Sandbox Help Center

What is Section 194J?

Any person paying fees to a resident person for any specified services for amount exceeding INR 30,000 in the financial year should deduct TDS at the applicable rate. TDS should be deducted on the amount excluding GST.

Specified Services under Section 194J

Why TDS under Section 194J not applicable on Sandbox Services?

• Whether services are in the nature of technical services?

In case of services from sandbox, there is no human intervention since the process is completely automated. Therefore, it does not fall under the definition of technical services and TDS under Section 194J is not applicable.

Reference Case: CIT v/s Bharti Cellular Limited (Delhi) 330 ITR 239 (SC)

TDS under Section 194J is applicable where you are paying any fees for technical services. As per the definition of ‘Fees for Technical Services’ as per Section 194J, the word ‘technical’ has to be read along with ‘managerial’ and ‘consultancy services’. Both ‘managerial’ and consultancy services involve some human element. Thus, the word technical should also have some human element.

Reference Case: Siemens Ltd. v. CIT(A) [2013] (142 ITD 1) (Mumbai ITAT)

Any technology or machinery is developed by human and put to operation automatically, wherein it operates without much of human interface or intervention, then usage of such technology cannot per se be held as rendering of 'technical services' as contemplated in Explanation 2 to section 9(1)(vii).

Reference Case: iGATE Computer Systems Ltd. vs. DCIT [2015] 53

Transmission of data via technical gadgets without any human intervention won't amount to technical services.

• Whether services are in the nature of Royalty?

Subscription fees received by Quicko is for the use of copyrighted services and not for the right to use of copyrighted services and hence, is not in the nature of royalty.

Reference Case: Elsevier Information Systems GMBH Vs DCIT (ITAT Mumbai)