Liablity of Tds on the Composite bill

This query is : Resolved 

02 September 2008


In works contract service, a person( contractor) constructs a building for Mr.A wherein material ( Rs 10,000)and labour( Rs.6,000) was supplided by the contractor for construction of building .

So if Contractor issues a bill( i.e one bill) for his service in which he bifercates his expences of material and labour seperately . On which amount T.D.S will be deducted
a) On Rs. 16,000 (i.e total value of bill)

b) On Rs 6,000 ( only labour)



CA E.A.Ravikumar (Expert)
02 September 2008

Section refers to any sum paid and that, therefore, even reimbursement of actual expenses cannot be deducted out of the bill amount for the purpose of deduction of tax at source.

Circular No. 715 dated August 8, 1995, may be refereed to

It may also be noted that the Supreme Court in the context of Section 194C has in Associated Cement Co. Ltd vs CIT (1993 201 ITR 435 SC) held that tax has to be deducted on the gross amount of the bill and not on the value of the bill as reduced by reimbursement of expenses.

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