Contactors for construction work presents running bills. But these bills have to be verified by an engineer for actual construction work completed. This takes times. Sometimes even part of bills has to be rejected. In such cases how the client should deduct TDS, because if he deduct TDS on billed amount later on there can be rejection of bills. In such cases what should be done?
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TDS on Contacts for construction
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Payment to contractors is deductible at the time of payment or credit whichever is earlier.
In your case if payment is made in advance and then running bills are received then deduct TDS at the time of payment itself.
If above is not the case and each biil is verified and then sanctioned then till that time do not credit the account of the contractor and keep his bill pending to be booked and once the bill has been approved by the engineer then book the bill and dedcut TDS on the same i. e postpone the credit to his account of the TDS as you can always state that the bill has not been booked as yet as the same has not been approved and once the same has been approved book the same immediately and deduct TDS on the same.
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