Tds on service contract - medical services - 194c or 194j?

TDS 8183 views 4 replies

Saroja Ponnada

6 Points Joined April 2016

Ours is a Sole proprietorship organization and we entered into contract with one MNC for providing doctors and paramedics for their Occupational Health Centers. They are deducting TDS at 10% under 194J on the total invoice.

I am not bifurcating the bill into Salaries of Medical staff and Service charges due to some practical difficulties. Is it a right practice to deduct TDS on the total amount? Is it correct to deduct it under 194J instead of 194C?

I am only providing healthcare services through my staff by paying them salaries. I am not a professional and I think 194J is not applicable to me. We are not claiming Service Tax from the Company as our services come under Healthcare services.

My point is that as ours is a service contract to provide these healthcare services through qualified personnel, it should come under 194C as per Circular: No. 681, dated 8-3-1994 issued by IT Department and as per definition we are providing health care services which is in the negative list of Service Tax.

Now my question is - Is it right to request them to deduct the TDS under 194C?

Replies (4)

Karthik.V.Kulkarni

Chartered Accountant

594 Points Joined December 2012

Yes it is right to deduct tds u/s 194J. Health care services provided by professional medical practitioner is a professional service. Just because you have contract doesn't make it a works contract. But anyway you need not be much concerned as anyway you will be getting credit of the same.

Saroja Ponnada

6 Points Joined April 2016

Thank you for your reply.

As you rightly said, Healthcare services provided by a professional medical practitioner is a professional service. That is why we are deducting TDS @ 10% from the salaries of our doctors, under 194J.

In my view, more in-depth analysis is needed in this case.