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TDS on Invoice Value

CMA.Baskar.V (Cost Accountant) (400 Points)

12 July 2011

hi,

We have received payment from customer after deducting TDS on total purchase order value.

Purchase order details:

Material : 200000
License : 100000
service : 50000

Total Value : 350000/-
Customer deducted TDS @ 10% : 35000/-

My concern is customer suppose to deduct TDS only on service value component instead of whole Purchase order value (including material and license)

If i am correct, please provide under which section TDS has to deduct.

Thanks in advance.......

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17 Replies

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 12 July 2011

share more facts

what is nature of materials and what is end use of this for the customer,

if its not a purchase but maintainance activity for customer then he is right to deduct TDS on whole amount

CA Hemant Kumar (CA, LLB (p), B.Com) (204 Points)
Replied 12 July 2011

If the material is only a part of the service then TDS on whole amount should be deducted...

otherwise on service element only...

CMA.Baskar.V (Cost Accountant) (400 Points)
Replied 12 July 2011

hi sharma,

Material related to Computer hardware

License to Computer software

Service part related to three years onsite support if case of any issue

ACMA Obulirajan R (M.Com, ACMA) (1119 Points)
Replied 12 July 2011

Baskar Sir,

What about your invoice??? Have you raised the invoice for consolidated amount? or Material separately and Srivice and licence part separately?

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 12 July 2011

again details are missing

computer hardware ...if complete pc then its fixed asset for buyer, but if parts then its maintanance activity

licence to computer software is also to be capitalized

amc is the service part,

i feel that the buyer has series of computers in their block of fixed assets, and they replced some old with new without adding quantity to the fixed asset block, so your bills are gone in maintanance section only.

to save the situation in future, issue seperate invoice for every nature of transaction, so that purchase does not goes to service component.

Chiradeep.R.H (Chirahi & Associates - Consultants) (240 Points)
Replied 12 July 2011

The Invoive Should be raised separately for materials and Service.

In that case TDS will be deducted on service at 10% U/s 194 J of IT Act.

Mihir (Wealth Manager) (5293 Points)
Replied 12 July 2011

Did you add service tax 10.30% for providing services for 3 years ?

CMA.Baskar.V (Cost Accountant) (400 Points)
Replied 12 July 2011

Obuli sir,

single invoice with detailed Bill of Material not consolidated......

CMA.Baskar.V (Cost Accountant) (400 Points)
Replied 12 July 2011

we are chargeing service tax only of service

ACMA Obulirajan R (M.Com, ACMA) (1119 Points)
Replied 12 July 2011

If you raise single invoice then TDS would be deducted on the entire value of the invoice and not part of the Invoice. In that case you have to raised separate invoice for material and service part.

Please correct me...........

CA,CMA,CS Karan Gogia (Employed) (230 Points)
Replied 12 July 2011

inputs!!!!!!

u have raised single invoice but as u say u bifurgated the amount of naterial and service , the TDS should be on the service part only.

now is the issue of section , it should be 194J -professional services.

and since TDS has already been deducted, check the TDS certificate when u receive , there the deductor also mention the section under which he is deduction TDS.

ADITYA (Manager Finance) (742 Points)
Replied 12 July 2011

Payment against purchases are out of TDS pre-view .

To avoid such a situation you should reaise your Invoice separately for Sale of Material, Software etc whare sales tax has been charged. This transaction will not be liable for TDS deduction at your customer's end. Where as Invoices raised by you for services provided by you including service tax will attract TDS.

C.A. Sandeep Wawhal (Chartered Accountant PGDFM BCom.) (1823 Points)
Replied 12 July 2011

If you are showing service charges separately in bill and service tax charged only on service amt then he has to deduct tds on service amount only and not on whole amount.