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TMI BlogClarification on various provisions relating to tax deduction at source--RegardingX X X X Extracts X X X X X X X X Extracts X X X X ..... es 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, artistes, 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 artistes, actors, models, etc. If payments are made for production of programmes for the purpose of broadcasting and telecasting, these payments will be subjected to TDS at 2 per cent. Even if the production ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r : 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 the 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 the goods are transported continuously in pursuance of a contract for a specific period or quantity, each GR will not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 advertisements 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 than 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 Rs. 1,20,000 per annum would apply separately for each co-owner of a property ? Answer : Under section 194-I, the tax is deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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 include supply of spares will be covered under section 194C. However, where technical services are rendered, the provision of section 194J will apply ..... X X X X Extracts X X X X X X X X Extracts X X X X
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