Wct tds on contractor

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CA SAJANA (Querist)
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19 December 2013 Dear Sir,

Please let me know whether an awarder is liable to deduct tax at source @ 8% under sec.10 of KVAT Act 2003 , if the contractor opted for compounding scheme under sec. 8 the Act to pay tax @ 3%.

Thanks and Best regards,

CA Sajana E V

CA SAJANA

CA SAJANA (Querist)
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23 December 2013 Dear all,

Please advice at the earliest.

It's Very urgent.

Thanks and Best Regards,

CA Sajana E V

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
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03 August 2025 Under the Karnataka VAT Act, 2003, regarding WCT (Works Contract Tax) TDS:
Section 10 of the KVAT Act mandates deduction of tax at source (TDS) @ 8% on payments made to contractors.
However, if the contractor has opted for the compounding scheme under Section 8 and is paying tax at 3%, the TDS provisions still apply.
The deductor (awarder) is generally liable to deduct TDS at the rate specified in Section 10, i.e., 8%, regardless of whether the contractor opts for compounding or normal scheme.
The reason is, TDS is based on gross payment to the contractor, not the tax rate chosen by the contractor.
Summary:
Yes, the awarder must deduct TDS @ 8% on payment to the contractor, even if the contractor is under compounding @ 3%.
The contractor can claim credit of this TDS while filing VAT returns.

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