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TDS ON SPONSORSHIP OAUMENT TO TRUST

GURTEJ SINGH (13 Points)

10 September 2019

Whether tds applicanle on sponsorship payment ? If yes which section and rate of TDS?

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3 Replies

Abhishek Agarwal (64 Points)
Replied 10 September 2019

194C and 2% if paid to firm/company else 1%

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Deepak Gupta (CA Student) (15922 Points)
Replied 10 September 2019

The agreement of sponsorship is, in essence, an agreement for carrying out a work of advertisement. Therefore, provisions of section 194C shall apply.

Circular : No. 5/2002, dated 30-7-2002.

TDS @ 1% where payee is individual/HUF and 2% for other payees

No TDS where single contract < 30,000

TDS deductible where single payment < 30,000 but FY aggregate > 1,00,000

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Suresh Thiyagarajan (Student) (3986 Points)
Replied 11 September 2019

1. As explained by expert above TDS u/s 194C @ 2% or 1% depending upon the nature of the payee.
2. The only other way that it could be categorized is TDS u/s 194J which is for profession and sponsorship services cannot be considered as a profession, unlike advertisement services.
3. Circular: No. 715, dated 08-08-1995 supports this view.
4. TDS u/s 194C is to be deducted @ 2% in case of the corporate payee or else 1% on the amount paid to the sponsorship agency.
Please correct me if the above solution has an alternative view.