TDS on commission paid by MTNL/BSNL to owners of PCO u/s 194

TDS on commission paid by MTNL/BSNL to owners of PCO under section 194-H of Income-tax Act, 1961

Instruction No. 03/2009

Dated 8-5-2009

A number of representations have been received from BSNL/MTNL and field formations regarding raising of / pending demands for non-deduction of tax at source on commission payments to the franchisees/ PCO owners by MTNL and BSNL prior to 1/6/2007.

The matter was discussed by the Board recently and it has been decided that the demands raised against MTNL/BSNL on account of non-deduction of TDS u/s 194H on all such commission payments to franchisee / PCO owners etc. may not be enforced till the matter is sorted out by the Board. However, in case MTNL/BSNL have already deducted TDS on commission payments to the PCO owners etc,. but have not deposited it to the Govt. accounts because of incorrect interpretations of instruction dated 15th July, 2002; they have to be directed to deposit such sums immediately to the Govt. Account.

[F. No. 275/15/2002-IT(B)]