Query Regarding TDS on Office Utility Expenses, Income Tax

[Ramanathan Seshan]

I had a quick question regarding TDS applicability.

Are we required to deduct TDS on the following expenses incurred for office use?

1. Internet charges for the office connection

2. Landline telephone bills for the office

3. Postpaid mobile bills used for office purposes

If TDS needs to be deducted then under which section should TDS be deducted

Regards,

S Ram

Posts / Replies

[YAGAY andSUN]

Great question — and it’s a practical one many businesses come across during day-to-day expense management. Here's a clear breakdown regarding TDS applicability on these office utility expenses:

🔍 1. Internet Charges (for office use)

• TDS Applicability: ✅ Yes, if paid to a non-telecom service provider (e.g., leased line from IT company or service bundled with support/maintenance).

• Section: 194J – Technical Services

• Threshold: ₹30,000 per annum (per party)

💡 However, if internet charges are paid to a telecom operator (like Airtel, Jio, BSNL, etc.) as a regular bill, then:

• Treated as a standard service, not liable for TDS under 194J (as clarified by CBDT Circular No. 21/2017).

🔍 2. Landline Telephone Bills (for office use)

• TDS Applicability: ❌ Not applicable

• Reason: Treated as a service rendered by a telecom company, considered as a contract of service, not "technical service" under Section 194J.

🔍 3. Postpaid Mobile Bills (used for official purposes)

• TDS Applicability: ❌ Not applicable (in most cases)

• Reason: Same as landline — if the bills are in the company’s name and are regular telecom services, TDS is not deductible.

✅ However, if there is a retainer contract or consolidated service agreement (e.g., mobile + internet + IT maintenance), then TDS under Section 194J or 194C may apply, based on the nature of the contract.

📌 Summary Table

Expense Type	TDS Required?	Section	Conditions
Internet (from IT vendor)	Yes	194J	If bundled with technical support/leased line
Internet (from telecom co.)	No	-	Regular telecom bill
Landline (telecom co.)	No	-	Standard office utility
Postpaid Mobile	No	-	If billed by telecom company and used for official purposes

🧾 Note on Compliance

• Ensure that invoices are in the company's name and not reimbursed to employees — otherwise, TDS implications may differ.

• Keep track of the vendor type: if it’s an IT service provider or aggregator, TDS may apply under 194J.

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