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TMI BlogClarifications on various provisions relating to tax deduction at source regarding changes introduced through Finance Act, 1995X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to an advertising agency and not when advertising agency makes payment to the media, which includes both print and electronic media. The deduction is required to be made at the rate of 1 per cent. It was further clarified that when an advertising agency makes payments to their models, artists, photographers, etc., the tax shall be deducted at the rate of 5 per cent as applicable to fees for professional and technical services under section 194J of the Act. Question 2 : Whether the advertising agency would deduct tax at source out of payments made to the media ? Answer : No. The position has been clarified in the answer to question No. 1 above. Question 3 : At what rate is tax to be deducted if the advertising agencies give a consolidated bill including charges for art work and other related jobs as well as payments made by them to media ? Answer : The deduction will have to be made under section 194C at the rate of 1 per cent. The advertising agencies shall have to deduct tax at source at the rate of 5 per cent under section 194J while making payments to artists, actors, models, etc. If payments are made for production of programmes for the purpose of bro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x at source from the sum payable by the agent to an airline or other carrier of goods or passengers ? Answer : The travel agent, issuing tickets on behalf of the airlines for travel of individual passengers, would not be required to deduct tax at source as he acts on behalf of the airlines. The position of clearing and forwarding agents is different. They act as independent contractors. Any payment made to them would, hence, be liable for deduction of tax at source. They would also be liable to deduct tax at source while making payments to a carrier of goods. Question 8 : Whether section 194C would be attracted in respect of payments made to couriers for carrying documents, letters, etc. ? Answer : The carriage of documents, letters, etc., is in the nature of carriage of goods and, therefore, provisions of section 194C would be attracted in respect of payments made to the couriers. Question 9 : In case of payments to transporters, can each GR be said to be a separate contract, even though payments for several GRs are made under one bill ? Answer : Normally, each GR can be said to be a separate contract, if the goods are transported at one time. But if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the person who arranges release of advertisement, etc., or whether deduction is to be made on the gross amount including bill of media ? Answer : Tax is to be deducted at the rate of 1 per cent of the gross amount of the bill. Question 18 : Whether deduction of tax is required to be made under section 194C for sponsorship of debates, seminars and other functions held in colleges, schools and associations with a view to earn publicity through display of banners, etc., put up by the organisers ? Answer : The agreement of sponsorship is, in essence, an agreement for carrying out a work of advertisement. Therefore, provisions of section 194C shall apply. Question 19 : Whether deduction of tax is required to be made on payments for cost of advertisement issued in the souvenirs brought out by various organisations ? Answer : Yes. Question 20 : Whether payments made to a hotel for rooms hired during the year would be of the nature of rent ? Answer : Payments made by persons, other individuals and HUFs for hotel accommodation taken on regular basis will be in the nature of rent subject to TDS under section 194-I. Question 21 : Whether the limit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the payment made on or after 1-7-1995. Question 26 : Whether payments made to a hospital for rendering medical services will attract deduction of tax at source under section 194J ? Answer : Yes. Question 27 : Whether commission received by the advertising agency from the media would require deduction of tax at source under section 194J of the Act ? Answer : Yes. Question 28 : Whether the services of a regular electrician on contract basis will fall in the ambit of technical services to attract the provisions of section 194J of the Act? In case the services of the electrician are provided by a contractor, whether the provisions of section 194C or 194J would be applicable ? Answer : The payments made to an electrician or to a contractor who provides the service of an electrician will be in the nature of payment made in pursuance of a contract for carrying out any work. Accordingly, provisions of section 194C will apply in such cases. Question 29 : Whether a maintenance contract including supply of spares would be covered under section 194C or 194J of the Act ? Answer : Routine, normal maintenance contracts which includes supply of spares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectively, the relevant date for deciding the applicability of section 194A would be that date of renewal. Thus, if the time deposit is renewed after 1-7-1995, the tax deduction at source will have to be made from interest paid or credited in respect of such a time deposit. Circular : No. 715, dated 8-8-1995. Clarification regarding question No. 20 1. Circular No. 715 dated 8-8-1995 has been issued by the Central Board of Direct Taxes to clarify various provisions relating to tax deduction at source under various provisions of the Income-tax Act. Question No. 20 of the aforesaid Circular related to applicability of the provisions of section 194-I of the Income-tax Act in respect of payments made to a hotel for rooms. The relevant question and answer is reproduced below : . . . Q. No. 20 : Whether payments made to a hotel for rooms hired during the year would be of the nature of rent? Ans. : Payments made by persons other than individuals and HUF for hotel accommodation taken on regular basis will be in the nature of rent subject to TDS under section 194-I. [Emphasis supplied] In this context, doubts have been raised as to what constitutes hotel accommodation ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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