What rate to be deducted 2.06% or 10.3%

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This query is : Resolved

P A RUPESH RAMNATH (Querist)

18 June 2008 My client has outsourced the collection work & pay a commission of 5% on the collection amount. We are going to deduct @10.3%. But they are asking us to deduct @ 2.06% contending it has a contract payment. Whether they are justified or not.

CA. PRASAD

CA. PRASAD (Expert)

18 June 2008 if you are paying the remuneration as "Commission", you have to deduct the the TDS @ 10.30 % only.

P A RUPESH RAMNATH

P A RUPESH RAMNATH (Querist)

18 June 2008 If we treat it has a collection charges rather than commission what is the position of law. Whether we can deduct @ 2.06%

DHANANJAY R

DHANANJAY R (Expert)

18 June 2008 Kindly note that, changing mere accounting head does not change the nature of expenditure if your client is able to prove that it is a commision and not collection charges in that case 10.30%under 194H is appropriate moreover to the best of my knowlewdge even if we say collection charges then that will also fall under Professional services. so the TDS will be again 10.30% under section 194J.

The Board has clarified that each section, regarding TDS under Chapter XVII, deals with a particular kind of payment to the exclusion of all other sections in this Chapter. Thus, payment of any sum shall be liable for deduction of tax only under one section. Therefore, a payment is liable for tax deduction only under one section—Circular : No. 720, dated 30-8-1995.

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