TDS on Medcine purchase

This query is : Resolved

Sarvesh Mani Tiwari,CFA(ICFAI) (Querist)
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07 March 2009 Whether TDS is applicable on Medcine purchase by Distt Health Socitey for free distribution in Govt Hospital u/s 194C.

CA Tilak Raj Sharma

CA Tilak Raj Sharma (Expert)
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07 March 2009 If there is agreement with a specific agency for the purchase. If the medicines are purchased from open market and no contract/agreement, then there will be no need to deduct TDS.

Sarvesh Mani Tiwari,CFA(ICFAI)

Sarvesh Mani Tiwari,CFA(ICFAI) (Querist)
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08 March 2009 Thanks u Sir,
But in Sec 194 C TDS is applicable on supply of Labour and there is no other reference of purchase or supply material?

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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27 July 2025 Exactly! You’re on point.

**Section 194C** deals with **payments to contractors or subcontractors for work done** — mainly **labor or services**. It **does not apply to mere purchase or supply of goods/materials** like medicines.

So,

* If the District Health Society **purchases medicines directly from the market** (no contract for “work” but just buying goods), **no TDS under section 194C**.
* If there is a **contract with an agency** that includes supply + service (like distribution or handling), TDS under 194C might apply on the service part.

In short: **TDS is not applicable on pure purchase of medicines** under 194C.

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