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Tds to contractor(for construction)

05 April 2018

when TDs to be paid?
At the time of payment or when the bill is received from contractor.

If I made payment of Rs 10,00,000.00 to the contractor in 3 to 4 installments. and get bill of such on 31-03 when should i pay tds?

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14 Replies

prasad Nilugal ( GST Practitioner & Accounts ) (14196 Points)
Replied 05 April 2018

You have deduct TDS as per section 194C of the income tax act 1961 at time of credit of such to the account of the contractor or at time of payment thereof in cash or by way of issue of cheque or draft any other mode .

1 Like

tripti (ca article) (209 Points)
Replied 05 April 2018

TDS IS TO DEDUCTED AT THE TIME OF MAKING PAYMENT OR CREDIT WHICH EVER IS EARLIER. HOWEVER IN FOLLOWING 7 CASES TDS IS TO BE DEDUCTED ON PAYMENT BASIS: 1. SALARY 2.DIVIDENDS 3. WINNING FROM LOTTERY OR CROSSWORD PUZZLE 4.WINNING FROM HORSE RACE 5.PAYMENTS IN RESPECT OF DEPOSITS YNDER NSC 6. PAYMENTS IN RESPECT OF REPURCHASE OF UNITS BY MUTUAL FUND OR UTI 7.PAYMENT OF COMPENSATION ON ACQUISITION OF CERTAIN IMMOVABLE PROPERTY.

Rahul Prajapati (Student) (2282 Points)
Replied 05 April 2018

Mahesh G,

As per sec 194C

The person responsible for making payment to resident contractor/sub-contractor should deduct TDS,

either at the time of crediting such sum to the account to the payee or
at the time of payment thereof in cash or
by an issue of a cheque or by any other mode, whichever is earlier.

As you said you made payments in Installments, then you have to deduct TDS as and when you make payment over the Installment Amount.

Rajkiran Ghosh (479 Points)
Replied 03 June 2018

when the tds will be deducted in case of contract if i pay 5 times payment in a f.y. and these amount exceeds of rs 100000....will the tds should be deducted for each payment time ???? plz reply sir....

Rahul Prajapati (Student) (2282 Points)
Replied 03 June 2018

If you knows that the payment to contractor will exceeds 100000 during the year then deduct TDS on each Payment to Contractor.

Or if you can't predict that payment would exceeds 100000 then don't deducd TDS till the time payment does not exceeds limit.

In future if that payment to contractor exceeds 100000 then deduct TDS on whole amount which you have paid till that time.

Rajkiran Ghosh (479 Points)
Replied 03 June 2018

but in a payment if the amount is rs 40000 in a f.y and i cannot predict whether in future if there will be the further patment then can i deduct tds on rs 40000???as tds limit will exceeds of rs 30000 in a single payment... please clear me sir

Rahul Prajapati (Student) (2282 Points)
Replied 03 June 2018

Originally posted by : Rajkiran Ghosh
	but in a payment if the amount is rs 40000 in a f.y and i cannot predict whether in future if there will be the further patment then can i deduct tds on rs 40000???as tds limit will exceeds of rs 30000 in a single payment... please clear me sir

Also, if single time payment exceeds Rs. 30000 then you have to deduct TDS

Rajkiran Ghosh (479 Points)
Replied 03 June 2018

but sir where in a f.y. payment arrises rs 40000 in a single payement i deduct tds on first payment and 2 nd payment in same f.y. rs 25000 ,3rd payment rs 25000 and last payment is rs 20000 ..then in whole f.y. total payment is rs 110000... then can i deduct tds only for 2 nd, 3rd and fourth payment ???as in first payment i have already deducted tds....please clear me sir

Rahul Prajapati (Student) (2282 Points)
Replied 03 June 2018

your first payment crosses 30000 limit at single time payment hence you have to deduct TDS on all payments

Rajkiran Ghosh (479 Points)
Replied 03 June 2018

u mean i will deduct tds on total payment of rs 110000??? but i deduct tds of rs 40000 for first payment so again if i deduct tds on all payments then on rs 40000 2 times tds will be deducted...plz clear me this issue sir

Rahul Prajapati (Student) (2282 Points)
Replied 03 June 2018

i said if you made a payment of 30000 in a single invoice then deduct tds on that and after this deduct tds on all payments. and if your limit of 30000 does not exceeds in a single invoice then deduct Tds when it crosses 100000

Rajkiran Ghosh (479 Points)
Replied 03 June 2018

that means first time i will deduct tds on rs 40000 and i can not predict whether total payment amount exceeds of rs 100000 so at the end of f.y. i will deduct tds on rest payment(25000+25000+20000)??? am i right sir???? plz reply me