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tds on works contract

Mohit Arya (Chartered Accountant) (96 Points)

04 January 2011

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.

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5 Replies

Pankaj Arora (Learner) (3134 Points)
Replied 06 January 2011

you should deduct tds only on printing charges u/s194c

Manish Khatri (C.A. ) (472 Points)
Replied 06 January 2011

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).

CA Vitrag S Modi (Chartered Accountant) (186 Points)
Replied 06 January 2011

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.