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I am individual with business income, do I need to deduct income tax for consultants?

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Vikram Gupta

21 Points Posted on 30 January 2022

I am a salaried individual with business income and have to pay a professional 20,000 Rs for some software related services. Do I need to deduct income tax when paying for professional/consultant services online?

Is there a limit on the amount above which the tax is to be deducted and at what percentage? If anyone can share a link to an article on steps on how to do it would be very helpful. Thank you.

Replies (8)

Quick Summary

This discussion addresses whether an individual with business income needs to deduct income tax (TDS) when paying for professional services, such as software consultants. The consensus suggests that TDS liability generally arises for businesses whose accounts were subject to a tax audit in the previous financial year, or if their turnover exceeds a certain threshold (e.g., 1 crore INR). For a one-off payment of 20,000 Rs, TDS might not be required, even if a tax audit is applicable. It's recommended to check specific turnover details and comply with relevant sections like 194C if applicable.

rama krishnan

5751 Points Posted on 30 January 2022

If your turnover is more than 1 crores during the f. y. 2020-21, then you are liable to deduct TDS on professional services at the rate of 10% if the aggregate payments exceeds 30000 in a year

sabyasachi mukherjee

Profession

19978 Points Posted on 31 January 2022

There are two opinions:
1 is your gross total income exceeding the basic threshold.
2. is your tds deducted out of professional services much higher .In that case tds is deducted.If you want to claim that tds .
its good
3. If you want to take business loan.Then it's OK.

Eswar Reddy S

CFO- at NHTF

15022 Points Posted on 31 January 2022

If tax audit is applicable then you have to comply with Tds provisions .If it is one time payment of 20000/- then it is not required even if the tax audit is applicable.

Kindly confirm whether you are carrying business / Profession & Turnover ?

sabyasachi mukherjee

Profession

19978 Points Posted on 31 January 2022

Here the querist has not mentioned.
So the question of tax audit stands irrelevant.
You are requested to adhere to Sec 194C.

Nidhi

Chief Accountant

1673 Points Posted on 31 January 2022

If u r filing return under presumptive taxation, than there is non need of same.

rd sharma

partner

61 Points Posted on 31 January 2022

TDS liability arises on a business person, if in the last financial year, his business accounts has been subject to tax audit under section 44. Other wise, he is not liable to withhold tds.

Eswar Reddy S

CFO- at NHTF

15022 Points Posted on 31 January 2022

@ Vikram Gupta

Kindly give details of turnover.

If it is small business / profession then there is no requirement to deduct tax on consultants payment even if it is above 30k.

Tds provisions are applicable only to tax audit entities.