TDS on Labour Supply & Commission: Section 194C vs 194H

This query is : Resolved

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This discussion clarifies the correct Tax Deducted at Source (TDS) section applicable to invoices for labour supply in construction. The query centres on whether TDS applies under Section 194C to the entire billed amount, including the contractor's commission, or if Section 194H should be used specifically for the commission portion. The consensus advises that if the contract is for labour supply and the total amount is paid to the contractor, Section 194C is generally applicable to the entire sum.

PARAS CHHAJED

PARAS CHHAJED

(Querist)
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08 May 2023 For construction work, the contractor who is an individual is supplying labour and billing the charges paid by him as per actual attendance of the labour. On the total amount of labour wages, he charges his profit as commission @ 10% of total wage bill for a particular period. Please advise me as to TDS will be applicable on entire billed amount u/s 194C only or TDS will be u/s 194H on contractor's margin (Commission). Thanks

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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08 May 2023 You are paying total amount (& not reimbursement of individual labor payments) to the contractor, sec. 194C will apply.

PARAS CHHAJED

PARAS CHHAJED

(Querist)
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09 May 2023 Thanks for the guidance provided.

The bill is like this:
Period 01.05.2023 to 07.05.2023
Supply of labour for construction work at site

Skilled Labour 3 persons 7 days @ 500 each = Rs.10,500
Mason 3 persons 5 days @ 800 = Rs.12,000
Coolie 10 persons 7 days @ 400 per day = Rs.28,000
TOTAL Rs.50,500
Add commission @ 10% of above Rs. 5,050
Grand Total Rs.55,550

Kindly guide for the above referred bill.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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09 May 2023 If your contract is for supply of labour, go with sec. 194C of the act.

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