We have haired consultant & we pay him professional fees & traveling expenses on monthly basis.
My question is that, on which amount we will deduct TDS? Professional Fees + Traveling or Only professional Fees?
According to Income Tax norms if we are making payment to a person for his services under consultancy equivalent or above Rs. 30,000/- in single payment or in part payments in a year we have to deduct TDS @ 10 % under section 194J.
so you have to deduct TDS @ 10 % for your consultant.
as per Income Tax norms after deduction of TDS we have to pay to govt by following next month of 7th. After wards we have to furnish quarterly e-Returns to Income Tax dept. Then we have to issue 16A either quarterly or yearly basis to respective consultant.
as far as Traveling expenses concern are you reimbursing his traveling expenses ? , if you are TDS will not attract . Even if you are paying other than consutlancy charges TDS will not attract, Hence no need to deduct TDS .
If your paying traveling expenses part of consultancy charges.TDS should be deducted as per Income Tax norms as above said.
I wish you all the best.
You should ask him to raise 2 separate bills - one for professional fees (75000) and the other for travelling expenses (15000).
In this case, you need to deduct tax on on Rs. 75000/- and not on Rs. 15000/-
However, if he is raising only one bill, you need to deduct tax on the gross amount i.e Rs. 90000/-
I hope this would help you.
Thanks & Regards,
Kudos to your patient explaining.
As the IT rules states, TDS is done on Professional Fees and not on any reimbursements.
You have 2 options: a) If its a single bill, you will have to deduct the TDS on full (90000) amount b) If the contractor wants to save this amount or you want your contractor to save this amount, you can ask him to raise 2 separate bills & deduct the TDS on Professional Charges only (75000) and not on reimbursements (15000).
It goes without saying that the contractor will have his PAN and he will loose the deducted amount on Rs.15000/- if he has Tax liability (in case, he does'nt have Tax liability, he can claim full refund in his IT returns).
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