Question And Answer
Subject: TDS on Architectural Contracts
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Date: October 2, 2021
Query asked by PARAS CHHAJED

The assessee entered into a contract with an architect firm to provide design, drawings, structural drawings, interior designs etc. for a project for a period of three years.

Please advise as to whether the TDS would be made u/s 194C or O194J, If u/s 194J then what would be rate of TDS i.e.  2% for technical services or 10% for professional services.

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Assuming the assessee is an individual architect, the architecture firm should deduct tax at the rate of 10 per cent on the professional services rendered by the assessee as the same would be a more appropriate classification.

As per section 44AA of the Income- tax Act, 1961 (Act), an Architect is a professional. Therefore, section 194J of the Act would be attracted.

Further, ex abundanti cautela it is advisable to deduct tax at 10 per cent and claim a refund, if any. Reference is drawn to the decision of the Hon’ble ITAT-Mumbai Bench in the case of DCIT v. Arthur Anderson and Co. ITA No. 9125/Mum/1995 dated July 29, 2003 wherein it was held that as abundant it is advisable to deduct tax and claim a refund, if any.

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