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Whether Leased Internet Payment subject to TDS?

TDS / TCS 883 views 2 replies

An IT Company is making Leased Internet payment bi-monthly to ISP. Whether such payment is liable for tax deduction a source? If it is so, then under which section it is tax-deductible- 194C or 194J?

Thanks.

Replies (2)

In my view, provisions of Sec.194C are not applicable as there is no contract for carrying out any work between specified persons and resident contractor. Provisions of Sec.194J are also not applicable as the payment is not a fee for technical service but is for charges for use of a facility. You can refer views of Madras High Court in case of Skycell Communications Ltd. & anr. Vs. Dy CIT & Ors. (251 ITR 53). It is held that mere collection of ‘fee’ for use of a standard facility provided to all those willing to pay for it does not amount to a fee for technical services. It is not a fee merely because hi-tech communication technology is used for providing these services. In fact, it is a charge for use of a facility. Hence, TDS is neither deductible u/s.194C nor u/s. 194J.

Thanks a lot sir!


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