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Tds deducted on contracter

Sudhanshu (article) (62 Points)

29 November 2013

Dear Members

According to 194C TDS should be deducted when any single contract is of Rs. 30000 or sum of contract is Rs. 75,000 in a single financial year.

My question is if a contract is of Rs. 41,000/- and TDS has deducted by the deducter and after that no invoice or contract is more the Rs. 30000/- (single) or in a whole year total contract is not more than Rs. 75000. Is deducter is liabe to deduct TDS after Rs 41,000/- contract?

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15 Replies

CA Dhruva Kalamanji (Chartered Accountant ) (1996 Points)
Replied 29 November 2013

According to section 194c subsection (5) No deduction shall be made from the amount of any sum credited or paid or likely to be credited or paid to the account of, or to, the contractor, if such sum does not exceed thirty thousand rupees : Provided that where the aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year exceeds seventy-five thousand rupees, the person responsible for paying such sums referred to in sub-section (1) shall be liable to deduct income-tax under this section.

Now let us analyze how the sub section (5) applies:

1.Check the total amount credit or paid or likely to paid is more than 75,000

2.If yes then this section will apply to all the payments which is made to the party

3.If no then this section will apply to only those transaction which are more than 30,000

4.And hence in your case the aggregate amount is paid is only less than 75,000 therefore this section will applicable to only on those payments which crosses 30,000 . so for rs 41000 it is applicable

Aman (Finance Professional) (604 Points)
Replied 29 November 2013

if contract value is more than 75000 or bill amount is more than 30000 thn tds should be deducted ...othrwise not

Sudhanshu (article) (62 Points)
Replied 29 November 2013

But my question is whether to deduct TDS after payment of Rs. 41,000. Means after payment of Rs. 41,000 is deducter can deduct TDS after on Payment which is less than Rs. 30000 (Single payment) and less than Rs. 75,000 in a whole year.

CA Dhruva Kalamanji (Chartered Accountant ) (1996 Points)
Replied 29 November 2013

no only on the payment which is 41000 can deduct. suposse the subsequent payment is say 29,999 then on such payment they cant deduct tds.

in scenario 2.

if subsequent payment is 24,000 and 10,000 and then 3000 then it is applicable to all the payment.

in toto : if payment is more than 75000 section 194c apllicable to all transaction if not then only to those payment which mote than 30,000

hope your doubt clarified. . .

Sudhanshu (article) (62 Points)
Replied 29 November 2013

Any link or book which it clearly....... or where it is writen in IT act.

Sudhanshu (article) (62 Points)
Replied 29 November 2013

By the way thanks @ Dhruva...............

Santosh Shetty (IPCC, Asst Manager) (200 Points)
Replied 29 November 2013

After deducting tds on Rs 41,000, you will have to deduct tds on all the amounts paid / credited up to the end of said FY, no matter what the amount is.

vishnu (Audit Assisstant) (109 Points)
Replied 30 November 2013

tds as per 194 c is to be deducted at the payment or credit which ever is earlier. So the TDS has to be deducted when the credit is made in the books of accounts,no need to wait till payment. correct me if i am wrong...

CA PRIYUL SHAH (JOB) (901 Points)
Replied 30 November 2013

If first bill exceeds Rs.30000 than all subsequent transactions attract TDS irrespective of whether aggregate value of transaction less than Rs.75000

Hardik Vasoya (Article Assistant) (26 Points)
Replied 30 November 2013

It matters to amount that if it is exceeds aggregate rs.75000 or by single rs.30000 , if after transaction of 41000 there will no any payment exceeds 30000 then TDS will not be deducde keeping in mind that aggregate payment at the year end not exceeds 75000....and if there sequence of payment during whole year and tds also deducted on every payment irrespective of amount value then ..it depends on aggregate at year end....if 75000 then its OK...and if not exceeds such limit...then tds amount which is deducted on amount below 30000 payment will be refunded..... ...I think now you all clear...its all about experiences....best of luck friends...

CA Dhruva Kalamanji (Chartered Accountant ) (1996 Points)
Replied 30 November 2013

DEAR SUDHANSHU

IT IS NOT NECESSARY TO DEDUCT ON ALL THE PAYMENT SUBSEQUENT TO THE PAYMENT OF RS 41000.

IF YOU ARE OF THE OPENION IT MAY CROSS 75k IN A YEAR THEN DEDUCT ON ALL THE PAYMENT SUBSEQUENT TO 41K. IF YOU ARE SURE THAT AGGREGATE AMOUNT WILL NOT CROSS THE LIMIT THEN NO NEED TO DEDUCT ON SUBSEQUENT PAYMENT

PROVIDED YOUR SUBSEQUENT PAYMENT IS LESS THAN 30K IF YOUR SUBSEQUENT PAYMENT MORE THAN 30K THEN CLOSE YOUR EYES AND DEDUCT TDS THATS IT

THANK YOU

CA Siddharth Mehra (Chartered Accountant) (145 Points)
Replied 30 November 2013

No, TDS not required to be deducted

Sudhanshu (article) (62 Points)
Replied 02 December 2013

Thanks to all......

but I am getting more confused now.......... everyone writing different-2 opinion.........I think law is also not clear about it and ICAI also not giving any notification regarding it.........

If anyone having any link or any other reference regarding this topic then please send it......

Regards

Sudhanshu

CA Dhruva Kalamanji (Chartered Accountant ) (1996 Points)
Replied 02 December 2013

The law is very much clear see it says in a year if your total amount is more than 75000 then you have to deduct on each and evety payment you made to the concerned party; if not check any single payment is greater than 30,000 then only on such payment you need to deduct tax. . .

where is the ambguity here it is prety much clear. . .