TDS on Reimbursement

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punit pandya (Querist)
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16 February 2011 Suppose a contractor has raised an invoice for Rs. 10,000/- for service charges and Rs. 25,000/- as reimbursement of Octroi charges. There is octroi challan only for Rs. 20,000/- attached as supporting for octroi expenses incurred. Is there a provision which says to deduct TDS @ 20% on unsupported reimbursement amount of Rs. 5,000/- ? On the balance amount of Rs. 10,000/- TDS would be deducted @ 2% u/s 194C? Is there any circular for such provision?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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16 February 2011 There is no such provision for unsupported reimbursement amount of 20% TDS.

You may tell the contractor to Raise the bill of 20000/ for reimbursement(No TDS) of Octroi and 15000/ for service charges (2% TDS Applicable).

If he does not issue you a bill , deduct TDS on total payment of Rs 35000/ @ 2 %.

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