TDS on Rent included in purchase Bill

TDS 2768 views 3 replies

CA NIRANJAN B. LATURKAR

Practicing CA

28 Points Joined January 2009

We have Tea Vending Machines in our office on hire basis and accordingly the supplier charges the consolidated bills for conusmables (Like Tea bags, Sugar, Milk etc) and the Rent for the machine as well. He charges VAT 12.5% on monthly rental of Machine and applicable VAT for consumables too.

Now my query is : Whether I should deduct the TDS on only monthly rental charges inclusive VAT or Exclusive of VAT or on the total bill value inclusive of VAT on cosumables too ??

Pls reply as early as possible. (if possible give the circular / notification ref also)

Thanks

Replies (3)

FATEMA

CHARTERED ACCOUNTANT

719 Points Joined March 2009

IN MY OPINION YOU SHOULD DEDUCT TDS ON MONTHLY RENT INCLUSIVE OF VAT AND NOT ON CONSUMABLES.

THE LOGIC IS THAT YOU WILL BE PAYING RENT INCLUSIVE OF VAT AND NOT EXCLUDE VAT WHILE PAYING RENT.

PAYMENT FOR CONSUMABLES DO NOT ATTRACT TDS.

Sunil

Trader

2616 Points Joined August 2009

It depends on who is running the machine. If he is giving a single bill without any breakup for the whole amount, it could be a catering contract in which you deduct TDS for the whole amount including VAT. He maybe charging you for supply of tea and coffee at your premises.If he charges you rent for the machine and he has placed someone to run it for you and also give the tea/coffee/sugar and the risk of the machine is his (he has to bring another one if this machine gets spoilt), it is a catering contract for supply of tea / coffee at your premises.

Now, consider another scenario. he has provided to you machine on rent at your premises and you are running it with your risk. Then you have to deduct as per section 194I for the rental of machine. He supplies to you tea / coffee and sugar satchets separately as retail sale and bills for these items SEPARATELY, then no TDS. This arrangement is not a contract for catering. This is lease of machine and supply of consumables, separate.