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Tds on sponsorship fee

SANJAY MAHESHWARI ACA ACS (Chartered Accountant) (123 Points)

15 December 2011

Please Clarify, whether TDS will be deducted on sponsorship fee payment of Rs. 50000/-

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14 Replies

CA Shraddha (Mcom, CS Exe.) (Service) (224 Points)
Replied 15 December 2011

In my opinion it would be covered u/s. 194C and the rate of TDS should be @ 2% if the payee is not an individual / HUF otherwise @ 1%.

Regards

Shraddha

valji (Accounts manager-MBA) (2150 Points)
Replied 15 December 2011

agreee with above it come under sec 194c

CA Ketan Waghela (Partner at Elite Educare) (356 Points)
Replied 15 December 2011

Sanjay ji,

Sponsership fees is subject to deduct (If not for charitable purpose) TDS u/s 194 J @ 10% (20% if the party doesnt have PAN).

TDS can be deducted u/s 194 C @ 2% or 1% (as Sharaddha ji said above) if there is a contract between the parties.

but it is advisable to deduct TDS at higher rate to avoid any issues ahead.

2 Like

Sunil (Internal Auditor) (334 Points)
Replied 15 December 2011

Circular Number 715 dated 8-8-1995 made it clear that the agreement of sponsorship of debates, seminars and other functions in school/college/associations is in essence an agreement for carrying out a work of advertisement and provisions of section 194C applies.

So based on the above circular if your sponsor ship is two bill which were below 30000/- TDS provisions will not apply as it did not crossed the limited of Rs. 75000/-

But if it is a single bill it will attract TDS liablity at the rate prescribed as it corssed the limit of Rs.30000/- p.a

1 Like

CA PRAVEEN SINGH (MANAGER ACCOUNTS) (2277 Points)
Replied 15 December 2011

ircular Number 715 dated 8-8-1995 made it clear that the agreement of sponsorship of debates, seminars and other functions in school/college/associations is in essence an agreement for carrying out a work of advertisement and provisions of section 194C applies.

So based on the above circular if your sponsor ship is two bill which were below 30000/- TDS provisions will not apply as it did not crossed the limited of Rs. 75000/-

But if it is a single bill it will attract TDS liablity at the rate prescribed as it corssed the limit of Rs. 30000/- p.a

AGREED....

buxi (student) (36 Points)
Replied 15 December 2011

Sirs... if it is other than place school/college/associations what will be the provision ?

CA Kiran Sutrave (CA) (428 Points)
Replied 17 December 2011

Sponsorship payment is covered under Section 194C. This clause is applicable only if a single payment exceeds30,000/- or payment during the year is more than75,000/- whichever is earlier.

TDS is deductible under Section 194C @ 1% if the payment is made to an individual / HUF or @ 2% if payment is made to other persons.

It is necessary to note here that in case of Sponsorship (after excluding certain services), the person receiving the sponsorship would be liable for Service tax payment under "Sponsorship Service" - Section 65(105)(zzzn) - which means that as a Service receiver you are liable to pay Service Tax

Deepak Pradhan (Practice) (21 Points)
Replied 22 May 2014

it would be covered under 194C.

Manjita Rane (1 Points)
Replied 30 August 2016

Please clarify whether TDS will be applicable for given below :

Corporate Sponsorship Fee for the Technical Seminar “Emerging Trends in Automation” organized by ISA Kolkata Section on 28th May 2016 at Hotel Taj Bengal, Kolkata Rs. 40000

Kartikey Jain (Intern) (2377 Points)
Replied 04 July 2018

Originally posted by : Manjita Rane
	Please clarify whether TDS will be applicable for given below : Corporate Sponsorship Fee for the Technical Seminar “Emerging Trends in Automation” organized by ISA Kolkata Section on 28th May 2016 at Hotel Taj Bengal, Kolkata Rs. 40000

If it is in the essence of advertisement, TDS u/s 194-C shall be deducted.

VIJITH TK (Accountant) (70 Points)
Replied 12 July 2018

Can anyone tell me how to book a receipt enrty for sposorship payment received means .. wether that is incom or other income

Sumit Jangir (6 Points)
Replied 10 October 2019

Dear Sir,

whether TDS will be deducted Under Section & Why Pls Attach Fille on sponsorship fee payment of Rs. 500000 + Gst-18%

Suresh Thiyagarajan (Student) (3986 Points)
Replied 11 October 2019

1. As per circular no. 715 dated 08.08.1995, service of sponsorship is in the nature of the contract for carrying the work undertaken to execute an event, hence TDS u/s 194C will be applicable in the given case.
Please correct me if the above solution has an alternative view.

Mitali (Finance Professional) (10526 Points)
Replied 21 December 2023

Sponsorship means a party providing financial or other support to an event, organization, or activity in exchange for promotional benefits. Sponsors typically gain visibility through branding, logo placement etc during the sponsored event. It is a mutually beneficial arrangement where the sponsor gets exposure, and the sponsored entity receives financial or in-kind support.

Applicability of TDS Section: Section 194C of the Income Tax Act apply to such sponsorship agreements.
Section 194C

Overview of Sec 194C: Section 194C deals with TDS on payments made to contractors and sub-contractors for carrying out any work, including advertising.

TDS Rates: TDS is required to be deducted at the rate of:
a). 1% if the payment is made to an individual.
b). 2% if the payment is made to any non-individual entity.