The Statement about the Withholding Taxes for the Individual Promoter in India
To All UC Union Members (“Members” or “You”),
To stay connected and updated with the UC Union features, we continue to launch initiatives that aim to unite every partner to share global success in the mobile
internet time. This is an update in relation to the UC Union services viz., online advertising network service via UC Union and an application store service via 9Apps
(“the Services”). To ensure compliance with tax laws in India, UC Union (“UCWeb”) has decided to withhold on any sum due to you for the Services rendered after
April 1st, 2017.
With effect from April 1, 2017, UCWeb would withhold taxes on any sum paid/ payable to You for the Services rendered, and the remittance would be undertaken after deducting such taxes. UCWeb would deposit taxes withheld with the Government treasury to your credit.
Going forward, Clause 4 of the UCWeb Service Agreement (“the Agreement”) (read in conjunction with Clause 6 of the Agreement) would read as under:
“You are responsible for all taxes (if any), including but not limited to sales,GST, VAT, excise, service tax, or such other transaction taxes, associated with the Services. UCWeb would deduct taxes at source under Income-tax Act,1961 as may be applicable from time to time, except to the extent You submit a certificate of exemption / reduced withholding obtained from the tax authorities. UCWeb will deposit such taxes within respective due dates and shall issue certificates of deduction of taxes within the time limits prescribed under law.”
Withholding tax provisions applicable on payments to Members towards the Services:
Under section 194C of the Income-tax Act,1961 (“the Act”), any person responsible for paying any sum to any resident for carrying out any work
(including work in the nature of the Services provided) in pursuance of a contract shall, at the time of credit or at the time of payment whichever is earlier,
deduct appropriate taxes. The applicable rate of tax is –
(i) one percent where the payment is being made or credit is being given to an individual or a Hindu undivided family (“HUF”);
(ii) two percent where the payment is being made or credit is being given to a person other than an individual or a HUF,of such sum as income-tax on income comprised therein.
Where the payments are made to Individuals/ HUFs
Where the payments are made to others
Amount payable to You for the Services
Less: Taxes withheld that 1% / 2%
Net amount payable to You
In light of the above, –
As the nature of Services would squarely fall within the provisions of section 194C of the Act, w.e.f. April 1, 2017, in conformity with the withholding tax provisions
applicable to it, UCWeb will withhold applicable taxes on the payments made to the Members.
Please note that the liability to deduct taxes under Section 194C on such payments arises if (i) the value of a singletransaction is more than INR 30,000;
or (ii) if the total value of transactions with a particular Member during a particular financial year exceeds INR100,000. Given that there would be difficulty in predicting
the volume of business with each of the Members, UCWeb would withhold taxes at the applicable rates on all transactions, irrespective of the quantum of payment /
UCWeb shall not withhold on the payments to the extent you submit a certificate of exemption / reduced withholding obtained from the Indian income tax authorities.
UCWeb undertakes to pay, within such prescribed time under the Act, the sum so deducted, to the credit of Government.
UCWeb shall be responsible to provide the certificate of tax deducted or any other document evidencing deduction of tax to the Members as applicable.
PLEASE NOTE THAT THEAMOUNT OF TAXES WITHHELD BY UCWEB WOULD BE CREDITABLE BY THE MEMBERS AGAINST THEIR RESPECTIVE TAX LIABILITIES.
WHERE THEMEMBER DOES NOT HAVE ANY INCOME TAX PAYABLE FOR THE RELEVANT FINANCIAL YEAR,SUCH AMOUNT OF TAX WITHHELD COULD BE CLAIMED
AS A REFUND BY THE MEMBERS BYFILING OF THE INCOME TAX RETURN WITH THE TAX AUTHORITIES. GIVEN THIS, BY VIRTUE OF THE CHANGE IN THETERMS OF
THE AGREEMENT, THE MEMBERS AS SERVICE PROVIDERS, ARE NOT LOSING OUT ONANY INCOME.
Please note that this proposition is based on as the law currently stands. If there are any changes in the Act the mechanism and rate of tax withholding would be
subject to change.
Thank you for your support and enthusiasm as we continue on thisexciting journey.