Tds on licence fee to private gas agency
C..a......STUDENT
(Querist) 19 November 2013
This query is : Resolved
Will TDS provisions be applicable on payment of license fee to a private gas agency?
If yes, under which section TDS be liable to be deducted?
Please reply.
R.K Nanda 
(Expert) 19 November 2013
consult tax lawyer.
Rajendra K Goyal
(Expert) 20 November 2013
Section 194(j) of IT Act is as under:
194J. (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of (a) fees for professional services, or (b) fees for technical services, 46a[or] (c) royalty, or (d) any sum referred to in clause (va) of section 28,] shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to five per cent of such sum as income-tax on income comprised therein :” Further , Explanation (ba) to Section 194J defines Royalty as “royalty shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9;”. Therefore , Explanation 2 to section 9(1)(vi) is visited to see the meaning of Royalty which is defined as follows “Explanation 2.—For the purposes of this clause, “royalty” means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head “Capital gains”) for— (i) the transfer of all or any rights (including the granting of a licence) in respect of a patent, invention, model, design, secret formula or process or trade mark or similar property ; (ii) the imparting of any information concerning the working of, or the use of, a patent, invention, model, design, secret formula or process or trade mark or similar property ; (iii) the use of any patent, invention, model, design, secret formula or process or trade mark or similar property ; (iv) the imparting of any information concerning technical, industrial, commercial or scientific knowledge, experience or skill ; (iva) the use or right to use any industrial, commercial or scientific equipment but not including the amounts referred to in section 44BB; (v) the transfer of all or any rights (including the granting of a licence) in respect of any copyright, literary, artistic or scientific work including films or video tapes for use in connection with television or tapes for use in connection with radio broadcasting, but not including consideration for the sale, distribution or exhibition of cinematographic films ; or (vi) the rendering of any services in connection with the activities referred to in sub-clauses (i) to (iv), (iva) and (v). Although in my personal opinion, one time licence fee for use is a sale , however, if use of the word lump sum in definition of Royalty which is very wide enough to encompass the software license within its ambit, TDS u/s 194J should be done by you at the time of making payment , subject to the condition that Individual and HUF are not liable for TDS if the business turnover is less than Rs 40 lac or gross professional fee is less than Rs 10 Lacs.
