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IS TDS DEDUCTED ON PRINTED MATERIAL

Amit Kapoor (Business) (26 Points)

14 September 2009

We are sending our paper / board to the press and , the printing press will print the material using its own plates, inks chemicals ,laminations etc. We are sending only base paper and the printing press will do value addition by printing inks , lamination etc .

The press makes us a VAT bill charging 2% vat.

Should we deduct TDS or not during payment of this bill ?

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8 Replies

CA.Tarun Maheshwari (CA, DISA) (7150 Points)
Replied 14 September 2009

Yes. It shall be treated as Job work, and TDS has to be compulsorily deducted under 194C on the payment.

Kalpesh (Accountts & Income Tax) (338 Points)
Replied 14 September 2009

AS FAR AS I KNOW IF THEY ARE CHARGING VAT THEN TDS NOT APPLICABLE.

ITS A JOB WORK AND IF THEY MENTION JOB WORK IN INVOICE THEN TDS APPLICABLE THEN VAT NOT APPLICABLE.

Amit Kapoor (Business) (26 Points)
Replied 14 September 2009

Originally posted by :Kalpesh
"	AS FAR AS I KNOW IF THEY ARE CHARGING VAT THEN TDS NOT APPLICABLE. ITS A JOB WORK AND IF THEY MENTION JOB WORK IN INVOICE THEN TDS APPLICABLE THEN VAT NOT APPLICABLE.	"

Thanks for your replies.

They are charging VAT and showing sale as they say apx 30 to 70 % of their consumables are being used compared to the board we supply.ie in some cases if bill is 100 then 40 is our board cost and 60 is their printing and plates films etc . and in other cases and in some cases board will be 60 and 40 will be their consumables which they buy on vat.case to case this may vary.They make bill only of their value aaddition and write our board cost separately.

KAMLESH JAIN (SERVICE) (22 Points)
Replied 31 October 2009

Originally posted by :Amit Kapoor

Dear All,

KINDLY REFER TO Circular No. 13/2006, dated 13-12-2006 of Income tax department which is being clearly mentioned that to dettermine tds liability we should identify wether it is contract for sale or contract for job work., given below original circular copy of the same your ready reference.

Regards,

kamlesh jain

Circular

Income-tax Act

Section 194C of the Income-tax Act, 1961 - Deduction of tax at source - Payments to contractors and sub-contractors - Applicability of TDS provisions of section 194C on Contract for Fabrication of Article or Thing as per Specifications given by the Assessee - Contradiction between two Circulars of CBDT - Resolution thereof

Circular No. 13/2006, dated 13-12-2006

1. Representations have been received in the Board seeking clarification on the applicability of section 194C on such transactions, where the assessee has outsourced certain work relating to fabrication or manufacturing of article or thing in accordance with the specifications given by the assessee. Circular No. 681, dated 8-3-1994 of the Board clarifies in para 7(vi) that the provisions of section 194C would not apply to contracts for sale of goods and further clarifies that where the property in the article or thing so fabricated passes from the fabricator-contractor to the assessee only after such article or thing is delivered to the assessee, such contract would be a contract for sale and so outside the purview of section 194C. However, in reply to question No. 15 in Circular No. 715, dated 8-8-1995 on the subject of applicability of section 194C, in respect of contract for supply printed material as per prescribed specifications, it has been said that such contracts would also be covered under section 194C. It has been represented that the views expressed in these two circulars, to the extent as pointed out above, are in contradiction to each other.

2. The matter has been examined by the Board and it is considered that exclusive reliance on Question/Answer No. 15 of Circular No. 715, without taking into account the principles laid down in Circular No. 681 is not justified. Before taking a decision on the applicability of TDS under section 194C on a contract, it would have to be examined whether the contract in question is a contract for work or a contract for sale and TDS shall be applicable only where it is a contract for work.

3. It is, therefore, clarified that the provisions of section 194C would apply in respect of a contract for supply of any article or thing as per prescribed specifications only if it is a contract for work and not a contract for sale as per the principles in this regard laid down in para 7(vi) of Circular No. 681, dated 8-3-1994.

Originally posted by :Kalpesh

"
AS FAR AS I KNOW IF THEY ARE CHARGING VAT THEN TDS NOT APPLICABLE.
ITS A JOB WORK AND IF THEY MENTION JOB WORK IN INVOICE THEN TDS APPLICABLE THEN VAT NOT APPLICABLE.

"

Thanks for your replies.
They are charging VAT and showing sale as they say apx 30 to 70 % of their consumables are being used compared to the board we supply.ie in some cases if bill is 100 then 40 is our board cost and 60 is their printing and plates films etc . and in other cases and in some cases board will be 60 and 40 will be their consumables which they buy on vat.case to case this may vary.They make bill only of their value aaddition and write our board cost separately.

Sunil (Trader) (2611 Points)
Replied 31 October 2009

TDS is deducted on printing for customised work like cards and stationery. If you are the specified deductor (company, firm, audited individual etc.) then you have to deduct TDS U/s 194C. For audited individual, no TDS for his personal purchases of these items.

This is applicable for all customised purchases. Eg. if a company orders plastic chairs with its Logo Blow Moulded, TDS will have to be done as the same chairs cannot be sold elsewhere. It becomes a contract manufacture and even though VAT is applicable on Transfer of Goods, TDS too becomes applicable if it is one composite bill. Normally, the mould with registered logo is belonging to the buyer even if the manufacturer has purchased the same on the buyer's behalf. The manufacturer cannot aver that the mould belongs to him because the Logo of the buyer is on it. Eventually the manufacturer is recovering charges for the mould in his sale of the chairs.

Therefore, rather than generalising, to be safe you take each transaction by their own merits. If manufacturer makes a chair and paints the logo then TDS and VAT is on the entire bill if it is a composite bill. If he makes separate bill then only VAT on the sale of chair, Service Tax and TDS on the logo painting charges.

sunnysmile (Student CA CPT ) (22 Points)
Replied 23 May 2013

printing china is a good place to know about china and also where you can turn to when encountering some technical printing issues.

Shudhanshu Agrawal (Business) (2570 Points)
Replied 23 May 2013

According to explanation (iv) (e) to Sec 194C of Income Tax Act, 1961 any work includes manufacturing or supplying a product according to specification of customer by using material purchased from such customer.

Sec 194C(3) says any sum paid or credited under above provisions TDS shall be deducted on invoice value excluding value of material.

Circular 715 dated 8-8-1995 says that TDS shall be applicable on printed material as per specification.

If we carefully analyse sec 194C and circular no 915, we find that TDS is not deductiable on the value of material specifically mentioned in invoice. Details of invoice are not available in the query, hence it will be difficult to guess the value of material.

However, TDS shall be deducted on amount excluding value of material.