Tds to be deducted or not ?

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Merina (Querist)
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03 April 2013 Hi I am doing the audit of a construction company. They have specific people ,for eg Mr X for doing the painting work. There are lot of people working under Mr X. The Co has shown Mr X under creditors. Company is paying cash to Mr X and Mr X distribute the money to the employees working under him. He is submitting the details of payment made to all of them with their sign to the company. The payment made to Mr X (employees salary) is more than 10 lakhs per year.

Kindly answer the following questions

1) Whether TDS to be deducted as the company is giving the payment according to the work done (contractual nature)? The company says that it is salary saying that they keep the muster (but Mr X come under 'Creditors') !

2) Whether cash payment above Rs 20,000 provision applies in this case as they are giving figures like Rs 50,000 etc to Mr.X. Or is it not applicable as Mr X ditributes it to the employees which would be quite less than Rs 20,000?

Kindly reply

Ankit

Ankit (Expert)
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03 April 2013 Dear Merina,

According to me, it should not be treated as salary as this is a contract for painting work given by the company..

hence, according to me TDS u/s 194C should come.

- Ankit

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