Live Course on Drafting of Appeal and Reply of Penalty Notice by CA Sachin Sinha. Register Now!!

TDS LIABILITY

Ravi Chopra (CA) (661 Points)

31 March 2010

HI FRIENDS!!!

KINDLY CONSIDER THE FOLLOWING CASE

SUPPOSE MR A MAKES PAYMENT TO MR B FOR A BILL IN INSTALMENTS BEFORE THE BILL DATE

Rs 10000 ON 18.11.09

Rs 15000 ON 20.11.09

AND BILL DATE IS 22.11.09 OF Rs 25000.

I WANT TO KNOW WHETHER IS THERE ANY LIABILITY OF DEDUCTION OF TDS...

KEEPING IN MIND THAT

A. TDS HAS TO BE DEDUCTED AT "DATE OF PAYMENT OR CREDIT WHICHEVER IS EARLIER" AND AS PER PROVISIONS OF ACT

B. (3) No deduction shall be made under sub-section (1) or sub-section (2) from—
(i) the amount of any sum credited or paid or likely to be credited or paid to the
account of, or to, the contractor or sub-contractor, if such sum does not exceed
twenty thousand rupees:

THNX

Reply
Follow
Share

7 Replies

shushantsinghal (BCOM(HONS),C.A) (283 Points)
Replied 31 March 2010

tds liability arise in the following case....

1 Like

CA KHAN AURANGZAIB (ERP FINANCIAL CONSULTANT) (85 Points)
Replied 31 March 2010

tds will be deducted because cummulative bill amount is more than thresh hold limit. does not matter whether payment made in installment or other wise

1 Like

Vivek Angrish (Manager Finance & Accounts) (232 Points)
Replied 31 March 2010

TDS Liability arises in your case as the Single Invoice amount is Rs.25000/-, (No matter that the payment are made in installments), but in order to get releived from TDS Liability one can take two different invoices for which the single invoice amount will be less than Rs. 20000/-(Rs. 30000/- w.e.f 01.07.2010) and the contract amount for the year does'nt exceeds Rs. 50000/- (Rs.75000/- w.e.f 01.07.2010)

1 Like

Vivek Handa (Lawyer) (65 Points)
Replied 01 April 2010

The views expressed by the L'd members above are absolutely correct

Kaushik Vankadkar (Service) (350 Points)
Replied 01 April 2010

Agree with Vivek Angrish. As the amount on the invoice is Rs. 25,000/-. The liability for TDS deduction arises irrespective of its installments payments.

Srinath Shenoy (Senior Accountant) (31 Points)
Replied 11 April 2010

Dear Ravi,

The amount of Rs.25000/- is billed in a single invoice and which is more than the exempted limit of Rs.20000/-,

thus the Tds @ 2% (1% if the contractor is an individual) is applicable on the bill, irrespective of the payment mode, whether the payment is made in installments or lumpsum. Hence, to avoid the Tds in this case, you can ask for two invoices for the said amount, keeping in mind that no invoice is billed for more than Rs.20000/-

-Srinath