In order to bring more clarity regarding interpretation of certain contentious issues relating to Tax Deduction at Source (TDS) on payments made by television channels, broadcasters and newspapers, Central Board of Direct Taxes (CBDT) has issued two circulars.
First circular deals with TDS on payments by broadcasters or television channels to production houses for production of content or programme for telecasting.
Ministry clarified that in a situation where content is produced as per the specifications provided by the broadcaster and the copyright of the content also gets transferred, such contract is covered by the definition of term ‘work’ in section 194C of the Income-tax Act and, therefore, subject to TDS under section 194C at 2 percent, instead of 10 percent under section 194J as payment for ‘professional or technical services’.
Another circular states that no TDS is attracted on payments made by television channels or newspaper companies to the advertising agency for booking or procuring for advertisements.
The clarification has put on rest litigious issue as to whether such payments or discounts are in the nature of ‘commission’ and so, subject to TDS at the rate of 10 percent under section 194H.