Tds on combined bill

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RAJIV (Querist)
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29 June 2013 We are getting some work done on contract basis. We get a bill in which contractor gives bifurcation of material and labor charges. We are deducting TDS on total amount.

Please tell me if we are following correct practice or only TDS should be deducted on labour charges.

Kindly give section or circular reference.

don't give personal opinions

Ganeshbabu K

Ganeshbabu K (Expert)
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29 June 2013 Yes..

in your case

TDS is deductible on the invoice value excluding the value of material, if such value is mentioned separately in the invoice; or

Please refer 194C(3)

Thanks & regards
Ganesh babu k

Ganeshbabu K

Ganeshbabu K (Expert)
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29 June 2013 For your reference i am providing you said section extract here

194C(3) Where any sum is paid or credited for carrying out any work mentioned in sub-clause (e) of clause (iv) of the Explanation, tax shall be deducted at source—

(i) on the invoice value excluding the value of material, if such value is mentioned separately in the invoice; or

(ii) on the whole of the invoice value, if the value of material is not mentioned separately in the invoice.

What is contained in sub-clause (e) of clause (iv) of the Explanation,

(iv) "work" shall include—
(a)
(b)
(c)
(d)
(e) manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer,
but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer.]

Thanks & regards
Ganesh babu k

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