Is there a tax deduction/ TDS on the salary on a retainerships salary?

Hello Everyone,
I have a concern, I am offered a job on retainership basis... Which is a concept very me to me. Eddy question here is that: is there any form of tax deduction or TDS being deducted from the salary?
Your insight on this matter will be highly appreciated.

Thanks
Mark Anthony

Dear Mark Anthony,

Generally, the consultants are retained on retainership basis. Therefore, instead of an "Appointment Letter", the company provides a "Contract Agreement". Since it will not be an employer-employee relationship, statutory deductions like PF/ESI will not be applicable.

However, TDS under section 194J of the IT Act will be deducted. Presently, the deduction is done @ 7.5% The government could increase or decrease it in future.

If the amount of TDS deducted exceeds your tax liability, then you claim a refund when you file the tax return. Generally, the government makes the refund between 3-6 months.

Thanks,

Dinesh Divekar

TDS rate for the current Financial year is 10%. It was reduced to 7.5% last financial year because of the pandemic.

Dear Mark-Anthony,

The deduction of tax at source is mandatory under section 194J,fees or fees for technical services. Some illustrative examples of professional fees are fees paid to a lawyer, doctor, engineer, architect, chartered accountant, interior decorators, advertisers, etc. Technical services would include the rendering of managerial, technical or consultancy services. Such payments made to residents are covered under section 194J.

You can claim back the same by filing the return if deducted excess or not under the purview of payment of Tax for such income.

Any payment covered under this section shall be subject to TDS at the rate of 10%.
But From 1 April 2020, the payment of fees for technical service shall be subject to TDS at the rate of 2%, better you consult a Tax consultant for more clarity and refund of TDS.