Tds query

I think it should be 194C.

It cannot be 194I because 'A' is not hiring the equipments of 'B' to scan the patients.

It cannot be 194H because you have mentioned here 'charges' and not commission. Due to space constraints, 'B' is relying on the premises provided by 'A'.

A very good question Anita.

I agree with the views of Mihir.

Tax should be deducted u/s 194C 

It should be deducted U/s 194C @ 1% becoz. payment is made to individual....

194C only...

Facts: Premises belongs "A"

"B" operates from the premises of "A"

"A" deduct 30% . . . and pay to "B"

Solution: Since "B" is operating in "A"'s premises, there should be some contract/Agreement between "A" & "B"

If you go through the agreement, you will come to know about the nature of transaction.

In the present case discount allowed by 'B' to 'A' is in the nature of rent for the use of premises. Therefore,

TDS should be deducted under section 194 I i.e. TDS on rent  @ 10 %.

However, if the contract between 'A' & 'B' clearly states that the discount will be the consideration for

referring the patients and the premises will be allowed to use free of cost then the nature of transaction

may change and fall under commission . Please correct me if i am wrong.

Regards,

Roshan

Roshan, Just to add on your thought, It can't be a case of 194I because u/s 194I the person responsible for deducting TDS is one who is responsible for paying the Rent but in the present case 'B'(the lessee, considering it to be a rental case) is instead getting money from 'A'. So practically it is not possible for B to deduct TDS.

194H - Brokerage will come into picture when a person is paying another a sum which is in the nature of Commission / Brokerage. Here the person making payment is 'A' and the one who is receiving is 'B'. As evident from the case 'B' is in no way getting a sum from 'A' which can be said to as brokerage or commission. It is his merely business receipt on which no TDS can't be deducted and the Case also not qualifies for Tax Collection at source otherwise that would have been possible.

Hence the only Section which is left is 194C. This on the limited facts available can’t also be a case of 194C. Since the present case is not covered under the definition of "Work" as set out u/s 194C.

A general clause with regards to TDS is that, it is to be deducted from the "INCOME" and not out of receipts. Here in the case the sum B is getting from A is merely his business receipts. So A cannot deduct tax at source.

Please correct me if I am wrong because I am still an article, so there is every chance that I may be wrong.  :P

 If we  go through the  entire reading this will not cover as rental income ,becouse rent is always fixed like per month per year per hour etc   for the use of property  or machinery .

If we try to understnad that transaction it will not appear as  purely contatactual becouse under section 194C there must be contactor and a contractee.  Contactor did a work  for contractee  .

further it will be clear after go through the agrement between parties what word exactly they use in there agreement

As per my  view this transaction is covered under section 194H as commission.

Please correct me if m wrong

One more thing to note here, 'A' is not the principal of 'B', and 'B' is not an agent of 'A',  so there is no agency here.

Agree with you mihir. Its just not the case of 194I as well 194H.

Only thing possible and that too on a complete understanding contract entered into between both parties (if any) 194C can come into picture otherwise No TDS is to be deducted.

Dear Akram,

what you have said about rent that it is fixed like per year , per month , per hour is correct.

Generally Rent are of fixed nature. But  suppose, if the contract between the parties states that rental for use of the property shall be in form of discount .Then it can be termed as rent.

So it will all depend upon the contract between the two parties.

194C seems to be attaracted. No other TDS sections seems to be in picture.

In no case 194I would apply.

Charges are for scan which is basically tech and professional in nature and not contractor commission