This is with respect to my earlier Question regarding TDS on penalty.
According to me there is two way to deduct TDS on payment made to Contractor witch include penalty also.:-
Lets Service charges(Including S.Tax) = 100 , Penality = 20, TDS Rate = 2%
Method 1 for TDS Calculation :-
Amount for TDS Calculation = (100-20) = 80
TDS = (80*2%) =1.6
Net Amount Payble to contractor =(80-1.6) =78.4
Method 2 :
Amount for TDS Calculation = (100)
TDS = (100*2%) = 2
Amount Payble to contractor =(100-2-20) = 78
Which method is correct ?
CAclubindia
