New Delhi: The Finance Ministry said today that if a content/programme is produced according to the specifications provided by the broadcaster/telecaster and the copyright of the content/programme gets transferred to the telecaster/broadcaster, such contract is subject to TDS under section 194C at 2 per cent, rather than at a rate of 10 per cent under section 194J as payment for ‘professional or technical services’.

In a circular issued recently, it was stated that such a contract is covered by the definition of the term ‘work’ in section 194C of the Income-tax Act.

The Central Board of Direct Taxes has brought out two circulars to bring about clarity in the interpretation of certain contentious issues relating to Tax Deduction at Source (TDS) on payments made by television channels, broadcasters and newspapers.

The first Circular No.4/2016 dated 29 February deals with TDS on payments by broadcasters or television channels to production houses for production of content or programme for telecasting.

The other circular - No.5/2016 dated 29 February - deals with TDS on payments by television channels and publishing houses to advertisement companies for procuring or canvassing for advertisements.

It has been clarified through the Circular that no TDS is attracted on payments made by television channels/newspaper companies to the advertising agency for booking or procuring of or canvassing for advertisements.

This clarification puts at rest the litigious issue as to whether such payments/discounts are in the nature of ‘commission’ and so, subject to TDS at the rate of 10 per cent under section 194H.
Both the Circulars are available on the website of the Department www.incometaxindia.gov.in.