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TDS on Water Charges

Sripada M (CA) (365 Points)

29 October 2009

Does a company purchasing water from a vendor on a monthly payment basis attract TDS? If yes, under which section?

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17 Replies

Sunil (Trader) (2611 Points)
Replied 29 October 2009

It is a contract for sale and VAT is applicable on the sales of the water. The containers are on deposit basis and exchanged with empty. It is similar to buying the 1 litre bottles. You are not providing the water or container to the seller. You have given a deposit to the seller for the container. The seller is procuring water himselfand treating and selling to you. If you send him the water to treat, package and send back to you then you have to levy TDS u/s 194C. Even if you send your own container or sometime one may send their little steel tankers mounted on a Tata ACE to fill with water, you are buying from him the processed water that he has imself processed with his raw material. It is same as sending a tanker to load fuel. TDS does not apply in these case whether you send your own container to fill or you exchange filled with empty.

CA MARUTHI GANDHI (JOB) (60 Points)
Replied 29 October 2009

Originally posted by :Sripada M

Provisions of Section 194C are applicable only where the contract is either a “contract for carrying out any work” or a “contract for supply of labour for works contract”. Hence, these provisions are not applicable for payments made under the contract of sale of goods.

in my openion

Here we can consider selling of water is equal with selling of goods.So weneed not deduct TDS.

Please let me know any contrary view.

sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 29 October 2009

no tds

praveen (Chartered Accountant) (6971 Points)
Replied 29 October 2009

TDS is not applicable.

Neither does VAT.

PRAVEEN KUMAR (MBA (Finance) B.Com.(P)) (3443 Points)
Replied 29 October 2009

Since it is a Purchase of Water. No TDS should be deducted from payment.

Originally posted by :Sripada M

Does a company purchasing water from a vendor on a monthly payment basis attract TDS?

If yes, under which section?

ravi chenna (Article Student) (30 Points)
Replied 29 October 2009

TDS provisions are not applicable to the above activity because that is in the nature of purchase but not a service

Amol Gopal Kabra (CA,CS,DISA) (Practicing CA) (8539 Points)
Replied 29 October 2009

Originally posted by :praveen
"	TDS is not applicable. Neither does VAT.	"

TDS is not applicable.. But VAT is applicable on processed water..

Ratan Deep Saxena (Asstt Manager (Accounts & Finance)) (2998 Points)
Replied 29 October 2009

Ir water is supplied by party on contract basis then TDS Would apply. And if water is purchased on the basis of tanker then no TDS would apply.

regards,

ratan

1 Like

Amol Gopal Kabra (CA,CS,DISA) (Practicing CA) (8539 Points)
Replied 29 October 2009

In my view, only because it is supplied through contract wont attract 194 C.

However, this case shall be considered. Say an organisation where the requirement is very large and the water supplier charges the bill as Water Charges and Transportation Charges. In such case where the transport charges exceed the threshold limit, then TDS shall be applicable of the transport part only and not on the water supply part.

Sunil (Trader) (2611 Points)
Replied 29 October 2009

If water is charged inclusive of delivery, it is sale of water. Even though the supply may be a contract, it still wualifies to be a sale as none of the raw materials are supplied by the buyer. the processing is done by the manufacturer and he is paying CENVAT as well as VAT. People even trade in processed water. Therefore 194C is not applicable. However, the transportation charges would have to depend on who is the owner of the transport. If I have my own tanker, process water, supply and charge separately for delivery, then my transportation charges is under 194C. If I do not charge for delivery and price is all inclusive my contract is a contract for sale. If I engage another transporter and bill all inclusive, the transporter is my contractor and not that of the buyer. If I charge separately, then I am the contractor u/s 194C for the buyer and the transporter is my sub contractor. If the buyer pays my bill separate nd transporters bill directly, the transporter is contractor for my buyer u/s 194C.

Prabhakar FCA (CA) (101 Points)
Replied 29 October 2009

no tds

Ganapati (Article Assistant) (81 Points)
Replied 31 October 2009

An organization providing a service called TESTING of water(lab word called ETP treated water)montly basis, against them TDS been deducted treated as a contractor. and they r charging Service Tax also. but my question is whether they have to treated as a professional/consultant...? or not..pls let me know..

thanks in advance.