TDS on Sanitary Contracts

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This query is : Resolved

Baljeet Singh (Querist)

22 December 2009 Our company is engaged in a sanitary contract with a private contractor. He provides the sweepers for cleaning of toilets and office premises and generally charges the labour charges in his invoice. Further, sometimes as required, he charges for material cost (i.e taps, sinks, acid bottles, perfumes etc) used in the maintenance of toilets. He shows the material value separately in his invoice. At what rate should we deduct the TDS on his invoice and on what amount(i.e on labour portion & material Value or labour portion alone)? Please reply soon.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)

22 December 2009 If he shows the Material value separatly no need to deduct the tds on material value, you deduct only the portion of labour charges

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

22 December 2009 If the contractor purchases materials FROM YOUR COMPANY and after doing the job, raises a bill in which the material cost and labour is separately shown, then the company has to deduct income tax on the labour component only under the substituted section 194C. If the said bill is raised as a composite bill,ie without bifurcation of material and labour ,income tax is to be deducted on the entire bill amount.
On the other hand, if the contractor purchases materials from the market, ie NOT FROM YOUR COMPANY, then the job he does will not come under the definition "WORK" given in explanation (iv)of the said section and accordingly no income tax deduction is required. For details pl read the substitued section in The Finance (No.2) Bill,2009.