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TDS on labour charges for capital expenditure

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SRKK

Article

71 Points Posted on 24 May 2023

Hi sir/Madam
a company has constructing a building as an asset. they had paid big amounts to sub contractor as labour charges. so my doubt is shall we need to deduct TDS on the payment made to sub contractor.? it's capital expenditure not revenue expenditure. So can I capitalise this amount without deducting TDS or is it mandatory to deduct TDS?

please advice

Replies (5)

Quick Summary

This discussion clarifies whether Tax Deducted at Source (TDS) is required on labour charges paid to subcontractors for capital expenditure, such as building construction. The consensus is that TDS is mandatory, even for capital works, under Section 194C of the Income Tax Act. The specific rate will depend on whether the subcontractor is an individual or a firm.