Tds on contracts

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This query is : Resolved

Deepak (Querist)

26 March 2014 Two payments are made to the contractor in a financial year:-
1. Rs. 45000/-
2. Rs. 25000/-
Should TDS be done on Rs. 45000/- as single payment exceeds Rs. 30000/- ? Or should TDS not be done as total payments does not exceed Rs. 75000/- ?
Clarify under below two situations :
1. There are two separate bills for the above respective payments.
2. There is only one bill of Rs. 70000/- but payment made as above.

Sandeep Dharar

Sandeep Dharar (Expert)

26 March 2014 Deepak if the contractors r issuing 2 invoices i.e, Rs. 45k & Rs. 25K, then deduct TDS on Rs. 45K only(if PAN is not quoted & the contractor is one party) coz. it crosses the limit of Rs.30K, & if same invoice is issued of Rs. 70K(45+25) then no TDS, coz Limit of 75K does not cross.

C.A. Mayur J. Raiyani

C.A. Mayur J. Raiyani (Expert)

26 March 2014 single 30k : payment or account credited or
aggregate 75K : payment or account credited whichever is earlier in order to hit 194c
1.payment is made before account is credited (i.e. you are making advance payment) 45k then tds attracted as single pymt is >30k irrespective of separate bills are raissed. However if you have raised two separate bill so as it remain less than 30k and if you make pymt 45k in consolidation then tds is not attracted.
2. as one bill is credited with 70k, tds provisions gets attracted irrespective of payment thereafter.

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Deepak

Deepak (Querist)

26 March 2014 Sir,
what if it is a construction contract and firstly a bill is raised for 75% of work done for Rs. 45000/- and later a bill for 25% work done Rs. 15000/-?

C.A. Mayur J. Raiyani

C.A. Mayur J. Raiyani (Expert)

26 March 2014 in first case tds attracted as bill raised (account credited >30k). in 2nd case tds not attracted as bill is less than 30k also aggregate volume is less than 75k. once max cap 75k exceeds deduct tds on all transaction which fall under 194c.

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C.A. Mayur J. Raiyani

C.A. Mayur J. Raiyani (Expert)

26 March 2014 given your e-mail id, i'll send some more interesting example as i'll have some time.

Deepak

Deepak (Querist)

26 March 2014 Thank you.
My mail id is "dpak0104@gmail.com"

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