Tax Deduction at Source

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This query is : Resolved

Reetika Goel (Querist)

26 February 2008 Suppose an enterprenuer has employed some labourers on contract basis who will be relived after the contract is over.
they are paid wages @ Rs. 100 per day with Rs. 5 per day as commission.
Under which head Tds will be deducted
- Section 194C
- Section 194H
or both by dividing the expenditure into their respective natures.

CA Saurabh Maheshwari

CA Saurabh Maheshwari (Expert)

26 February 2008 WHEN THE COMMISSION IS FIXED AT THE TIME THE CONTRACT WAS UNDERTAKEN ,IT MEANS AMOUNT PAYABLE TO LABOURERS IS RS.105/- AND IT WILL BE COVERED UNDER CONTRACT AND TDS SHALL BE APPLICABLE AS PER SECTION 194C.

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)

26 February 2008 Please clarify the following:
1. Is the entreprenuer directly engaging the labourers individually and paying them directly or he is engaging a cotractor who engages the labourers and the contractor raise the bill for the wages and money is paid to the contractor.

2. What is that commission amount and paid to whom?

CA. Vineet Grover

CA. Vineet Grover (Expert)

26 February 2008 Hi Reetika,

TDS shall be deducted u/s194C. The enterpreneur is paying under the contract. Further the commission is paid to the labours in lieu of salary.
Thus 194H shall not be applicable.

Rgds/
Vineet

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