Payments by television channels and broadcasters for programmes made by production houses based on their specifications and for which the channel owns the copyright will be considered as “work” and will be liable for tax deducted at source.

These will be taxed at the rate of two per cent rather than at a rate of 10 per cent under section 194J as payment for “professional or technical services”.

In a recent circular, the Central Board of Direct Taxes has also clarified that in cases where the broadcaster or telecaster only acquires the telecast rights of the content already produced by the television channel, there is no contract for “carrying out any work”.

“Such payments are not liable for TDS under Section 194,” it said.

TDS on payments to advertising agencies:

Separately, the CBDT also said that payments by television channels and newspaper companies to advertising agencies for booking or procuring or canvassing of advertisements will not attract tax deducted at source.

“An issue has been raised whether fees or charges taken or retained by advertising companies from media companies for booking advertisements is ‘commission’ or ‘discount’,” it said in another circular, clarifying that commission will only refer to payments for engagement of models, artists and photographers.

The Finance Ministry in a statement on Tuesday said that the clarification puts at rest the litigious issue as to whether such payments or discounts are in the nature of ‘commission’ and so should attract a TDS at the rate of 10 per cent.

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