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TDS for Service Charge

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Joseph Samuel

Accountant

59 Points Posted on 18 October 2021

Dear Sir/Madam,

A manpower company (called company A) conducting an interview. An another manpower company (called Company B) is giving candidates for the same interview. Now for giving the candidates, Company B is asking Rs. 5,000/- per candidate as a Service Charge from Company A. That is, if the candidate given by Company B is selected in the interview, then the candidate make the payment to Company A. And from that, Company A has to pay Rs. 5,000/- to Company B. Company A is agreed for this. Totally 12 candidate were selected. So, Rs. 5,000*12 = Rs. 60,000/- is payable [there is NEITHER A WRITTEN CONTRACT, NOR A WRITTEN CONTRACT FOR CONTINUOUS SUPPLY OF SERVICE IN FUTURE].

Now my question is, whether Company A needs to deduct TDS for the payment they make to Company B or not ?

If yes, under which section will it come?

Thanks in advance!

Replies (6)

Quick Summary

A manpower company (Company A) is being charged a service fee by another manpower company (Company B) for providing candidates who are subsequently selected. Company A is seeking clarification on whether they need to deduct Tax Deducted at Source (TDS) on these service charges. The discussion also covers the specific section under which TDS might apply and how to handle TDS when payments are made in installments.

CMA Poornima Madhava

CMA

9106 Points Posted on 21 October 2021

194j would usually apply for recruitment services

Joseph Samuel

Accountant

59 Points Posted on 29 October 2021

Mam,

Thank you so much for the reply. One more thing. If we make the payment in two different months, whether do we need to deduct TDS for the amount we paid for this month or do we need to deduct TDS for the entire amount?

CMA Poornima Madhava

CMA

9106 Points Posted on 31 October 2021

If the aggregate payments or invoice value exceeds ₹30k, tax to be deducted at source.

Joseph Samuel

Accountant

59 Points Posted on 01 November 2021

No, what I am asking is, for example total invoice value is Rs. 50,000/-. So the TDS will be 5,000/-. And we are gonna pay the amount in two different installment as Rs. 25,000/- this month and another Rs. 20,000/- (Rs. 50,000/- - Rs. 5,000/- = Rs. 45,000/-) in the next month. As we made the payment of Rs. 25,000/- this month we need to deposit the TDS amount on or before 7th of next month. But when we deposit, whether do I need to deposit Rs. 2,500/- (as I gave only Rs. 25,000/- in the month) or Rs. 5,000/- (on total invoice value)?