.**
**So the chartered accountants are correct:** the service tax is excluded when calculating the threshold.
---
### 2. TDS under Section 194C on payments to contractor (firm):
* Threshold for TDS deduction on payments to contractors is Rs. 30,000 per contract (or Rs. 1,00,000 in case of others like individuals).
* You made payments of Rs. 74,000 + Rs. 1,000 = Rs. 75,000 during the financial year.
* Since the **total payments exceeded Rs. 30,000**, TDS is applicable on the entire amount of Rs. 75,000.
* TDS rate under section 194C is 2% for payments to a firm.
* Since you did not deduct TDS earlier, you should deduct TDS on the outstanding amount payable now (Rs. 1,000), and file a TDS return accordingly.
* Additionally, you should deposit the TDS and explain the late deduction (if any) in the return.
---
**Summary:**
| Situation | Threshold | Is TDS applicable? | Remarks |
| -------------------------- | ---------- | -------------------- | -------------------------------------- |
| Consultant invoice (194J) | Rs. 30,000 | No (Invoice Rs. 27k) | Threshold based on amount excluding ST |
| Contractor payments (194C) | Rs. 30,000 | Yes (Total Rs. 75k) | Deduct TDS on entire amount in March |
---
If you want, I can help you draft the TDS return and advise on how to handle the late TDS deduction for the contractor payment. Would that be helpful?
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