Tds on remuneration to teachers for correcting answer script

Recently one of the Universities has started deudcting tax on renumeration pay-outs to teachers for correcting answer scriptts. They pay Rs 20 per paper. Generally  payments are less than 2000. The teachers are employees of affiliated colleges, but not of university itself. The payments are done in cash. There is no commitment to give TDS certificates.

Considering the amount is small, is it legal for University to deduct income tax. Under what section it will fall ?

Are they bound to give a TDS Certificate/Form 16A and will individual transactions get reflected in Form 26AS.

Their stand is that the bulk amount of pay-outs to teachers attract tax and they can deduct it before payment.

Does this fall under income tax or service tax deduction?

 

Replies (5)

This does not fall in Income Tax Act as well as Service Tax Bcoz payment is so small without billing as per TDS provision under Section 200 & Section 201 of Income Tax Act.

It depends on how the transactions are being recorded in Books Accounts of the University, like Contract or Professional Charges. Pls. let us know the details.

I do not believe there is any contract. From an individual teacher's point of view, he just fills a bill-cum-receipt and gets money more as an incentive. The teacher does not have freedom to specify his charges or say in any terms of payment. He just has to take what he is given.

Whatever deductions I have seen are accompanied by a Form 16A with 194(x) sub-section. I did not find relevant one and ceilings seem to be on higher side. In this case payment is in hunderds and generally not exceeding couple of thousand rupees.

Even if income is taxable, would it attract TDS is the question.

 

I do not believe there is any contract. From an individual teacher's point of view, he just fills a bill-cum-receipt and gets money more as an incentive. The teacher does not have freedom to specify his charges or say in any terms of payment. He just has to take what he is given.

Whatever deductions I have seen are accompanied by a Form 16A with 194(x) sub-section. I did not find relevant one and ceilings seem to be on higher side. In this case payment is in hunderds and generally not exceeding couple of thousand rupees.

Even if income is taxable, would it attract TDS is the question.

 

To my opinion the charges being paid to teachers can be considered as Professional Charges and Section Code is 194J and the rate shall be 10%.

However, TDS deduction to be made on the amounts which crosses the slab of Rs. 30,000 in the whole year per individual.

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