10 November 2009
If your proprietorship firm is exceeding the limits for audit u/s 44AB, you have to deduct TDS u/s 194C on the bill amount or under labour charges if bill separately shows invoice amount and labour charges.
10 November 2009
The substituted section 194C states that any person responsible for paying for the work contract between contractor and specified person.
The only specified individuals are:- (l) any person, being an individual or a Hindu undivided family or an association of persons or a body of individuals, if such person,— (A) does not fall under any of the preceding sub-clauses; and (B) is liable to audit of accounts under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such sum is credited or paid to the account of the contractor;
Since the word 'and' is used between (A) and (B) and not the word 'or', both conditions have to be satisfied.
Therefore apparently you have to deduct only if you are audited. However, still check from your CA if he disputes this view. At worst you will be deducting 2% TDS which the payee cannot dispute unless he submits certificate u/s 197.
Your organisation is NOT a Firm. Your organisation is a 'Proprietorship Concern' and it is not a concern that is distinctly seperate from the indivdual for purpose of Income Tax Act. You are still liable for TDS u/s 192 and 195 and your proprietorship concern is a branch of the individual when you apply for TAN number.
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