16 October 2010
A Building Contractor enter into a contract for the erection of building for Rs. 5 lakh. as per the contract all the material provided by contractor himself. for the same Tds Should be deducted or not ??? reply for the same with decided cases if u have ????????
Definition of Work u/s 194C clarified- as par budget 2009 TDS on outsourcing contract 1 Excluded where product made under specification of customer – raw material purchased from other person However, Included Contract where raw material is supplied by customer Value for TDS- In case invoice separately reflects raw material value – TDS on amount excl Raw Material Value otherwise TDS on Full Invoice Amount. my doubt is upon 1 point above . as per me all material provided by contractor himself.. sir can u dispel this doubt
16 October 2010
see tax is deducted on the income as you disclosed that your contractor is providing all the material from there end but that is not his income , yaa of course you are reimbursing that but in this case tds will be deducted only on the amount you are paying for there services means total amount paid by you minus cost of material supplied by them hope you doubt has been cleared
16 October 2010
Building construction is not, as per my understanding,a manufacture or supply of a product with in the meaning of explantion (iv) (e) to section 194C of the Income tax Act,1961. In view of that, from where the material is purchased need not be looked into. But the definition of work is an inclusive one, therefore,contract done by the contracor using his own material (not purchased from open market or purchased from awarder) is a "work"on which tax has to be deducted under section 194C of the said act.
CAclubindia
