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TDS on Contractor

Pradeep Jain (service) (143 Points)

17 November 2009

Hi,

Please specify the word "Contract" under TDS 194C section.

Which type of contract it referes?

Thanks

Pradeep Jain

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6 Replies

Deepak Tapse (Accounts Manager - Taxation) (1771 Points)
Replied 17 November 2009

Pl read sec. 194C @ incometaxindia.gov.in

ashish gupta ( student) (1922 Points)
Replied 17 November 2009

It refers to works contract and includes contract for supply of labour. Pls read the section for more clarification

Prabeer (B. COM (H) CA & CS Final) (5484 Points)
Replied 17 November 2009

Hi!

Section 194C is applicable in respect of consideration for carrying out any works contract (including supply of labour for carrying out any work.) For this purpose, "contract" shall include sub-contract.

"Work" as defined in Section 194C-

i) Advertising;

ii) Broadcasting and telecasting including production of programmes for such broadcasting or telecasting;

iii) Carriage of goods or passangers by any mode of transport other than by railways;

iv) Catering;

v) Manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer.

(Guest)

See contract, work contract and contract for supply of labour were given as contract.

Actually it is inculsive definition. Where ever you enter into a contract with some one then you have to deduct TDS. Dont think it is applicable only for contracts for which we put agreements and high value contract. It is applicable where ever the word contract is applicable.

Tarun (CA Final Student) (89 Points)
Replied 17 November 2009

Agree with Mr. Prabeer

CA Abdul Haseeb (Employed) (147 Points)
Replied 18 November 2009

Frankly speaking this section has got a lot in it.... the word contract should be studied thoroughly and various landmark judgements should be used in order to come to a proper point of understanding.. What is necessary is to understand the difference between a contract and a sale. The characteristics of a contract should be understood.. this has so many things into it.. in some judgements, its said that where the whole service is done according to the specifications of the reciever then it amounts to contract whereas in a sale the customer recieves wat is produced which is not exactly according to his specifications.. for eg if u want to buy a car then you go to a showroom and buy a car this amounts to sale and not contract but where you specify the person what all you need and he manufactures accordingly it amounts to contract... though this may be debatable this is what meant by contract.... further things like the time, amount, qualntity etc.. and things like this go on should be taken into account.. u have got to understand all those key points to conclude wat is a contract and wat is a sale