Tds on works contract u/s 194c

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

26 May 2012 As per the provision of 194C sub section 3
(3) Where any sum is paid or credited for carrying out any work mentioned in sub-clause (e) of clause (iv) of the Explanation, tax shall be deducted at source—

(i) on the invoice value excluding the value of material, if such value is mentioned separately in the invoice; or

(ii) on the whole of the invoice value, if the value of material is not mentioned separately in the invoice.

Explanation.—For the purposes of this section,—

(iv) "work" shall include—

(a) advertising;

(b) broadcasting and telecasting including production of programmes for such broadcasting or telecasting;

(c) carriage of goods or passengers by any mode of transport other than by railways;

(d) catering;

(e) manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer,

but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer.’.

Hence I want to know
1.That for the purpose of 194C the definiton of works is exhaustive to one which is specified or other works contact are also covered (i.e construction etc)
2. for deduction of TDS value of material if seperately disclosed on bill is to be excluded is applicable only in relation to sub-clause (e) of clause (iv) of the Explanation- which is applicable only if material is supplied by the customer.
Thus in case of normal works contract(i.e not involving manufacture or supply of goods) where material is not supplied by the customer but it is separately disclosed in the invoice , how TDS should be deducted?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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27 May 2012 Q 1.

"(iv) " work" shall INCLUDE... Thereby the list is an inclusive one and as such other contracts are very well covered.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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27 May 2012 Q.2.

Your observation is correct.

It is related with such contracts in which material is supplied by the customer to the Contractor and value of the goods are mentioned separately in invoice at the time of supply of material as well as at the time of receipt of the product.
.
In such type of cases TDS is required to be deducted on the amount after subtracting from the invoice value -the value of the goods so supplied.
.
In other cases on the whole invoice amount
TDS is required to be deducted.
.

Querist : Anonymous

Querist : Anonymous (Querist)

28 May 2012 I thought the same as above but there is lots of ambiguity over the same different peopole are of different opinin. Anyways Thanks for the clarification

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