Examine the applicability of tax deducted at source/tax collected at source and calculate the amount of TDS as per the provisions applicable for…

(i) By virtue of section 206C(1A), Mr. Rajkumar is not required to collect tax at source under section 206C (1) , since Mr. Shubham has furnished a certificate to Mr. Rajkumar that the scrap purchased from him is for manufacturing process carried on by him and not for trading purposes. However, TDS under section 194Q will be attracted in the hands of the buyer in cases covered under section 206C(1A), if the conditions specified under section 194Q are fulfilled. In this case, tax is required to be deducted at source under section 194Q by the buyer, Mr. Shubham, since his turnover in the immediately preceding financial year i.e., F.Y.2023-24 exceeds 10crores and he has purchased goods of the value or aggregate of such value exceeding 50lakhs in the F.Y.2024-25. TDS u/s 194Q would be 0.1% of the sum exceeding 50lakhs and the same has to be deducted at the time of payment or credit of such sum to the account of resident seller, whichever is earlier. Therefore, in the present case, Mr. Shubham is required to deduct tax at source @ 0.1% of 5,00,000, being the amount exceeding 50lakhs at the time of credit. (ii) This issue has been clarified by the CBDT Circular No.8/2009 dated 24.11.2009. As per provisions of section 194J (1) , any person, who is responsible for paying to a resident any sum by way of fees for professional services, 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 10% of such sum as TDS. Further, as per clause (a) of Explanation to section 194J "professional services" includes services rendered by a person in the course of carrying on medical profession. The services rendered by hospitals to various patients are primarily medical services and therefore, the provisions of section 194J are applicable on payments made by TPAs to hospitals, etc. Further, for invoking provisions of section 194J, there is no stipulation that the professional services have to be necessarily rendered to the person who makes payment to the hospital. Therefore, TPAs who are making payment on behalf of insurance companies to hospitals for settlement of medical/ insurance claims, etc. under various schemes, including Cashless Schemes, are liable to deduct tax at source under section 194J on all such payments to hospitals, etc. In view of the above, all such transactions between TPAs and hospitals would fall within the ambit of provisions of section 194J.