MCQ Self Challenge # 0065 on TDS deduction in case of call centre business

TDS Deduction in Case of CALL CENTRE Business

Dear Professional Seniors & Friends,
Warm Greeting!

Here is the Next post of #MCQ on concept based practical professional knowledge on TDS deduction in case payee is engaged in call centre business in a unique manner to be self answered by participants. The detailed answer of these MCQs shall be posted next day for the self assessment of the participants.

MCQ 65.1: XYZ avails services of call centre for which XYZ paid the call centre firm Rs 1,00,000? Which among the following is correct in relation to TDS deduction by XYZ.
A) TDS u/s 194C will be deducted.
B) TDS u/s 194J will be deducted.
C) TDS u/s 194I will be deducted.
D) No TDS will be deducted.

MCQ 65.2: At What rate TDS will be deducted in the above question?

A) 2%
B) 10%
C) 1%
D) No TDS will be deducted.

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CA Sanjay Kumar Agrawal
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——Answer MCQ Self Challenge # 0065——

Dear Professional Seniors & Friends,

Warm Greetings!

This post of MCQ is on concept relating to section under which TDS is liable to be deducted in case payee is engaged in the business of call centre and the rate at which it is to be deducted.

Answer to MCQ 65.1: B) TDS u/s 194J will be deducted.

Answer to MCQ 65.2: A) 2%

Practical Analysis for MCQ 65.1& 65.2:-

1. As per Section 194J, 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 call centre to be an information technology enabled services.
5. On combined reading of points 2,3,4 above, call centre service shall be deemed to be an professional service, hence liable to be TDS deduction u/s 194J.
6. Now the question comes relating to rate of tax at which TDS is to be deducted. Upto 1^st June 2017, whenever TDS is to be deducted u/s 194J, straight away 10% TDS is deducted.
7. But government through Finance Bill 2017 has inserted a proviso to brought change in Section 194J effective w.e.f 1^st June 2017 to provide that TDS will be deducted @ 2% if the payee is engaged in the business of operation of call centre.
8. Based on the above analysis, correct answer MCQ 1 : B) 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 professional opinion; you can definitely have your own opinion.)

Sincere Regards!

CA Sanjay Kumar Agrawal

Mobile: 9810116321

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