Tds on tender fee

Can you please elaborate the nature of work

Tender is for making of scrapper barrels. It is open for all mfg. co. My co. is also applied for it. It fees is around rs. 65,000.

 

This case comes under section 194C (TDS on contracts). tds is to be deducted @ 1%  where the payment is being made or credit is being given to an individual or a Hindu undivided family, in other cases @ 2%. If such work includes material value also and is shown separately in the invoice then material value shall be deducted from the total amount. There is a threshold limit provided under this section according to which no tds shall be deducted under this section if such sum does not exceeds Rs.30000(individual payments) or in aggregate does not exceeds Rs.1 Lac.

On a similar line, as a part of tender agreement for purchase of coal, the assessee is required to pay Rs.2.5 per tonne as processing fee which will be only payable if the tender is granted. Will this processing fee attract TDS provisions?

Tax deduction at source will result in temporarily blockage of funds for contractors. It may negatively impact working capital requirements of contractors who are working at very low scale. It may be noted that such contractor may take input tax credit of the TDS deducted by the Government after claiming the credit in the monthly return which is related to the month in which TDS is to be deducted by the Government. However, the provision relating to TDS under GST law is put on hold for the time being and the same will be brought into force from a date which will be notified later. For any information please visit https://www.tendersontime.com/publish-tender/