TDS in case of Work Contract

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This query is : Resolved

saurabh agarwal (Querist)

23 November 2007 There is a back to back work contract agreement between a contractor and a sub contractor.The clause of agree. is that contractor will raise a bill of gross amt. to contractee. and out of the payment received from the contractee, the contractor will deduct a sum of Rs. 5% of amt. received(out of gross bill local taxes and TDS will be deducted) and than the balance will be paid to sub contractee. My query is on which amt. the contractor will deduct TDS and make a payment to sub-contractor(whether on gross amt or on the amt. to be paid tothe sub-contractee). and whether this 5% amt will come under the purview of Sec.194J.

saurabh agarwal

saurabh agarwal (Querist)

23 November 2007 pls reply earliest

CA. O.P. Agarwalla

CA. O.P. Agarwalla (Expert)

24 November 2007 Mr. Saurabh,

In my opinion:-

01. There is one main Contract on which the contracte will deduct TDS u/s. 194C(1)@ 2% + ....

02. There is a sub-contract for the value of 95% of the Main Contract. Contractor will deduct TDS u/s. 194C(2)@ 1% +.....

03. No body in case is paying any fees for professional or technical services. Section 194J will not be applied.

saurabh agarwal

saurabh agarwal (Querist)

26 November 2007 Respected Sir,
By Mistake The section was wrongly quoted. The 5% amt. which i m taking about is regarding Commission and whetehr Sec. 194H will be attracted or not in thos case. pls reply

saurabh agarwal

saurabh agarwal (Querist)

28 November 2007 modified

CA. O.P. Agarwalla

CA. O.P. Agarwalla (Expert)

30 November 2007 I do not think the deduction of profit margin in allotting sub-contract will fall under the category of commission.

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