Urgent reply needed

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

07 May 2015 good morning experts......my uncle is a sub contractor of govt. buildings and works which means a registered person will make tender to the govt. on behalf of my uncle and if he gets the tender , entire work will be done by my uncle and tds under sec 194 c will be deducted from that person by the govt. and my uncle pays some percentage as commission to him .............now my uncle who is receiving remaining proceeds after tds and commission needs to pay tax or not?????????????????if yes under what head and how?????pls explain me in detail...........................

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

07 May 2015 As a sub contractor your uncle is doing contract work. This income is liable for tax under business head(PGBP).
Tax has to be paid from profit after deducting commission and all other expenses in executing contract.

Querist : Anonymous

Querist : Anonymous (Querist)

07 May 2015 but the tax is already been deducted by the govt........the proceeds he received are after tax only ..........if he pays tax again it will led to double taxation ????????

Querist : Anonymous

Querist : Anonymous (Querist)

07 May 2015 plzzzzz do reply as early as possible

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

02 August 2025 I understand your concern about double taxation—here's a clear explanation to help:

---

### What happens with TDS under Section 194C?

* **TDS (Tax Deducted at Source)** under Section 194C is deducted by the government **while making the payment** to your uncle (the sub-contractor).
* This TDS is **not the final tax**; it is an **advance tax deducted** on behalf of your uncle.

---

### Does your uncle need to pay tax again?

* **Yes, your uncle must file an income tax return** and pay tax on his total income.
* The income is taxable under the **head "Profits and Gains from Business or Profession (PGBP)"** because he is engaged in contract work.
* When filing the return, your uncle reports:

* **Gross receipts (full amount before commission and TDS).**
* Deducts **commission paid** and other allowable business expenses.
* Pays tax on the **net profit** (income minus expenses).

---

### How is double taxation avoided?

* The **TDS deducted is credited against your uncle’s total tax liability**.
* If the tax liability is **more than TDS deducted**, your uncle pays the balance.
* If **TDS is more than the tax liability**, your uncle can **claim a refund**.

---

### Summary

| Step | Description |
| ---- | -------------------------------------------------------- |
| 1 | Govt deducts TDS (advance tax) on payment. |
| 2 | Your uncle files ITR reporting full income and expenses. |
| 3 | Tax payable calculated on net profit. |
| 4 | TDS deducted is credited, no double tax. |
| 5 | Balance tax/refund determined on filing. |

---

If your uncle does not file a return and just relies on TDS deducted, he may lose out on claiming expenses and potentially get taxed more than necessary.

---

**Feel free to ask if you need help with the ITR form or tax calculations!**

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now