Tds u/s 194 c - diary sales
This query is : Resolved
01 February 2013
We are selling diaries. Some customers may ask for customization - in that instance we will make diaries as per the customers requirement. The cost of required customization will be included in the product cost. We wont bifurcate the customization costs in the bill. We will charge VAT /SALES TAX for total selling price of the product. In that case whether the TDS U/s 194 C will attract as implied contract. Please clarify.
04 February 2013
hai
vaibhav
please refer the cbdt circular no. 714, & 715 dated 3rd and 8th august 1995.
please explain me the" printed materials" in the explanatory Q & A of these circulars . (Question no. 15 and its answer)
vaibhav
please refer the cbdt circular no. 714, & 715 dated 3rd and 8th august 1995.
please explain me the" printed materials" in the explanatory Q & A of these circulars . (Question no. 15 and its answer)
28 July 2025
Great question! Here’s how **TDS under Section 194C** would apply in the case of **diary sales with customization** included in the product cost:
---
### Key points to consider:
1. **Nature of the Transaction:**
* If you are selling **goods** (diaries) to customers, that is a **sale of goods transaction**, and TDS under **Section 194C (contract payments)** does **not** apply.
2. **Customization as Part of Sale:**
* Even if customization is done as per customer’s requirement, but the customization cost is **included in the price of goods** (not separately charged), it still remains a **sale of goods**.
* There is **no separate contract for services or work**; it’s part of the goods sale.
3. **Implied Contract & TDS:**
* Section 194C applies to payments for work contracts or services. In the case of sale of goods, no TDS under 194C is attracted.
* Just because customization is done, it does **not imply a contract for services** if it is bundled with goods sale.
4. **VAT / Sales Tax on Total Selling Price:**
* Charging VAT / sales tax on the total amount confirms that it’s treated as sale of goods.
* Service tax (now GST) applicability is different, but from TDS perspective, this is sale of goods.
---
### **Conclusion:**
* **No TDS under Section 194C** is required to be deducted on sales invoices where customization is bundled with product cost.
* If customization charges were **separately billed as a service or work contract**, then TDS under 194C might be applicable on that portion.
---
If you want, I can help you draft a formal clarification note or analyze any specific invoices — just ask!
---
### Key points to consider:
1. **Nature of the Transaction:**
* If you are selling **goods** (diaries) to customers, that is a **sale of goods transaction**, and TDS under **Section 194C (contract payments)** does **not** apply.
2. **Customization as Part of Sale:**
* Even if customization is done as per customer’s requirement, but the customization cost is **included in the price of goods** (not separately charged), it still remains a **sale of goods**.
* There is **no separate contract for services or work**; it’s part of the goods sale.
3. **Implied Contract & TDS:**
* Section 194C applies to payments for work contracts or services. In the case of sale of goods, no TDS under 194C is attracted.
* Just because customization is done, it does **not imply a contract for services** if it is bundled with goods sale.
4. **VAT / Sales Tax on Total Selling Price:**
* Charging VAT / sales tax on the total amount confirms that it’s treated as sale of goods.
* Service tax (now GST) applicability is different, but from TDS perspective, this is sale of goods.
---
### **Conclusion:**
* **No TDS under Section 194C** is required to be deducted on sales invoices where customization is bundled with product cost.
* If customization charges were **separately billed as a service or work contract**, then TDS under 194C might be applicable on that portion.
---
If you want, I can help you draft a formal clarification note or analyze any specific invoices — just ask!
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