Regarding TDS provisions

1911 views 9 replies

CA Rajnish

136 Points Joined February 2010

Issue is as follows: A statutory orgnaization mainatins a panel of contractors who are alloted work or who are required to fullfill organization's requirement.

There is a supply of some materials(finished goods) amounting to Rs. 10000.

Contractor submits the bill containing following particulars

materials:                                                                        10000.00

Cost of transport                                                                  200.00

Total:                                                                               10200.00

Add: 10% profit                                                                  1020.00

Ttal amt payable:                                                              11220.00

Now the que is Under which sec TDS is required to be deducted and on wht amt??

Kindly clarify regarding the same, it'll b very helpful to me.

Replies (9)

sri

Finance Manager

21 Points Joined October 2011

TDS is applicable u/s 194C. If the one time payment exceeds Rs.30000 or aggregating amount in a year exceeds Rs. 75000.

Further if the contractor charges sales tax on material cost, the same is not taxable, other wise total amount taxable.

CA Manish

CA work

40 Points Joined September 2008

I agree with Sri

suja nair

Finance

61 Points Joined February 2009

TDS will be deducted on following on the invoice value excluding the value of material, if such value is mentioned separately in the invoice; Hence TDS will not apply to the cost of materials only on the balance amount the same will apply.

Tax % would be

One percent where the payment is being made or credit is being given to an individual or a HUF.

Two percent where the payment is being made or credit is being given to a person other than an individual or a HUF, of such sum as income-tax on income comprised therein.

Hence here the % would be 2%

CA PRAVEEN SINGH

MANAGER ACCOUNTS

2277 Points Joined August 2011

TDS is applicable u/s 194C. If the one time payment exceeds Rs. 30000 or aggregating amount in a year exceeds Rs. 75000.

Further if the contractor charges sales tax on material cost, the same is not taxable, other wise total amount taxable.

AGREE.....

CA PRAVEEN SINGH

MANAGER ACCOUNTS

2277 Points Joined August 2011

Tax % would be

One percent where the payment is being made or credit is being given to an individual or a HUF.

Two percent where the payment is being made or credit is being given to a person other than an individual or a HUF, of such sum as income-tax on income comprised therein.

Hence here the % would be 2%

AGREE....

CA Rajnish

136 Points Joined February 2010

Explanation.—For the purposes of this section(194C),
(iv) “work” shall include—

(a) advertising;

(b) broadcasting and telecasting including production of programmes for such broadcasting or telecasting;

(c) carriage of goods or passengers by any mode of transport other than by railways;

(d) catering;

(e) manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer,
but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer.
So now whether provisions of sec 194C can be invoked here,as point (e) makes it amply clear that supplying of materials(finished goods) does not amount to "WORK

Vivek D. Mange

Sr. Audit Executive

22 Points Joined May 2010

I think its a normal transection of URD purchase as the contrator has not issued TAX INVOICE & as contector is not REGISTERED under any state's VAT act.

there is no need of TDS as it is not applicable on any SALES transactions of MATERIAL.

TDS will be applicable only if the issuer from whom contractor has purchased material issue invoice on ORGANIZATION and not on CONTRACTOR than only the TDS will be applicable on PROFIT MARGIN of contractor @ rate prescribed by the above friends after comparing BASIC condition of 194C.

otherwise in journal scenario its a normal PURCHASE TRANSACTION of material and no need of deducting TDS on it.