Section 194C prescribes a tax rate of 2% for payment to persons other than Individual and HUF and 1% for payment to Individual or HUF, whereas Section 194J prescribes a tax rate of 10%
Generally you will apply TDS u/s 194C for advertising. The provisions of section 194C shall apply to all types of contracts for carrying out any work including transport contracts, service contracts, advertisement contracts, broadcasting contracts, telecasting contracts, labour contracts, materials contracts and works contracts. The provisions of this section would apply in relation to payments made to persons who arrange advertisement, broadcasting, telecasting, etc.
Section 194J applies to payment made for professional or technical services. In general advertising fees or agency fees will be subject to TDS under 194C whereas specific expertise such as model fee or actor fee for the ad, would be subject to TDS under 194J. Or fee paid to the director of the ad film will also be subjected to TDS under 194J.
This position was clarified by CBDT vide it’s circular no. 715 as under
“The term advertising has not been defined in the Act. During the course of the consideration of the Finance Bill, 1995, the Finance Minister clarified on the Floor of the House that the amended provisions of tax deduction at source would apply when a client makes payment to an advertising agency and not when advertising agency makes payment to the media, which includes both print and electronic media. The deduction is required to be made at the rate of 1 per cent. It was further clarified that when an advertising agency makes payments to their models, artists, photographers, etc., the tax shall be deducted at the rate of 5 per cent as applicable to fees for professional and technical services under section 194J of the Act
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