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sagar (CA Final)     06 July 2009

TDS is applicable on Fixed Assets?

Is TDS applicable if purchased a Fixed asset? According to me. as per provisions if you do not deduct TDS. The expenditure will be disallowed.

 

For purchasing a fixed asset we do not debit an expenses account. Hence No TDS to be deducted.

In Otherwords if you are Capitalising an expenses Then TDS is to be deducted.

 

I am confused whether its true or not



 22 Replies

RITESH KOTHARI

RITESH KOTHARI (B.COM, FCA, DISA(ICAI))     06 July 2009

 it is absolutely correct.

on purchase of fixed asset thre is no TDS liability

sagar

sagar (CA Final)     06 July 2009

Thanks for confirming. Shall I take it as final answer

RITESH KOTHARI

RITESH KOTHARI (B.COM, FCA, DISA(ICAI))     06 July 2009

 YES U CAN.

sagar

sagar (CA Final)     06 July 2009

Thank you sir

CA Devanshi Gandhi (Ajani)

CA Devanshi Gandhi (Ajani) (FCA DISA Mcom CIFRS & LLB)     06 July 2009

 not applicable

Aditya Maheshwari

Aditya Maheshwari (CA in Practice)     06 July 2009

If labour charges on addition of furniture are seperately billed then TDS should be deducted for safety sake and to avoid any unnecesary litigation

Sagar

Sagar (Student)     07 July 2009

Yes there is no liability of Tax Deducted on source on purchase of fixed assets.. When you pay Labour charges against fixed assets then you have to deduct TDS on that only if the limit is crossed.

Amit

Amit (student)     07 July 2009

yes no there is no TDS liability on purchase of fixed assets.

RAJU

RAJU (LEARNER)     07 July 2009

Hi sagar,

 

Tax is not deductible for purchase of any asset.  However, if labour charges are paid for construction of building etc., TDS has to be deducted even if it is capitalised. 

 

If I am not wrong, you are assuming a situation wherein payments on which tax is deductible is capitalised.  In such an event, there is no question of additing back the expense, since expenditure is not claimed.  However, this does not exempt you from deducting tax.  You will always be liable to pay TDS irrespective of whether expenditure is claimed or not.

 

 

LAXMIKANT JAIPURKAR

LAXMIKANT JAIPURKAR (Practicing Company Secretary/Tax Consultant)     07 July 2009

On various items which are added in the fixed assets, tds is required to be deducted i.e. pure labour contracts given for the construction of building (material supplied by the owner), amount paid to carpenter for the furniture works, installation of machinery, air conditioners, commission paid for the purchase of machinery, etc.

Ms.Monika

Ms.Monika (Partner)     08 July 2009

Originally posted by :sagar
" Is TDS applicable if purchased a Fixed asset? According to me. as per provisions if you do not deduct TDS. The expenditure will be disallowed.

 

For purchasing a fixed asset we do not debit an expenses account. Hence No TDS to be deducted.

In Otherwords if you are Capitalising an expenses Then TDS is to be deducted.

 

I am confused whether its true or not
"
komal nemani

komal nemani (CA Final CS Executive Student)     11 September 2009

der is no TDS liability on purchase of fixed assets

Mayank kharbanda

Mayank kharbanda (Risk Advisory Services)     11 September 2009

dharamraju is right....... but if u do not deduct TDS on such items which are to be capitalized for e.g. pure labour contracts then the amount of depreciation on that capitalized item will be added back to profits.
Consultus

Consultus (Practicing Chartered Accountant )     11 September 2009

Dear Members,

 

The tax is to be deducted in case of any payment/credit specified under chapter XVII B of IT Act irrespective whether it is capitalised or treated as revenue.

 

If any person responsible for paying (section 204) does not deduct tax at source as specified under chapter XVII-B, the person responsible for paying shall be attracted penalty under section

 

73[Penalty for failure to deduct tax at source.
271C.  74[(1) If any person fails to—
               (a)   deduct the whole or any part of the tax as required by or under the provisions of Chapter XVII-B; or
               (b)   pay the whole or any part of the tax as required by or under—
          (i)   sub-section (2) of section 115-O; or
        (ii)   the second proviso to section 194B,
then, such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct or pay as aforesaid.]
75[(2) Any penalty imposable under sub-section (1) shall be imposed by the  76[Joint] Commissioner.]
 

Thanks


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