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TDS on Internet Services(VOIP Minutes)

Shiv (Service) (22 Points)

20 July 2007

Please help me

currently we are receiving internet services like VOIP Minutes from DATA INFOSYS LTD. and he is charging service tax.

then whether Payment should be made after deduction of TDS or not ?

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7 Replies

GUNNAM BHASKAR RAO (c.a (final) & c.s (final)) (274 Points)
Replied 21 July 2007

it comes under contract u/s 194c @ 2% as per agreement

(Guest)

It is not contract. It will come under Technical Service u/s 194J @ 10%+SC+EC

Shiv (Service) (22 Points)
Replied 23 July 2007

Hi Mr. Gunnam Could u provide me supporting fact e.g circular etc.

(Guest)

I have received an Interenet bill of Rs. 67,000/-. This bill includes services tax. I just want to confirm whether this bill is eligible of deduction of TDS or Not. Please help me out with this issue. Regards,

(Guest)

VOIP service is availed for reducing the ISD calls. In other words it partakes the character of Leased line charges for which TDS is not deducted while making payment (Refer case below). Hence in my view TDS should not be applicable for VOIP minutes which is for the Talktime part and invloves no rental of equipment. Reference: Skycell Communications Ltd vs DCIT (2001 119 Taxman 496), Madras High Court held that use of equipment and machinery does not tantamount to receipt of technical services. This then rules out deduction of tax under Section 194J. Also Section 194I is not applicable as we do not pay any rent but pay for VOIP talktime.

(Guest)

hi. I want to know that we are Internet VOIP minutes provider co. that we purchase from our overseas suppliers and dnt pay any taxes , but when we sell them to our clients they insist on deducting TDS on sale of VOIP minutes, so will any one help me in this regard....

CA Suraj Prasad Shaw (Chartered Accountant) (504 Points)
Replied 11 July 2012

Originally posted by : Guest
	VOIP service is availed for reducing the ISD calls. In other words it partakes the character of Leased line charges for which TDS is not deducted while making payment (Refer case below). Hence in my view TDS should not be applicable for VOIP minutes which is for the Talktime part and invloves no rental of equipment. Reference: Skycell Communications Ltd vs DCIT (2001 119 Taxman 496), Madras High Court held that use of equipment and machinery does not tantamount to receipt of technical services. This then rules out deduction of tax under Section 194J. Also Section 194I is not applicable as we do not pay any rent but pay for VOIP talktime.