TDS on Band Performance services, Income Tax

[Sanjay Lakhotia]

Can anybody provide their insights on TDS on band performance services?

Posts / Replies

[YAGAY andSUN]

TDS (Tax Deducted at Source) on band performance services

When it comes to TDS (Tax Deducted at Source) on band performance services, it typically involves understanding the tax implications for the services rendered by musicians, bands, or performers for events, concerts, and shows. The application of TDS to these services depends on a few key factors like the nature of the contract, the amount of payment, and the structure of the band (whether an individual performer, group, or a registered entity).

Key Insights on TDS for Band Performance Services:

1. Relevant TDS Sections

• Section 194J (Professional Fees):
  • If the performance is considered a professional service, then TDS is applicable under Section 194J. The rate is generally 10% for residents.
  • Professional services include music performance, event performance, and other related services provided by individuals or professionals in the music industry.
  • TDS is deducted from the fees paid to the band or the performer for their service.
• Section 194C (Contractual Services):
  • If the band or musicians are hired through a contract (for a specific performance or gig), Section 194C might apply. In this case, TDS is typically deducted at a rate of 1% for individuals/HUF and 2% for other entities (like firms, companies, etc.).
  • This applies if the agreement is more akin to a contractor relationship for a one-off or temporary event.

2. Threshold for TDS Deduction

• Section 194C:
  • TDS is only deducted if the aggregate payment made to the band crosses ₹30,000 in a financial year. This threshold applies for each contract separately.
• Section 194J:
  • TDS under Section 194J is deducted when professional fees exceed ₹30,000 in a year. So if the total payments for performances exceed this amount, the organizer must deduct TDS.

3. TDS Deduction on the Payment

• TDS is generally deducted at the time of making payment to the band, and it's applicable to the fee for performance.
• If additional services like travel, accommodation, or equipment are part of the agreement, they may not be subject to TDS if they are billed separately and are not part of the performance fee.

4. PAN and TDS Deduction

• The person or entity deducting TDS (typically the event organizer or company) must ensure that the performer or band provides their PAN number to avoid higher TDS rates (20% in case PAN is not provided).
• If the performer is a non-resident, the TDS rate may vary, and the payment may fall under Section 195.

5. GST Consideration

• In addition to TDS, GST is also applicable to band performance services if the aggregate turnover exceeds the prescribed threshold limit under GST law.
• GST is charged on the performance services, and this should be factored into the contract or invoice. The general GST rate for performance services is 18%.

6. TDS Certificate (Form 16A)

• The person deducting TDS (organizer, company, or event manager) must provide the TDS certificate (Form 16A) to the band or performer. This certificate can be used by the performer to claim a credit for the TDS while filing their income tax return.

7. Non-Residents (Foreign Bands)

• If the band is a foreign entity or includes non-resident performers, payments made to them may fall under Section 195. This requires TDS to be deducted on payments made to non-residents, usually at a higher rate, depending on the country of residence of the performer and the applicable DTAA (Double Taxation Avoidance Agreement).

8. Exemption for Small Performers

• In certain cases, if the total payments to an individual performer do not exceed the taxable income threshold, TDS might not be applicable. However, this depends on the specific circumstances and the nature of the tax laws in the country.

9. Event Organizer's Responsibility

• The responsibility for deducting and remitting TDS generally falls on the event organizer or the payer. Therefore, the organizer should ensure they are compliant with the tax laws and withhold the appropriate amount of TDS from the payment made to the band.

Conclusion:

TDS on band performance services is based on whether the payments made are considered professional fees or contractual services, with differing rates for each. Both Section 194C and Section 194J come into play depending on the nature of the performance agreement, and the total amount paid during the year.

Disclaimer:

The contents of this reply is only for your kind information. It's always a good idea for event organizers to consult with a tax professional or chartered accountant to ensure the correct TDS deductions are made and that performers are provided with the necessary certificates to claim the TDS credits during their income tax filing.