If d contractor billed the amount separatly for material and his job work...then on what amount the tds will be deducted.
for eg. cloth Rs. 400000
printing charges Rs. 100000
total bill amt. Rs. 500000
on which amt tds will be deducted.
Raw material (cloth ) is not supplied by contractee/ purchaser/assessee.
you should deduct tds only on printing charges u/s194c
If the contractor is submitting bill in spilit formate showing service charges and material supplied separately, TDS is required to be deducted only on payment of Service Charges (Sec. 194C of Income Tax Act).
As per latest Amendment,
TDS in case of JOB work according to specification(brief):In case of work contract being manufacturing or supplying product according to specification(by using material from such customer),tds shall be deducted on the invoice value excluding the value of material purchased from such customer,if such value is mentioned separately in the invoice.where the material component has not been separately mentioned in the invoice,tds shall be deducted on the whole value of the invoice.
Relevant clause of new section :is reproduced hereunder
EXPLANATION TO SECTION 194 C
(iv) work shall include
(a).......
(b).......
(e) manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer,but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer.
subsection (3) Where any sum is paid or credited for carrying out any work mentioned in sub-clause (e) of clause (iv) of the Explanation, tax shall be deducted at source
(i) on the invoice value excluding the value of material, if such value is mentioned separately in the invoice; or
(ii) on the whole of the invoice value, if the value of material is not mentioned separately in the invoice.
So I think 194C is not attracted here. It should be treated as sale only.
@ MR VITRAG:WHAT ABT LABOUR CHARGES??TDS ON IT SHOULD BE DONE ...
Serivce Tax amt in Work contract
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