tds on job work
This query is : Resolved
Ashish Kumar Pandey
(Querist)
24 June 2010
Dear sir,
if i need finish material for own fixing work at our company but the schedule is we made only the payment for suppliers on be half of jobworker and further suppliers send the material for jobwork to directaly billing to jobworker and he is also claimed cenvat and booking purchase,during the jobwork he is additional glass fix to said material material send to me through central sales tax systems. so tell me above matter the tds liability is applicable or not and which hand.
if i need finish material for own fixing work at our company but the schedule is we made only the payment for suppliers on be half of jobworker and further suppliers send the material for jobwork to directaly billing to jobworker and he is also claimed cenvat and booking purchase,during the jobwork he is additional glass fix to said material material send to me through central sales tax systems. so tell me above matter the tds liability is applicable or not and which hand.
CA Sanat Pyne
(Expert)
24 June 2010
section 194C WILL BE APPLICABLE.
24 June 2010
Clarification regarding “work” under section 194C.
There is ongoing litigation as to whether TDS is deductible under section 194C on outsourcing contracts and whether outsourcing constitutes work or not. To bring clarity on this issue, it is proposed to provide that “work” shall not include manufacturing or supplying a product according to the requirement or specification of a customer by using raw material purchased from a person other than such customer as such a contract is a contract for ‘sale’. This will however not apply to a contract which does not entail manufacture or supply of an article or thing (e.g. a construction contract).
It is also proposed to include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer, within the definition of ‘work’. It is further proposed to provide that in such a case TDS shall be deducted on the invoice value excluding the value of material purchased from such customer if such value is mentioned separately in the invoice. Where the material component has not been separately mentioned in the invoice, TDS shall be deducted on the whole of the invoice value.
It is further proposed to make the amendments effective from the 1st day of October, 2009. Accordingly, the proposed amendments will apply to credits or payment effected on or after 1st October, 2009.
As per amendment , work contract
include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer
In your case ,supplier is direct supplying material to jobwork, hence 194 C will not applicable.
There is ongoing litigation as to whether TDS is deductible under section 194C on outsourcing contracts and whether outsourcing constitutes work or not. To bring clarity on this issue, it is proposed to provide that “work” shall not include manufacturing or supplying a product according to the requirement or specification of a customer by using raw material purchased from a person other than such customer as such a contract is a contract for ‘sale’. This will however not apply to a contract which does not entail manufacture or supply of an article or thing (e.g. a construction contract).
It is also proposed to include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer, within the definition of ‘work’. It is further proposed to provide that in such a case TDS shall be deducted on the invoice value excluding the value of material purchased from such customer if such value is mentioned separately in the invoice. Where the material component has not been separately mentioned in the invoice, TDS shall be deducted on the whole of the invoice value.
It is further proposed to make the amendments effective from the 1st day of October, 2009. Accordingly, the proposed amendments will apply to credits or payment effected on or after 1st October, 2009.
As per amendment , work contract
include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer
In your case ,supplier is direct supplying material to jobwork, hence 194 C will not applicable.
CA Sanat Pyne
(Expert)
25 June 2010
BANSAL JI TDS U/S 194 WILL BE DEDUCTED ON THE BILL SUBMITTED BY THE JOB WORKER. IF COMBINED BILL FOR MATERIAL AND JOB WORK CHARGES ARE GIVEN, TDS WILL BE DEDUCTED ON TOTAL BILL AMOUNT. IF SEPARATE BILL FOR MATERIAL AND JOB WORK CHARGES IS GIVEN TDS WILL BE DEDUCTED ON JOB WORK CHARGES.
25 June 2010
Dear Pyne Ji,
There is no jobwork between party. The party purchase material from the person directed by the vendor and use it and sold material to vendor after charging sales tax.
Hence no tds will be deducted.
Our company having vendor lg/samsung are supplying materail to lg/samsung on same basis. Lg/Samsung direct us to purchase material form third party. We purchase from them and use it to make fg and sold it lG/samsung. there is no tds dedcuted by them.
If material is supplied by LG/Samsung and we use it to make FG, then they deducted tds as per new amendment.
There is no jobwork between party. The party purchase material from the person directed by the vendor and use it and sold material to vendor after charging sales tax.
Hence no tds will be deducted.
Our company having vendor lg/samsung are supplying materail to lg/samsung on same basis. Lg/Samsung direct us to purchase material form third party. We purchase from them and use it to make fg and sold it lG/samsung. there is no tds dedcuted by them.
If material is supplied by LG/Samsung and we use it to make FG, then they deducted tds as per new amendment.
CA CS Ravi Mehata
(Expert)
01 July 2010
I agree with Bansal Sir.
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