TDS on Penality
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
03 March 2010
As per Agreement with contractor he is liable to pay penality in case not completing the contract on time. I want to know the penality is liable to TDS or Not? If Yes How to calculate the TDS?
03 March 2010
Penalty per se is not exigible to TDS, as it is not a payment for carrying out any work.
Amount paid or credited is the base for TDS deduction u/s 194C.
If the Gross Amount is credited to the account of the contractor and the amount of penalty is debited there after, indirectly, the amount of penalty gets covered.
On the other hand, if the net amount is credited to the account of the contractor, the penalty gets excluded.
Amount paid or credited is the base for TDS deduction u/s 194C.
If the Gross Amount is credited to the account of the contractor and the amount of penalty is debited there after, indirectly, the amount of penalty gets covered.
On the other hand, if the net amount is credited to the account of the contractor, the penalty gets excluded.
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