Tds on advance payment to contractor for supply of equipment

May be yes.

Dear Priyank

The question raised by you can in reality only be answered on a complete appreciation of the contract documents since the facts of the case are absolutely crucial. Section 194C is applicable on contract for work. Work can also include supply of material where it is embedded in the work to be done.

Typically if the contract for supply and civil work are separate and the invoices for the same are also separate there is no question of deducting TDS on the supply portion. In the instant case, you have stated that a separate invoice will be issued for supply. Even if no work has been done or no supply has been done, advance paid for purchase of the equipment is not liable to TDS.

By ensuring documents are in order there will not be a requirement to deduct TDS on the supply portion

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