Tds on fixed asset

This query is : Resolved

sivashankar (Querist)
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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

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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18 June 2016 yes TDS apply on the contract value under section 194C

sivashankar

sivashankar (Querist)
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20 June 2016 but we are not clime depreciation

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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27 July 2025 Here’s how TDS works in your scenario regarding fixed asset construction:

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### 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**.

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### 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.

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### 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 |

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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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