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Whether tds applicable

Yogesh Shah (Managing Corporate Finance) (1051 Points)

03 September 2012

Hello to all CCItes

I have one query regarding applicability of TDS :-

One of our client is public transport company. They pays toll charges to toll company when their vehicles (buses) passes municipal limits. In fact, they have made a contract with toll company that both will maintain records of how many buses have crossed the toll points. At month end, they calculate accordingly and our client pays toll charges in bulk. While paying these toll charges, they deduct TDS.

Now, my question is whether TDS deduction is applicable on toll charges payment?

Our client has deducted though. If yes, whether it falls under Sec 194C?

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6 Replies

Manjunatha M K (Manager - Accounts) (318 Points)
Replied 03 September 2012

According to Sec 194C

Any person responsible for paying any sum to any resident for carrying out any work⁵⁹(including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a specified person shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to—

. . . .

Explanation to Sec 194C

"work" shall include—

(a) advertising;

(b) broadcasting and telecasting including production of programmes for such broadcasting or telecasting;

(d) catering;

(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.]

In the given case no work in performed. So TDS is applicable u/s 194C

Yogesh Shah (Managing Corporate Finance) (1051 Points)
Replied 04 September 2012

Hi Manjunath,

did u mean to say that

'as NO work is performed and hence TDS is NOT APPLICABLE'?

Manjunatha M K (Manager - Accounts) (318 Points)
Replied 04 September 2012

Sorry for mistake, Since no work is performed Sec 194C is not applicable.

Arif Ali (Apt Co Advisory) (1230 Points)
Replied 13 September 2012

yes no any tds

Yogesh Shah (Managing Corporate Finance) (1051 Points)
Replied 26 September 2012

Hi Guys ...

Post Script - (Ya, its a little bit late, but what to do. Killer pressure of 30th Sep)

In meantime, I asked this query to my ex-coaching class faculty in Poona. He replied that

YES, TDS DEDUCTION WAS APPLICABLE AND IT HAD TO BE DEDUCTED.

This is because, for treating any arrangement as a 'Contract' - its not necessary that physical agreement or any other documentary thing should be present. Service is provided, payment is made. Enough. Sec 194C gets applicable.

In my query, TDS was aplicable just becuase of simple reason that contract was present. Let it be toll charges etc etc. doesn't matter. If contract is there, TDS is applicable.

Arif Ali (Apt Co Advisory) (1230 Points)
Replied 26 September 2012

Hi Yogesh, Tax collection is not covered under the meaning of 'work' under 194C. so no tds should be deducted.

As you r saying ur coaching classed teacher said 194C will be applicable. In my view his answer is not correct. please take the view of more expert teacher.