02 July 2010
Sir, An Awarder make part payment to the Contractor after deducting retention money @5%. The retention money will be paid to the contractor when the contract work is fully completed. Here my question is,when the Awarder has to deduct tax on retention money, at the time of deducting the retention money or at the time of payment of retention money when the contract is completed?
Here "Tax" means Income Tax, VAT, Service Tax etc.
03 July 2010
Retention is mutual arrangement of both parties as per the contract term Sale is booked once the bill is accepted and VAT need to be deducted on the credit and pay , retention payment is the one of the payment term it will not affect Tax purpose.