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TDS on AMC contract of desktops, laptop

jayathirtha purohit (Accountant) (30 Points)

31 March 2014

We are doing business of rendering Non-Comprehensive Annual maintainence contract for Desktops, Laptops etc. I would like to know, whether TDS will be deductible U/s 194J or 194C.We are receiving 60,000 per customer. Kinldy advice me.

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DISHA SHAH (professional) (1618 Points)
Replied 31 March 2014

TDS for Annual Maintenance Contract

The proper functioning of the office equipments in the company requires proper maintenance and regular services which is out sourced these days to other companies who are specialized for this work. But there should be a contract supporting the whole procedure.

Normally three types of maintenance contracts are found in India:-

1) Preventive Maintenance Contract (PMC)
2) Remedial Maintenance Contract (RMC) for Breakdowns.
3) Annual Maintenance Contract for CNC Controllers. (AMC)
The Annual Maintenance Contract is the legal agreement normally conducted between two companies wherein the later agrees to render the maintenance service annually to the former at an exchange of the nominal amount. It ensures that the later promises to provide maintenance services to the former all through out the year on a regular basis.

The Annual Maintenance Contracts is also known as AMC which is liable to TDS as per the Income Tax Act 1961. It was issued by the Central Board of Direct Taxes (CBDT) on the Circula No 715 and was being published on 8th of August 1995. This issue says that a regular maintenance agreement which involves the need of spares are covered u/s 194C is not tax liable but wherein the technical services are provided is attached with the deduction of tax.

The TDS on the AMC is deducted on the single contract if the amount exceeds Rs 30000/- and in case of multiple contracts the deduction starts after Rs 50000/-.

TDS rate Individual/huf 1% domestic company/firm 2%

Following are the services of AMC where the TDS is deducted:

1) Maintenance of computer and peripherals
2) Networking, LAN connection and web designing
3) Plantation and maintenance of Transformer & Panels in the industry
4) Contracts made annually for the inside Electrical fittings.
5) Proper maintenance and servicing for the electrical equipment present in the company.
6) In fact T.D.S. is applicable for on going service rendered for fixing telephone cable and I.O. Box D-Link.

DINU SUKUMAR (Audit Manager) (176 Points)
Replied 31 March 2014

Hii

TDS on AMC applicable at 1% from individuals and 2% from others u/s 194C if the single payment exceeds Rs. 30,000/- and an aggregate payment in a financial year exceeds Rs. 75,000/-

sumit jain (Ca Final Student and Article) (71 Points)
Replied 31 March 2014

Section 194c will apply. ..

Saji John (Finance Manager) (26 Points)
Replied 03 April 2014

TDS applicable under section 194C, if you want to avoid TDS to be deducted issue quarterly invoice to each client.

PAUL (SENIOR FINANCE OFFICER) (21 Points)
Replied 11 April 2014

In case of AMCs (say Rs.1 lac) which covers both service and spares what is the value for which TDS is to be deducted taking into consideration that at the time of entering into AMC there is no bifurcation between material and labour. For service tax purposes, if they are not seperately identifiable, 70% of the contract value is to be considered for service portion. So can we make TDS on 70% of the contract value.

Shradha (student) (26 Points)
Replied 01 July 2015

Intially company design his website and google account of Rs32516/- with service tax on his 1st bill dated:5/4/2015, So in which head i should have deducte the TDS ??? TDS 194 C or 194 J kindly suggest ??