Tax Deducted at Source

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jijesh (Querist)

21 August 2008 a contractor hired machinery for his construction work.he treated this as a subcontract because machinery hired for the purpose of construction and dedut TDS @ 1%.is it possible..?

CHEZHIYAN

CHEZHIYAN (Expert)

21 August 2008 It Does not Fall Under The Meaning of Subcontract

CA Nallathambi Srinivasan

CA Nallathambi Srinivasan (Expert)

21 August 2008 If the contract for hiring machinery is made between Contractor and Sub contractor, and the payment made to sub contractor by contractor, then it is not treated as Sub Contract. But the payment is made by other than contractor who pays to contractor for construction work.

i.e A - Third Party
B - Contractor
C - Sub Contractor

If payment is made to C by A then TDS may be deducted at Sub Contract Rate, if the contract is made between B & C for hiring the Machinery.

Otherwise TDS should be deducted as normal Contract rate.

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