20 June 2009
TDS is required to be deducted on the entire amount of the bills. Please refer to the folloaing clarification issued by CBDT on this matter in circular no715 dated 08/08/1995
Question 30 : Whether the deduction of tax at source under sections 194C and 194J has to be made out of the gross amount of the bill including reimbursements or excluding reimbursement for actual expenses ?
Answer : Sections 194C and 194J refer to any sum paid. Obviously, reimbursements cannot be deducted out of the bill amount for the purpose of tax deduction at source.
Since in your case the single bill is issued, TDS needs to be deducted from the entire bill.
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