02 February 2009
a company is deducting TDS for a contractor on bill to bill basis. however now the total transactions with the said party has crossed Rs 50,000. Now my question is whether TDS has to be deducted on all the bills irrespective of the amounts or not??? Please help.
02 February 2009
Hi, As per Income Tax Act, on payments to contractors, TDS has to be deducted @ 2% at the time of credit to party or payment, whichever is earlier. In case of Contract, the ceiling is Rs.20,000/-. In your case, if there is probability that some more contracts will be entered into with the same party in the same financial year, and the same will exceed the Rs.20,000/-, then you need to deduct tax.
CAclubindia
