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TDS on purchase of flowers from a vendor

Pradeep Jain (service) (143 Points)

18 November 2009

Hi,

We have fixed a vendor with fix rates for supplying of flowers for our company and has not written contract with him.

He is just charging fix rate*Qty.of flowers supplied by him, not tax he is charging.

Should we deducted TDS on this?

Regards

Pradeep Jain

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7 Replies

Pradeep Jain (service) (143 Points)
Replied 19 November 2009

Hi,

Please provide valid inputs in this case.

RITESH KOTHARI (B.COM, FCA, DISA(ICAI)) (778 Points)
Replied 19 November 2009

Details insufficient and looking Hypothetical.

Pradeep Jain (service) (143 Points)
Replied 19 November 2009

Originally posted by :RITESH KOTHARI
"	Details insufficient and looking Hypothetical.	"

Hi Ritesh,

Details are complete. My concern is only whether we should treat it as a contract or not.

As he is just purchasing flowers from outside and delieveres to us.

Hope now it's clear

nidhi (CA) (65 Points)
Replied 19 November 2009

hi pradeep..

if the transaction is in the nature of contract, only then the company wud b liable to deduct TDS.

If there is an oral agreement which can b enforced by either of the parties in case of breach by the other, then it amounts to a contract.

In all other cases, in the absence of a written agreement, in my opinion, it wouldn't amount to a contract. thus there wud b no liability of the country.

Pradeep Jain (service) (143 Points)
Replied 19 November 2009

Hi Nidhi,

But under income tax act, oral contract is also valid.

do you think this is a service contract or sale contract (If we assume it a contract).

Sunil (Trader) (2611 Points)
Replied 19 November 2009

No TDS. This is a contract for sale. You are not providing any raw material to the flower seller and neither are you selling to him any thing to manufacture the product and sell back to you.

However if you have following arrangement with him:-

1) You supply to him or provide him with a vase or basket and ask him to place the flowers in that and send back to you, it is a contract u/s 194C. In this case TDS is only on the service charge of placing the fowers in vase or baskets and not sale of flower if details are separate. However if breakup of charges and sale is not given then TDS is on entire bill.

2) You ask him to decorate the office with the flowers then again it is a contract and you should ask him to separate his service charges and do TDS only on the service charges. If no breakup, then TDS on the entire bill.

3) If the person comes to your premises and does Ikebana flower arrangements, it is better to have a separate bill for services and flowers as Ikebana comes under technical fees that attracts 10% TDS.

Do as applicable in your case. If you are simply buying flowers and the person is supplying it to you with office delivery as his responsibility there is no TDS. His activity is selling you the flowers and not the transportation as that is auxiliary to his selling activity. If there is a contract for any of the 3 instances above, get details separated in bill and deduct TDS accordingly.

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