40(a) 3 on purchase bill

1) Yes, disallowed

2) No

3)No

Disallowed in first case.

Disallowed in second case also if there is only 1 bill

No disallowance in third case

Similar case, Flooring works service bill

Total service charge - Rs.67,700 - (Single invoice)

All payments were made in cash in various  instalments (Not exceeding Rs.20,000) & no tds was deducted.

Service provider has now agreed to provide 4 invoice,so that none of amount & invoice will be higher than Rs.20,000.-So 40(A)3 issue is solved.

Now regarding tds & service tax (Reverse charge)-

Cases

(1) - None of the payment or expense booked during the period during exceeds Rs.30,000 but only one invoice was issue at the end amounting to Rs.67,700.-Was it necessary to deduct tds on account that final bill amount has exceeded Rs.30,000.

(2) - Is it necessary for the company to pay service tax on reverse charge basis.Since-Materials are purchased from other party & Services are done by local labourers.

In First case for TDS Compliance.

All payments were made in cash in various  instalments (Not exceeding Rs.20,000) & no tds was deducted ---------  TDS to be deducted irrespective of cash payment......when single bill exceeds Rs.30,000

Service provider has now agreed to provide 4 invoice,so that none of amount & invoice will be higher than Rs.20,000.-So 40(A)3 issue is solved---------- No need to deduct TDS when single bill does not exceed Rs.30,000 and for our case Aggregate Rs.75,000 is also not exceeding.

 

Now,about service tax..

Is it necessary for company to pay servicetax on reverse charge basis-

(Will this transasaction covered as works contract under service tax)

when

When material for work is purchased from another party who charged VAT

&

Service/labour work is done by labours/local contractors who are not liable to charge service tax.