TDS on material Supply

This query is : Resolved

Rakesh (Querist)
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28 September 2010
Dear All,

My vendor had raised a bill of Rs 2586311/- against interior fit out for developing a retail store. The bill had been charges in the following way.

Total- 23,00,088
67 % of the total amount- 15,41,059
Vat @ 13.5% on 67%- 2,08,043
33 % of the total amount- 7,59,029
Service Tax @ 10.3% on 33%- 78,180
Grand total- 25,86,311

There are two query on my in the above case.
1. Under which section the TDS will be applicable (194 C or 194 J)
2. The TDS will be deducted on which amount (On Labour job value or gross value).

Kindly give me the case law for the above answer, accordingly i will update my vendor.

CA Punit

CA Punit (Expert)
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28 September 2010 Interior decorator service comes under the category of professional services, hence 194J would be applicable.
TDS should be made on gross amount i.e. Rs. 2586311

O.D.SHARMA

O.D.SHARMA (Expert)
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29 September 2010 Hi,
TDS will be deducted on labour ,Not on gross value.VAT bill will not attract TDS

Kishanlal Paliwal

Kishanlal Paliwal (Expert)
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30 September 2010 From the query, it is clear that the transaction is composite contract for interior decoration work.

Service Tax is applied on abated amount i.e. 33% only.

TDS would be applicable on Gross bill amount payable to the Contractor.

Regards
K.L.Paliwal

CA Arvind Singh Chawla

CA Arvind Singh Chawla (Expert)
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30 September 2010 It appears from the query, the vendor is taking abatement under notification 1/2006: which is not applicable for completeion and finishing services

Further interior decorator category is not allowed abatement of 67% as claimed in bill

Either the vendor should show a material sale and pay tax on balance (labour) OR bill under works contract under composition ( subject to conditions fulfilling works contract) OR pay tax @ 10.30%

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