Tds on chargeable issue of store item
This query is : Resolved
31 August 2011
Please help me and give your valuable opeinion
As per Incmoe tax Act, TDS is deductable at the time of paymnet in cash , cheque or any other mode or credit whicever is earlir. I have doubt whether TDS will be deductable if comany issue material to its contractor on chargeable basis. i.e. on issue of material ,amount equivalent to store item value is debited in contractor account as may be considered as payment by any other mode.
As per Incmoe tax Act, TDS is deductable at the time of paymnet in cash , cheque or any other mode or credit whicever is earlir. I have doubt whether TDS will be deductable if comany issue material to its contractor on chargeable basis. i.e. on issue of material ,amount equivalent to store item value is debited in contractor account as may be considered as payment by any other mode.
31 August 2011
if you are supplying material to your contractor for the work on same and you are charging for that than it will not be eligible for TDS under work Contract as per new definition of Work contract applicable from 01.10.2009.
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01 September 2011
Thank you sir for valuable reply and i m agree with your reply but mentioned section of TDS/work contract is applicable in case of manufacturing or supplying a product ......In my case comany rescived security service from other company issue store item like umbrell, torches, cylinder gass etc. to security service provider.Is the same rules are applicable in this case too.
27 July 2025
Great question! Here’s a clear explanation on **TDS on chargeable issue of store items to contractors or service providers**:
---
### Situation:
* Your company **issues store items (like umbrella, torches, gas cylinders, etc.)** to a contractor or service provider.
* These items are **charged back** to the contractor (i.e., the contractor’s account is debited with the value).
* You want to know if **TDS is deductible on this “payment” by crediting the contractor’s account** (since no actual cash payment happens).
---
### What the Law Says:
1. **TDS is deductible at the time of payment or credit, whichever is earlier.**
2. If you are **charging the contractor for the material issued**, this debit in contractor’s account **amounts to payment by any other mode**, so it will trigger TDS liability.
3. **Is this amount considered payment for "work"?**
* As per the amended definition of **Work Contract (effective from 01.10.2009)**, the supply of goods or material by itself is **not considered a work contract** unless it involves labor or services.
* Therefore, if the material is supplied **separately and charged**, then TDS on work contract under **Section 194C** is **not applicable on the material supply value**.
4. **But TDS may apply if these charges fall under other relevant sections**, e.g.,
* If the contractor is providing **security services**, and you are charging material used, you may deduct TDS on the service charges under **Section 194C** (work contract/service contract).
* However, on the **value of material charged separately**, TDS under 194C generally **does not apply**.
---
### Summary:
| Aspect | TDS Applicability | Section |
| ------------------------------------------------------- | ----------------------------------------- | ------------- |
| Material charged separately to contractor | **No TDS under Section 194C** | - |
| Payment for services (including use of material) | **TDS applicable under Section 194C** | 194C |
| Debit of material value to contractor account (no cash) | **TDS is triggered as payment or credit** | As applicable |
---
### Practical Advice:
* Deduct TDS on the **service portion** of the bill under 194C.
* **Do not deduct TDS on the material supply amount** charged to the contractor.
* Make sure to clearly **break up the invoice** into material and service components to avoid confusion.
---
If you want, I can help you draft a sample invoice format or TDS calculation sheet for this scenario. Would that help?
---
### Situation:
* Your company **issues store items (like umbrella, torches, gas cylinders, etc.)** to a contractor or service provider.
* These items are **charged back** to the contractor (i.e., the contractor’s account is debited with the value).
* You want to know if **TDS is deductible on this “payment” by crediting the contractor’s account** (since no actual cash payment happens).
---
### What the Law Says:
1. **TDS is deductible at the time of payment or credit, whichever is earlier.**
2. If you are **charging the contractor for the material issued**, this debit in contractor’s account **amounts to payment by any other mode**, so it will trigger TDS liability.
3. **Is this amount considered payment for "work"?**
* As per the amended definition of **Work Contract (effective from 01.10.2009)**, the supply of goods or material by itself is **not considered a work contract** unless it involves labor or services.
* Therefore, if the material is supplied **separately and charged**, then TDS on work contract under **Section 194C** is **not applicable on the material supply value**.
4. **But TDS may apply if these charges fall under other relevant sections**, e.g.,
* If the contractor is providing **security services**, and you are charging material used, you may deduct TDS on the service charges under **Section 194C** (work contract/service contract).
* However, on the **value of material charged separately**, TDS under 194C generally **does not apply**.
---
### Summary:
| Aspect | TDS Applicability | Section |
| ------------------------------------------------------- | ----------------------------------------- | ------------- |
| Material charged separately to contractor | **No TDS under Section 194C** | - |
| Payment for services (including use of material) | **TDS applicable under Section 194C** | 194C |
| Debit of material value to contractor account (no cash) | **TDS is triggered as payment or credit** | As applicable |
---
### Practical Advice:
* Deduct TDS on the **service portion** of the bill under 194C.
* **Do not deduct TDS on the material supply amount** charged to the contractor.
* Make sure to clearly **break up the invoice** into material and service components to avoid confusion.
---
If you want, I can help you draft a sample invoice format or TDS calculation sheet for this scenario. Would that help?
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