We are in a business of selling and purchasing of Fabric & Furnishing. We use to purchase a Plastic bags from one of the vendor. He issue a invoice with 12.50% VAT, we use to debit it to Packing Material Expenses. My question is whether the vendor becomes a contractor in this case, we usually deduct 2% tds. is it right to do so if the VAT is charged and TDS also to be deducted. Can anybody explain with suitable exs and case.
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Tds on vat
Replies (14)
first of all its not a contact and according to new ammendment we should charge tds on amt excluding vat
for eg 1000+100(vat) then tds= 1000*%of tds
No question of tds if you are purchasing items
Bansal sir, We are not purchasing it for selling purpose. we have already debited to packing expenses. My question is whether we should deduct the TDS and if yes, then at which rate?.
TDS if it is to be deducted should be on the gross amount
If it is not for selling purpose then the tds will be deducted on gross amount..
Debit it tobpurchade if packing material and shiw consumption of packing material
no need of tds
Debit to purchase of packing material no need of tds supply if material does not come under definition of work as per sec 194c n9 need of tds
Mr. Bansal is right
its d easy way out
No TDS required if its an outright purchases. There is no relevance whetherbyou consume yourself or resell.
However, if you supply the basic raw material say boards for making the packing materials then it would become a contract of work and TDS has to be effected on the value addirion. ie value excluding the cost of material.
Mr Bansal is right. No need of TDS
If vendor produced a bag with ur specifications and in customize form as u require then its contract
...and u require to deduct a tds.
good sir
TDS is not attracted on purchasing
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