TDS on consultancy fees paid to Engineering college

TDS 4783 views 6 replies

A company has paid Rs 12 Lac as consultancy fees to an Engineering college. The Company engaged the college to undertake certain activities for its business and after doing the work, the college has raised an invoice for Rs 12 Lac towards consultancy fees for doing the  same. Now my query is:

Whether TDS is required to be deducted from the said consultancy fees?
 
If yes, then please clarify , u/s 10 of the Income Tax Act, the income of college/university/school is exempt and if their income is exempt, how can we deduct TDS?
 
If No, then please clarify what procedure do we need to follow to ascertain that tax is not required to be deducted ie collection of exemption certificate, notification etc.?
 
Is it necessary to know whether college is a govt. college or private college? Would it make any difference regarding deduction of Tax?
 
Please clarify.
Replies (6)

OPINION ON  01:

If income of deductor is exempt , it does not reduce its liability to deduct tax on payment covered by sec 192 to sec 195. since they are deducting tax on income of payee & it has nothing to do with exemption status of payer

OPINION ON 02 :

Ask the payee to give app to AO in form 13 to receive "certificate for no deduction or lower deduction" & follow the certification power

IT WILL NOT MAKE ANY DIFFERENCE IF PAYER IS govt. college or private college as explained in 1 above

Hi

Thanks for the reply but you have replied in wrong way. Here the deductor is Compnay and not the college.

Hi Sujit

"Certificate for no deduction or lower deduction"

Should be collected by the collage & have to submit with the company so company will not deduct TDS on the same Invoice (i.e. Consultancy)

 

Dear Subhas,

You have only mentioned about the TDS Certificate u/s 197, it means that  the company is liable to deduct tax . (If yes,.... clause of my query) If so, then what about the provision of sec 10 which exempt income of College/Uniersity? If college income is exempt, should we deduct tax? What about if its a govt college, as because if the payee is govt., there is no need to deduct tax. Please highlight these issues also.

see sec 196

I THINK TDS SHOULD BE DEDUCTED U/S 194 J AS PER I. TAX ACT 1961, IF CERTIFICATE U/S 197 NOT PROVIDED. THE ANOTHER THING IS EXEMPTION UNDER SEC. 10, COLLEGE MAY APPLY THIS INCOME AS EXEMPTION AND GET HIS TDS REFUND FROM INCOME TAX AUTHORITY.


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