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TDS on contract payment

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03 July 2008 Whether tax is required to be deducted at source on oxygen cylinder holding charge paid to seller of oxygen gas ? Can holding service be covered within the definition of contract attracting provision of TDS u/s. 194 C ? Here, it is to be noted that in the business of sale of oxygen gas, the bill is dividend in two parts, i.e. partially for gas and partially for charges viz. holding charge, maintenance charge etc.
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Sanjeev Kumar Varshney

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Sanjeev Kumar Varshney (Expert)
03 July 2008 Dear Josef

This is the trade practice of Gas business to bifurcate sale price into 2/3 parts to avoid Excise and VAT. The holding charges are not liable to TDS. You are purchasing the O2 gas on a agreed price and booking entire amount as purchase cost, hence no need to deduct ant TDS.
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