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June 2009

TDS on commission paid by MTNL/BSNL to owners of PCO under Section 194-H of Income-tax Act, 1961 —Instruction No. 03/2009, dated 8.5.2009 (reproduced) — [F. No. 275/15/2002-IT(B)]

By Pinky Shah, Sonalee Godbole, Gaurang Gandhi, Tarun Ghia, Nimesh Dedhia, Vijay Kewalramani
Chartered Accountants
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  1. TDS on commission paid by MTNL/BSNL to owners of PCO under
    Section 194-H of Income-tax Act, 1961 —Instruction No. 03/2009, dated 8.5.2009
    (reproduced) —     [F.
    No. 275/15/2002-IT(B)]

A number of representations have been received from BSNL/MTNL
and field formations regarding raising of/pending demands for non-deduction of
tax at source on commission payments to the franchisees/PCO owners by MTNL and
BSNL prior to 1/6/2007. The matter was discussed by the Board recently and it
has been decided that the demands raised against MTNL/BSNL on account of
non-deduction of TDS u/s. 194H on all such commission payments to franchisee/PCO
owners, etc. may not be enforced till the matter is sorted out by the Board.
However, in case MTNL/BSNL have already deducted TDS on commission payments to
the PCO owners, etc., but have not deposited it to the Govt. accounts because
of incorrect interpretations of instruction dated 15th July, 2002, they have
to be directed to deposit such sums immediately to the Govt. Account.

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