Tax on professional fees paid

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Prateek

47 Points Posted on 01 June 2016

Hi,

I work in a company and am on contract. My company pays me salary as professional fees. An amount of 10% is deducted from monthly salary saying tax on professional fees. I spend the given amount of time daily in my company premises following employer- employee relationship and all the rules and regulations are imposed on me too as are on regular employees. Should I be considered as employee and tax should be deducted under section 192 or should be deducted under 194J. Request you to please help.

Replies (7)

CA Rohit Jain

Practice

1157 Points Posted on 02 June 2016

Dear Prateek,
Its completely depends on your contract with the company. If you entered an employee contract with it, then tax should

CA Rohit Jain

Practice

1157 Points Posted on 02 June 2016

be deducted under section 192 otherwise they are right in treating you as an outsider professional service provider and deducting TDS @ 10% from your fees

Prateek

47 Points Posted on 02 June 2016

But I spend the specified timings in company premises as my on-roll colleagues do.

Ankush

Student

912 Points Posted on 02 June 2016

Tax as salary might result in higher incidence of taxation as you would not be allowed to claim expenses with respect to the same.

Murtaza I Bhagat

Tax & Finance Consultant

8842 Points Posted on 02 June 2016

You don't have to considered as employee. You are on contract so no employer-employee relation established by your company and for that they are deducting 10% u/s 194J as professional fees. Rules to be follwed are same for both employee and professional. If you stay there and after end of the contract if company allow you to be a employee then only your tax will be deducted as an employee but recently your tax will be under 194J on which you can calculte and claim refund in your ITR.

CA.Vinita Gupta

Deputy Manager- Finance

2114 Points Posted on 02 June 2016

Have you received an Appointment Letter? do you receive Payslip each month? Are you in the Payroll of the Employer. If Yes Sec 192 would be attracted.

Else if you are giving professional service then 194J would be attracted