Can we deduct tds contract-94c & works contract both.
This query is : Resolved
15 April 2013
CAN WE DEDUCT TDS CONTRACT-94C & WORKS CONTRACT IN ONE BILL ? IF YES, IN WHICH CRITERIA THIS IS POSSIBLE ?. I REQUIRE YOUR GUIDANCE IN DETAIL.
06 May 2013
Dear Experts, Can you guide us in this matter at your earliest ?
18 July 2024
Yes, TDS (Tax Deducted at Source) under section 194C and section 194J can be deducted on the same bill under certain conditions. Here’s how each section applies:
1. **Section 194C - Payments to Contractors**: This section applies to payments made to contractors for any work (including supply of labor for carrying out any work), which may include works contracts. The key points are:
- TDS at the rate of 1% (for individual/HUF) or 2% (for others) is deducted on payments exceeding Rs. 30,000 in a single payment or Rs. 1,00,000 in aggregate during the financial year.
- Works contract payments are also covered under this section if they involve supply of labor for carrying out the work.
2. **Section 194J - Payments to Professionals or Technical Services**: This section applies to payments made to professionals or technical service providers. The key points are:
- TDS at the rate of 10% is deducted on professional fees, technical fees, royalty, non-compete fees, etc.
- This can include payments to architects, interior decorators, surveyors, engineers, etc.
**Can Both TDS under Section 194C and 194J be Deducted on the Same Bill?**
Yes, it is possible to deduct TDS under both sections 194C and 194J on the same bill if the bill includes payments that fall under both categories. Here are scenarios where this might apply:
- **Composite Services**: If a single bill includes payments for both works contract services (under section 194C) and professional or technical services (under section 194J), TDS can be deducted under both sections for the respective portions of the payment.
- **Separate Identification**: It’s crucial that the invoice or bill clearly identifies and segregates the different components of the payment:
- The portion attributable to works contract services (which would fall under section 194C).
- The portion attributable to professional or technical services (which would fall under section 194J).
**Example:**
Suppose a bill from a contractor includes:
- Rs. 50,000 for actual work done (works contract, covered under 194C).
- Rs. 20,000 for professional advice or consulting services (technical services, covered under 194J).
In this case, you would deduct:
- TDS at 2% (or 1%, as applicable) on Rs. 50,000 under section 194C.
- TDS at 10% on Rs. 20,000 under section 194J.
Ensure that the invoice clearly mentions the nature of services provided and the corresponding amounts to apply the correct TDS rates under each section.
**Conclusion:**
Yes, you can deduct TDS under both section 194C (for works contract) and section 194J (for professional or technical services) on the same bill if the bill clearly segregates the payments for each type of service. Proper documentation and adherence to TDS rules are essential to avoid any issues during audits or assessments.
1. **Section 194C - Payments to Contractors**: This section applies to payments made to contractors for any work (including supply of labor for carrying out any work), which may include works contracts. The key points are:
- TDS at the rate of 1% (for individual/HUF) or 2% (for others) is deducted on payments exceeding Rs. 30,000 in a single payment or Rs. 1,00,000 in aggregate during the financial year.
- Works contract payments are also covered under this section if they involve supply of labor for carrying out the work.
2. **Section 194J - Payments to Professionals or Technical Services**: This section applies to payments made to professionals or technical service providers. The key points are:
- TDS at the rate of 10% is deducted on professional fees, technical fees, royalty, non-compete fees, etc.
- This can include payments to architects, interior decorators, surveyors, engineers, etc.
**Can Both TDS under Section 194C and 194J be Deducted on the Same Bill?**
Yes, it is possible to deduct TDS under both sections 194C and 194J on the same bill if the bill includes payments that fall under both categories. Here are scenarios where this might apply:
- **Composite Services**: If a single bill includes payments for both works contract services (under section 194C) and professional or technical services (under section 194J), TDS can be deducted under both sections for the respective portions of the payment.
- **Separate Identification**: It’s crucial that the invoice or bill clearly identifies and segregates the different components of the payment:
- The portion attributable to works contract services (which would fall under section 194C).
- The portion attributable to professional or technical services (which would fall under section 194J).
**Example:**
Suppose a bill from a contractor includes:
- Rs. 50,000 for actual work done (works contract, covered under 194C).
- Rs. 20,000 for professional advice or consulting services (technical services, covered under 194J).
In this case, you would deduct:
- TDS at 2% (or 1%, as applicable) on Rs. 50,000 under section 194C.
- TDS at 10% on Rs. 20,000 under section 194J.
Ensure that the invoice clearly mentions the nature of services provided and the corresponding amounts to apply the correct TDS rates under each section.
**Conclusion:**
Yes, you can deduct TDS under both section 194C (for works contract) and section 194J (for professional or technical services) on the same bill if the bill clearly segregates the payments for each type of service. Proper documentation and adherence to TDS rules are essential to avoid any issues during audits or assessments.
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