Outsourcing of the Services - whether the Tax is to be deducted u/s 194-C (Contracts) or u/s 194-J

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..... Outsourcing of the Services - whether the Tax is to be deducted u/s 194-C (Contracts) or u/s 194-J
Query (Issue) Started By: - MOHAN S Dated:- 25-2-2010 Last Reply Date:- 4-3-2010 Income Tax
Got 3 Replies
Income Tax
One of our clients is a Company running a Hospital. They refer( Outsource) the Laboratory and Clinical Diagnosis Services to another Private Limited Company. When payment .....

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..... is being made by the Hospital whether the Tax is to be deducted u/s 194C (Contracts) or u/s 194J Professional Services. In my opinion, as this is basically a contract only 194C is applicable. Can any one give their views? Reply By Jain Jain: The Reply: This is nothing but Technical and Professional service. Reply By sm surana: The Reply: Section 194J must be applicable in this case. Reply By Rama .....

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..... Krishana: The Reply: TDs u/s 194J is deductible only if the same is professional service or technical service or royalty or non compete fee u/s 28(va). The activity of outsource of clinical diagnosis services to another provide company is neither a professional service, nor a royalty or non compete fee. On the other side, the term technical service has been defined u/s 9(1)(vii) which read as, "a .....

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..... ny consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Sa .....

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..... laries" - Therefore, the nature of service being provided by the Laboratory to be ascertained. Since the service being provided by the laboratory is not only technical but also based on science in the form of expert report, the same would fall within the category of "fees for technical services". Therefore tax at source (TDS) u/s 194J is required to deducted.
Discussion Forum - Knowledge Shari .....

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