Tds on royalty deducted from payment to contractor

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HARSHIT JAIN (Querist)
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18 November 2013 Sir,

If a contract has been entered with an individual contractor for work order in relation to a civil work and the contractor has used soil, concrete etc. to which royalty is to be paid to government. Than in such case if the company has deducted amt. for royalty and deposited the same to government, than TDS should be deducted on amt finally credited to contractor's account or gross amt. inc. royalty deduction.

SANTOSH SAGAR K

SANTOSH SAGAR K (Expert)
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19 November 2013 From a practical perspective and on a conservative basis, you may deduct tax on the gross amount billed (including Royalty).

However, on a technical note, I would summarise as below:

Civil Work Order - Rs. 100
Royalty - Rs. 10
Balance payment towards civil work - Rs. 90
TDS @ 10% on Royalty = Rs. 1
TDS @ 1%/2%/10% on Rs. 90 as applciable

However, it may be advisable to obtain separate bills for the gross amount of Royalty on which tax was dedcuted and paid thereon to the Government.

Trust this clarifies.

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