TDS query u/s. 194C

malli and Nag (CA) (119 Points)
Replied 19 June 2010

These all bills are considered one only(seperatly considered only for Rs.20000 limit)

Date is 1.7.2010

malli and Nag (CA) (119 Points)
Replied 19 June 2010

Dear friend see the attachment

Attached File : 13 8 tds ready reckoner.xls downloaded: 428 times

CA Vitrag S Modi (Chartered Accountant) (186 Points)
Replied 19 June 2010

If the bils are to be considered as separate then according to you we are not required to deduct Tds, right?

SRINIVASA MURTHY (Asst Manager (Finance)) (186 Points)
Replied 19 June 2010

U R liable to deduct TDS on the payments, if the payment to a party exceeds Rs.20000/- in a single payment r Rs.50000/- aggrigate during the year are liable to TDS.

there is no connections with the contracts u entered for the services as long as party is same it is liable to TDS, if payment exceeding the limits spicified in the act.

from 1-7-2010, the limits are going to b Rs.30000/- for single payment and Rs.75000/- for aggregate for the financial year.

Amit Agrawal (Chartered Accountant) (75 Points)
Replied 19 June 2010

Dear Vitag,

IF the total of the bills exceeds Rs. 50000 in aggregate then there is bound to be TDS u/s 194c

CA Vitrag S Modi (Chartered Accountant) (186 Points)
Replied 19 June 2010

Dear Srinivasa murthy,

Are u sure, TDS liabilty depends on payment.

As far as i know it depends on the amount of the bill.

CA Vitrag S Modi (Chartered Accountant) (186 Points)
Replied 19 June 2010

Mr. Amit,

total of all bills does not exceed Rs. 50000/- but it exceeds Rs. 20000/- only if all the bills are deemed to be one and same.

Pls reply me exactly.

SRINIVASA MURTHY (Asst Manager (Finance)) (186 Points)
Replied 19 June 2010

Dear Mr. Modi, Section 194C is applicable for the Payments exceeding Rs.20000/- for single payment.

whether u r processing a single bill r 2-3 bills at a time, the provision of section is like this, TAX IS REQUIRED TO BE DEDUCTED AT SOURCE WHERE THE AMOUNT CREDITED OR PAID TO A CONTRACTOR OR SUB-CONTRACTOR EXCEEDS Rs.20000/- (Rs.30000/- from 1st July, 2010) IN A A SINGLE PAYMENT OR Rs. 50000/- (Rs.75000/- from 1st July, 2010) n the aggregate during the financial year.

in other words, where the payments does not exceeds Rs.20000/- in a single payment Rs.50000/- in aggregate Sec 194C is not applicable. Ex: if u receiving monthly bill of Rs.2000/- (Rs. 24000/- p.a) it is not iable for TDS u/s194C as it is with in the limits.

CA Vitrag S Modi (Chartered Accountant) (186 Points)
Replied 19 June 2010

Hello Mr. Srinivasa Murthy,

Then as per u, If i have received a bill of say Rs.30000/- but if i made payment in parts of say Rs.5000/- for 6 times then whether we will be required to deduct TDS?

SRINIVASA MURTHY (Asst Manager (Finance)) (186 Points)
Replied 21 June 2010

There are 2 answers to this question brother,

As per my understanding, when you have received rs.30000/- bill and making monthly payments, Rs.5000/- as per ur example, and u will account this expenditure on cash basis i.e. Rs.5000/- every month based on the payment. Then TDS is not applicable.

But, where u have booked the entire expenditure and making payments at your convenience, i.e., in parts, 194C is applied on those credits, based on the accounting. the total TDS is to be deducted from the 1st Payment and to b deposit with Central govt

It is based on the how u account it in ur books, this is how I understand the Section 194C, any wrong interpretation of the law may b corrected.

Shudhanshu Agrawal (Business) (2570 Points)
Replied 21 June 2010

Originally posted by : SRINIVASA MURTHY
	Dear Mr. Modi, Section 194C is applicable for the Payments exceeding Rs.20000/- for single payment. whether u r processing a single bill r 2-3 bills at a time, the provision of section is like this, TAX IS REQUIRED TO BE DEDUCTED AT SOURCE WHERE THE AMOUNT CREDITED OR PAID TO A CONTRACTOR OR SUB-CONTRACTOR EXCEEDS Rs.20000/- (Rs.30000/- from 1st July, 2010) IN A A SINGLE PAYMENT OR Rs. 50000/- (Rs.75000/- from 1st July, 2010) n the aggregate during the financial year. in other words, where the payments does not exceeds Rs.20000/- in a single payment Rs.50000/- in aggregate Sec 194C is not applicable. Ex: if u receiving monthly bill of Rs.2000/- (Rs. 24000/- p.a) it is not iable for TDS u/s194C as it is with in the limits.

I would like to correct you Mr. Murthy,

As per Section 194C it is not payment but it is any sum credited or paid as well for Rs. 20,000. Moreover when we check the applicability of Section 194C first we need to look whether any bill is exceeding Rs. 20,000 and then we check the collective bills.

Yes we can do planning to avoide the applicability of TDS by asking more than one bill.

SRINIVASA MURTHY (Asst Manager (Finance)) (186 Points)
Replied 21 June 2010

Dear Mr. Sudhanshu, plz clarify if u obtain different bills from the same party for same service contract (here there may be 4 agreements of contract) , how u will avoid TDS? if u making a single payment for all the bills.

and plz explain me this also

"TAX IS REQUIRED TO BE DEDUCTED AT SOURCE WHERE THE AMOUNT CREDITED OR PAID TO A CONTRACTOR OR SUB-CONTRACTOR EXCEEDS Rs.20000/- (Rs.30000/- from 1st July, 2010) IN A A SINGLE PAYMENT OR Rs. 50000/- (Rs.75000/- from 1st July, 2010) THE AGGRIGATE DURING THE FINANCIAL YEAR."