Tds on fixed asset
This query is : Resolved
sivashankar
(Querist)
18 June 2016
sir
i want to know one thing if company have factory building i will construct a new building i will make agreement with MR.V as a contractor i provide all material but i pay only agreement amount ( labour charge i not paid that include of agreement amount not show separately ) i want to deduct TDS or not give me the suggestion
i want to know one thing if company have factory building i will construct a new building i will make agreement with MR.V as a contractor i provide all material but i pay only agreement amount ( labour charge i not paid that include of agreement amount not show separately ) i want to deduct TDS or not give me the suggestion
CMA Ramesh Krishnan
(Expert)
18 June 2016
yes TDS apply on the contract value under section 194C
sivashankar
(Querist)
20 June 2016
but we are not clime depreciation
27 July 2025
Here’s how TDS works in your scenario regarding fixed asset construction:
---
### Situation Recap:
* Your company is constructing a new building.
* You are providing all the **materials**.
* You are paying **Mr. V (contractor)** only for **labour/contract work** included in the agreement amount (no separate billing for labor).
* You want to know if **TDS is deductible** on the agreement amount under **Section 194C**.
* Also, you mentioned **not claiming depreciation**.
---
### Key Points on TDS:
1. **TDS Applicability under Section 194C:**
* Section 194C applies to payments to contractors for carrying out any work (including supply of labor).
* Since Mr. V is providing **contractual labour/service** (even if material is provided by you), the payment made to him is for **work contract services**.
* You **must deduct TDS under Section 194C** on the entire agreement amount paid to Mr. V, irrespective of whether materials are supplied by you or not.
2. **Threshold:**
* TDS is deductible if payment exceeds ₹30,000 per contract or ₹1,00,000 in aggregate in a financial year.
* TDS rates:
* 1% for individual/HUF contractors
* 2% for others (including companies)
3. **Impact on Depreciation:**
* Whether or not you claim depreciation on the building does **not affect your TDS liability**.
* TDS is a withholding tax obligation on payment to contractors and is independent of asset depreciation or tax treatment.
---
### Summary:
| Aspect | Guidance |
| ---------------------------- | ----------------------------------- |
| Payment to contractor | Yes, TDS under Section 194C applies |
| Material supplied by company | No impact on TDS applicability |
| Claiming depreciation | Independent of TDS deduction |
---
If you want, I can help you draft the TDS calculation or provide the exact wording for deducting TDS in this scenario!
---
### Situation Recap:
* Your company is constructing a new building.
* You are providing all the **materials**.
* You are paying **Mr. V (contractor)** only for **labour/contract work** included in the agreement amount (no separate billing for labor).
* You want to know if **TDS is deductible** on the agreement amount under **Section 194C**.
* Also, you mentioned **not claiming depreciation**.
---
### Key Points on TDS:
1. **TDS Applicability under Section 194C:**
* Section 194C applies to payments to contractors for carrying out any work (including supply of labor).
* Since Mr. V is providing **contractual labour/service** (even if material is provided by you), the payment made to him is for **work contract services**.
* You **must deduct TDS under Section 194C** on the entire agreement amount paid to Mr. V, irrespective of whether materials are supplied by you or not.
2. **Threshold:**
* TDS is deductible if payment exceeds ₹30,000 per contract or ₹1,00,000 in aggregate in a financial year.
* TDS rates:
* 1% for individual/HUF contractors
* 2% for others (including companies)
3. **Impact on Depreciation:**
* Whether or not you claim depreciation on the building does **not affect your TDS liability**.
* TDS is a withholding tax obligation on payment to contractors and is independent of asset depreciation or tax treatment.
---
### Summary:
| Aspect | Guidance |
| ---------------------------- | ----------------------------------- |
| Payment to contractor | Yes, TDS under Section 194C applies |
| Material supplied by company | No impact on TDS applicability |
| Claiming depreciation | Independent of TDS deduction |
---
If you want, I can help you draft the TDS calculation or provide the exact wording for deducting TDS in this scenario!
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