CONTRACT U/S 194C

TDS 1448 views 6 replies

IN A CASE OF PERSON (LET'S SAY X) WHICH IS A MANUFACTURER WHO SALES GOODS TO ANOTHER COMPANY (LET'S SAY B). X & B HAVE AN AGREEMENT THAT B WILL PICK UP MANUFACTURED GOODS WHEN THEY ARE REQUIRED. FOR SUCH PURPOSE B HIRES "A" A TRANSPORT CO, AND B DEBITS THE TRANSPORT AMOUNT TO X. AS PER ACT  "B" DEDUCTS T.D.S. OF "A"U/S 194C. IN THIS CASE WILL "X" PERSON HAVE TO DEDUCT T.D.S. ON THE AMOUNT DEBITED BY "B", WILL SUCH TRANSACTION FALL AS CONTRACT U/S 194C. AS THE CONTRACT U/S 194C STATES THAT TAX IS TO BE DEDUCTED IF THERE IS A WORK CONTRACT OR A LABOUR CONTRACT FOR CARRYING OUT WORK CONTRACT.

Replies (6)

I DONT THINK AS CONTRACT BETWEEN B & TRANSPORT CO.

Your question is confusing to other, tell me cleatrly.

Why B debiting the transport amount to X.

NO,  X do not have to deduct TDS for reimbursement of expenses to B , In this case B has received the service under 'WORK CONTRACT OR A LABOUR CONTRACT FOR CARRYING OUT WORK CONTRACT' and B is deducting the TDS on the service received. Whereas B is not providing any service to A but is getting the reimbursement of the same as per Agreement for Sale of Goods.

And the same logic will apply for Service Tax on G.T.A in the present scenario.

Here B is purchaser ans also, he is paying money to transporter for his services. In the transaction of purchase from X, X will raise an invoice for the value of goods. Thus there is no point where X is billing the transport charges paid to A. X is billing only for goods purchased by B.

I think point is very clear and no question of doubt here.

If my understanding is wrong, i request neeraj to Reword his question and post again.

Originally posted by :Abhinav Agarwal
" Here B is purchaser ans also, he is paying money to transporter for his services. In the transaction of purchase from X, X will raise an invoice for the value of goods. Thus there is no point where X is billing the transport charges paid to A. X is billing only for goods purchased by B.
I think point is very clear and no question of doubt here.
If my understanding is wrong, i request neeraj to Reword his question and post again.
"


 

Abhinav Sir, what i ment to say is that B is the purchaser, X is the seller. B hires A to pick up the goods purchased from X. The transport contract is between B and A. X does not bill the transport charges to B, but the transport charge occured by B are debited to X, hence X is the one bearing the expenses. In this case is X liable to deduct T.D.S. from A. (B is already deducting T.D.S. from A u/s 194C).

Thanks, wating egarly for your reply.

I think the TDS made by the purchaer B is correct.  No need to deduct tax by X on the expenditure reimbursement by him to B.  For claiming expenses by Mr. X he may raise debit note.

Mr. B can not claim the transport expenses in his books, he is just paying on behalf of X.

 


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register