tds on works contract

As per sec 194C, TDS is to be deducted on all works contract. works contract includes advertising, broadcasting & telecasting, carriage of goods & passengers by any mode other than railways and catering. the provisions are also applicable for "contract for supply of labour for works contract".Since contracts for the construction, repair, renovation or alteration of buildings or dams or laying of roads or airfields or railway lines or erection or installation of plant and machinery are in the nature of contracts for work and labour, income-tax will have to be deducted from payments made in respect of such contracts. therefore you will have to deduct TDS under sec 194C. TDS will have to be deducted where the amount credited or paid to the contractor or a sub-contractor:- (a)exceeds Rs.20000 (Rs.30000 from July 1,2010) in a single payment or (b) exceeds Rs.50000 (Rs.75000 from July 1,2010) in the aggregate i.e. the total amount of all the bills submitted by the contractor during a financial year exceeds Rs.50000.

Rate is 1% on gross amount and edu. Cess is not applicable.

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TDS on Works Contract Tax Dear Members,

I would like to get clarifications in the following transactions whether

1.the transaction will attract Works contract Tax
2.if so wat is the rate of tax
3.if vendor is deducting VAT then what is the effect of WCT
4.if the work is done against Purchase order as per specification required by the contractee whether the vendor is falling under 194C as a contractor for deducting TDS.

The case is

We have raised an order for printing of Poster papers to a Private ltd company.
On the basis of the puchase order and as per the specification mentioned in that order, we have received the posters.

Now the vendor has raised bill for the work he completed and also charged VAT @ 4% on the total work value.

We have paid the vendor without deducting TDS.

To my knowledge,

if the work is taken as WCT,say WCT attracts, then in our case the vendor has charged VAT hence no need to collect WCT from his payment.


In over view, it is a sale in hands of the vendor and purchase to the receiver and hence no question of TDS raise.

In another view,it is like job work and the vendor falls under the definition of "Contractor" as per IT Act and hence TDS to be deducted.
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phe9oxis.
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