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Dear Professional Seniors & Friends,
Warm Greeting
Here is the Next post of #MCQ on concept-based practical professional knowledge on TDS deduction in case the payee is uniquely engaged in call center business to be self-answered by participants. The detailed answers to these MCQs shall be posted the next day for the self-assessment of the participants.
MCQ 65.1: XYZ avails services of a call center for which XYZ paid the call center firm its 1,00,000. Which among the following is correct about the TDS deduction by XYZ?
A) TDS u/s 194C will be deducted
B) TDS u/s 194) will be deducted.
C) TDS u/s 1941 will be deducted.
D) No TDS will be deducted
MCQ 65.2: At What rate TDS will be deducted in the above question?
A)296
B) 10%
C)1
D) No TDS will be deducted.
This post of MCQ is on concept relating to the section under which TDS is liable to be deducted in case the payee is engaged in the business of the call center and the rate at which it is to be deducted.
Answer to MCQ 65.1: 8) TDS u/s 194] will be deducted.
Answer to MCQ 65.2: A) 2%
1. As per Section 194J, a person availing professional services will required to deduct TDS @ 10% subject to some limits.
2. Explanation (a) of this section provides the meaning of "professional services means services rendered by a person in the course of carrying on legal medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purposes of section 44AAor of this section.
3. Government vide Notification No. 385(E) dated 4/5/2001 notifies the profession of information technology for the purpose of Section 44AA.
4. Also government vide Notification No. 890(E) dated 26/9/2000 notifies the services of the call centre to be information technology-enabled services.
5. On a combined reading of points 2,3,4 above, call center service shall be deemed to be a professional service, hence liable to be TDS
deduction u/s 194J.
6. Now the question relating to the rate of taxation services at which TDS is to be deducted. Upto 1st June 2017, whenever TDS is to be deducted u/s
194J, straight away 10% TDS is deducted.
7. But the government through Finance Bill 2017 has inserted a proviso to bring change in Section 194J effective 1st June 2017 to provide that TDS will be deducted @ 2% if the payee is engaged in the business of operation of the call center.
8. Based on the above analysis, the correct answer MCQ 1:8) TDS u/s 194J will be deducted.
9. Correct answer MCQ 65.2: A) 2%.
(Disclaimer: The objective of the MCQ post is just to discuss the concept, it may happen, by change of facts, the answer may be different. Please do not treat this as a professional opinion: you can definitely have your own opinion.)
Sincere Regards!
CA Sanjay Kumar Agrawal
Mobile: 9810116321
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