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TDS on capitalised labour charges

TDS 2201 views 4 replies
Whether TDS is required to be done on labour charges spent on renovation of premises which are capitalized along with material purchase? As per my understanding since the expenses are not debited to P & L A/c. tax should not be deducted. Please site latest circular or case law for the same.
Replies (4)

If we take that assumption then TDS need not to be deducted for all the construction works which means builders will not be covered under 194C since every project is fixed asset & capitalised by the buyer

Hence we cannot assume the same & TDS will not have any relation with the expense type.

So I think TDS will be applicable for renovation since it is a contract under 194C.

 

Hello, TDS is required to be deducted from the payments of particular nature like contractor, commission, interest, rent royalty professional services. It is the nature payment not the nature of expenditure which triggers the applicability of TDS.

TDS is applicale u/s 194 C.

Liability to deduct tax applies irrespective of revenue or capital nature of payment. 

Only consequence of capital nature is that there would not be any disallowance in case of non deduction.

However it doesn't mean that there is no liability to deduct tax and payer will have to face the other consequences of non deduction like interest and penalty.


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