TDS on Advertisements – Applicability, TDS Rates, Limits

Area 194 C: TDS on ads is subtracted U/s 194 C and 194 J of the Income Tax. This short article will discuss whatever with regard to TDS deduction with respect to advertisements. The issue of the applicability of TDS on payments made by tv channels or media homes, releasing papers or magazines to ad agency for acquiring and canvassing for advertisements has been examined by the CBDT in view of representations received in this regard.

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TDS on Advertisements

Anyone accountable for paying any sum to any resident (specialist) for performing any work (includes supply of labour) in pursuance of a CONTRACT in between the contractor and the defined person then the defined person needs to deduct TDS on the quantity paid or payable for the work done.

Here work includes:

  • Marketing
  • Broadcasting, telecasting of products
  • Catering etc.

Applicability

Section 194 C is the ruling section for TDS with respect to ads.

  • As per Area 194 C, the service receiver which is responsible for paying the specialist or sub-contractor, with regard to the contract to carry out any work or work-related activities, is likewise responsible for subtracting TDS from such payment.
  • Such TDS is needed to be subtracted earlier of
    • Payment or
    • Credit
  • Work which is performed under any contract also includes advertising. Hence, area 194 C is likewise appropriate for advertisements.
  • However, such TDS deduction is warranted by the person who receives the service from an advertising agency and hence, an ad agency is not under the onus for deducting TDS.
  • Payments made to advertising agencies are subject to TDS deduction under 194 However, payments made by an ad agency to its artists, professional photographers, and so on is covered under section 194 J and not 194 C. Thus, these payments by ad agency undergo TDS deduction @ 5%.

For e.g.- if any advertising agencies present a single expense for artwork and for payments made to the artists etc. with respect to any ad, then TDS should be subtracted under 194 C, whereas ad agency need to deduct TDS @ 5% under area 194 J.

Limit for deducting TDS

The service receiver need to subtract TDS under 194 C on ads where

  • Either total sum paid or credited during any fiscal year is more than Rs.100000( relevant from June 2016) or
  • Single payment to any provider which is more than Rs.30000

TDS rates

  • Where the payment is made to any individual or HUF– 1%
  • Where the payment is made to any other entities– 2%

Exemptions

  • Area 194 C is not appropriate where the payer is private or HUF or AOP or BOI, who have gross receipts, sales, or turnover not more than
  • 1 crore for any service
  • 25 lakhs for any profession
  • Area 194 C is also not applicable where such payment is for the personal usage of the payer (who may be either specific or HUF).

Real implications

  • Payment made to Doordarshan– Not covered under the province of 194 C. Thus payments are not qualified for TDS reduction under 194 C.
  • Direct payments to print or electronic media– Covered under 194 C and thus payments qualified for TDS deduction under 194 C.

Where the ad is installed by setting up hoardings

  • If area is taken on rent and then additional sublet for putting ad hoardings, the eligible for TDS under section 194 I (lease).
  • For any other cases, 194 C is applicable.

Scenario where an individual gets commission for organizing release of advertisement

TDS reduction ought to be on overall expense amount and not just for the part of the commission.

Sponsorship of disputes, seminars, to make promotion by way of banners by the organizers–

Area 194 C is applicable for this reason TDS needs to be subtracted at the prescribed rates.

Examples

Concern– Our company has actually published an advertisement regarding the task chance, in a news paper. At what rate i have to deduct TDS, exists any minimum limitation for non deduction of TDS on advertisement.

Service— The Advertisement costs comes under u/s 194 C– Agreement.

The limitation is if you are paying more than 30,000 per individual throughout the financial year the tds to be deducted would be as follows;-LRB- .

  • 2% if the deductee is company
  • 1% if the deductee is non business

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