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TDS on Advertisements – Applicability, TDS Rates, Actual implications

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Section 194C : TDS on Advertisements – Applicability, TDS Rates, Actual implications. This article will explain everything with respect to TDS deduction with respect to advertisements. Everything you want to know about TDS on Advertisements. There are many queries related to TDS on Advertisements like – Does Payment of Advertisement Charges attract TDS deduction?, Can Provisions of section 194C would apply or not etc. Now Find your all queries answer from below….

TDS on Advertisements – Applicability, TDS Rates, Actual implications

Applicability

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

  • As per Section 194C, the service receiver which is responsible for paying the contractor or sub-contractor, with respect to the contract to carry out any work or work-related activities, is also responsible for deducting TDS from such payment.
  • Such TDS is required to be deducted earlier of
    • Payment or
    • Credit
  • Work which is carried out under any contract also includes advertising. Hence, section 194C is also applicable for advertisements.
  • However, such TDS deduction is warranted by the person who receives the service from an advertising agency and hence, an advertising 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 advertising agency to its artists, photographers, etc. is covered under 194J and not 194C. Hence, these payments by advertising agency are subject to TDS deduction @ 5%.

For e.g.- if any advertising agencies present a single bill for artwork and for payments made to the artists etc. with respect to any advertisement, then TDS must be deducted under 194C, whereas advertising agency must deduct TDS @ 5% under section 194J.

Threshold for deducting TDS

The service receiver must deduct TDS under 194C on advertisements where

  1. Either total sum paid or credited during any financial year is more than Rs.100000(applicable from June 2016) or
  2. Single payment to any service provider which is more than Rs.30000

TDS rates

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

Exclusions

  1. Section 194C is not applicable where the payer is individual or HUF or AOP or BOI, who have gross receipts, sales, or turnover not more than
  2. 1 crore for any business
  3. 25 lakhs for any profession
  4. Section 194C is also not applicable where such payment is for the personal use of the payer (who may be either individual or HUF).

Actual implications

  • Payment made to Doordarshan – Not covered under the purview of 194C. Hence payments are not eligible for TDS deduction under 194C.
  • Direct payments to print or electronic media – Covered under 194C and hence payments eligible for TDS deduction under 194C.

Where the advertisement is put up by installing hoardings

  1. If space is taken on rent and then further sublet for putting advertisement hoardings, the eligible for TDS under section 194I (rent).
  2. For any other cases, 194C is applicable.

Situation where a person receives commission for arranging release of advertisement

TDS deduction should be on total bill amount and not only for the portion of the commission.

Sponsorship of debates, seminars, to earn publicity by way of banners by the organizers – 

Section 194C is applicable hence TDS must be deducted at the prescribed rates.

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About Yash Shah

Yash Shah is passionate article writer and has written more than 100 articles in the field of Finance, Insurance, Stock Market, Company Law, Auditing, Taxation and many others. In case of any queries or suggestions, you can reach the author @ [email protected], you can also catch him on facebook @ yashshah299

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