Accounting and tds on payment to third party on behalf of co
This query is : Resolved
08 June 2015
sir,
one of my client was deducting tds on payment to contractor, but later contractor has stopped supplying material itself and instruct the third party to supply material. now since six months material is supplied by third party, third party was issuing bills to us on the name of contractor and we are making payment to third party directly. but no tds was deducted on such payments and now contractor is issuing conslidated bill. so whether payment for material made earlier to third party is required to deduct tds or not. only letter correspondence is there to prove that payment is made on behalf of contractor
one of my client was deducting tds on payment to contractor, but later contractor has stopped supplying material itself and instruct the third party to supply material. now since six months material is supplied by third party, third party was issuing bills to us on the name of contractor and we are making payment to third party directly. but no tds was deducted on such payments and now contractor is issuing conslidated bill. so whether payment for material made earlier to third party is required to deduct tds or not. only letter correspondence is there to prove that payment is made on behalf of contractor
08 June 2015
No you should have deducted the TDS at the time of Payments as for you its the payment to contractor only.
08 June 2015
Mr. Sachin,
the above contract of your client seems to be of sale/supply of material where no TDS liability arise.
TDS liability arises only when payment is being made to any resident contractor for carrying out any "work (including supply of labour for carrying out any work) under a contract".
work shall not include manufacturing or supply a product according to the requirement or specification of a customer by using raw material purchased from a person other than such customer as such a contract is a contract for `sale’, please refer Circular : No. 681, dated 8-3-1994.
the above contract of your client seems to be of sale/supply of material where no TDS liability arise.
TDS liability arises only when payment is being made to any resident contractor for carrying out any "work (including supply of labour for carrying out any work) under a contract".
work shall not include manufacturing or supply a product according to the requirement or specification of a customer by using raw material purchased from a person other than such customer as such a contract is a contract for `sale’, please refer Circular : No. 681, dated 8-3-1994.
08 June 2015
But the contractor is giving consolidated bill
08 June 2015
Mr. Sachin,
What is the nature of original contract?
Whether you were providing some material on which the contractor was required to work:
- If yes, then it is if job work nature and the payment is liable to TDS.
- If no, then it is a contract for supply of material, and the liability for TDS didn't arise since the begining.
Payment to third party on behalf of the contractor does not alter the nature of contract and similarly the TDS liability.
What is the nature of original contract?
Whether you were providing some material on which the contractor was required to work:
- If yes, then it is if job work nature and the payment is liable to TDS.
- If no, then it is a contract for supply of material, and the liability for TDS didn't arise since the begining.
Payment to third party on behalf of the contractor does not alter the nature of contract and similarly the TDS liability.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- ITC temporary reversal and reclaim
- GST on export of services and Input Credit
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- Inventory of finished goods
- Applicable TDS rate for sale of property in Nov 2024
- Sale of property furniture sale
- Can we claim ITC of Feb-2024 in the month of November-2024 which was not claimed by oversight
- REGARDING 25 AS DATE OF PAYMENT AND DATE OF BOOKING
- Tds on building rent monthly
- Regarding Waiver of Interest levied u/s 50 of PGST/CGST Act
- LAST YEAR 2022-23 ITC IN NEXT YEAR 2023-24 REPORITNG IN GSTR-9
- MIS MATCH OF INVOICE NUMBER
- IGST Credit-Show cause notice issued-confusion
- Issue of gst e invoice
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
- Query for dubts
- Regarding einvoice taken on nil rated sales
Trending Online Classes
CAclubindia
