Confusion on TDS Applicability

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A user is seeking clarification on Tax Deducted at Source (TDS) applicability for machinery purchases where installation was initially assumed to be included. After receiving a separate invoice for installation, they are unsure whether to deduct TDS under Section 194C or 194J, and how to justify past TDS deductions on machinery invoices. The advice given suggests deducting TDS on installation charges under Section 194C and not on the supply of machinery itself, treating it as a works contract where the vendor can claim credit later.

Sapan

Sapan (Querist)
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12 March 2021 Hi Everyone,

We have purchased machinery and as vendor issued invoices one by one i assumed that the machinery is inclusive of installation so i deducted TDS u/s 194C . Now later on they issued separate invoice for installation .

So what to do ?

Should I deduct TDS u/s 194C or 194J for installation invoice & that too on what rate ?
If I deduct TDS on installation then what to answer if they ask that why you deduct TDS on machinery invoices ?

Thanks in Advance

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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12 March 2021 Deduct TDS on installation charges under section 194c. No need to deduct TDS on supply of machinery.

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Sapan

Sapan (Querist)
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13 March 2021 Sir that's true. But as initially only machines were supplied so i deducted TDS that time considering machinery + installation. So now what justification i shud give regarding deduction of TDS on Machinery invoices as Installation Invoice raised lastly after machinery invoices .

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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13 March 2021 Some times it will be considered as works contract and TDS made for the whole amount. It's not a problem let him claim credit in filing ITR.

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Sapan

Sapan (Querist)
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13 March 2021 Thank you sir for your prompt reply for solution.

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