Tds rate on annual maintenance contract
This query is : Resolved
07 May 2016
Dear All,
I got many views regarding TDS rate on AMC @ 1% in case of Individual 2% in case of Company.
Our company made AMC contact with XYZ Pvt Ltd. for 2 visits of engineer/erector in a year. Cost of spares not includes in it. What rate should apply in this case, 2% or 10%.
Because the followings are written in Ready Reckoner (Dr. Vinod K. Singhania):
"159.7-6 MAINTENANCE CONTRACTS - Routine, normal maintenance contracts which include supply of spares will be covered under section 194C, However, where technical services are rendered, the provisions of section 194J will apply in regard to tax deduction as source - Circular No. 715, dated August 8, 1995."
I got many views regarding TDS rate on AMC @ 1% in case of Individual 2% in case of Company.
Our company made AMC contact with XYZ Pvt Ltd. for 2 visits of engineer/erector in a year. Cost of spares not includes in it. What rate should apply in this case, 2% or 10%.
Because the followings are written in Ready Reckoner (Dr. Vinod K. Singhania):
"159.7-6 MAINTENANCE CONTRACTS - Routine, normal maintenance contracts which include supply of spares will be covered under section 194C, However, where technical services are rendered, the provisions of section 194J will apply in regard to tax deduction as source - Circular No. 715, dated August 8, 1995."
CA R SEETHARAMAN
(Expert)
07 May 2016
Here no material involved and only technical services rendered TDS at 10% applicable u/s 194J.
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07 May 2016
Hi Sanjeev
In case you are taking any service which is covered under explanation II to section 9(1)(vii), which mainly covered legal, professional & technical services, then you are liable to deduct tax under section 194J @ 10%. However, in case it is not covered then Tax will be deducted under section 194C @ 1/2% depending upon the case. Also under 194C, if the invoice contains material and labor charges separately then tax will be deducted on labor value only otherwise tax will be deducted on the whole invoice value.
Thanks
In case you are taking any service which is covered under explanation II to section 9(1)(vii), which mainly covered legal, professional & technical services, then you are liable to deduct tax under section 194J @ 10%. However, in case it is not covered then Tax will be deducted under section 194C @ 1/2% depending upon the case. Also under 194C, if the invoice contains material and labor charges separately then tax will be deducted on labor value only otherwise tax will be deducted on the whole invoice value.
Thanks
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