please take a note that, our vendor issued Proforma Invoice of Rs. 30,000/- as profession fees. As per our payment term & condition as below, - 40% - 40% - 20% for e.g. when i pay 40% of Invoice value i.e. 12,000/-. Can deducte TDS on Rs. 12,000/- or Rs. 30,000/- please guide me.
Further to inform you that, if vendor charge Service tax i.e. 10.3% then that i dedcute TDS on full value i.e. invoice value + Service tax or invoice value. please help me
19 January 2010
TDS should be deducted on payment or credit which ever is earlier basis.Hence, when you pay 40%, deduct TDS on that payment, when you pay the second 40%, deduct TDS on that payment and while making the final payment of 20%, deduct TDS on the 20%. Thus once you make payment of the entire invoice, you will end up deducting TDS on the total invoice but in three different stages. TDS should be deducted on the gross invoice (fees +service tax). Excluding the service tax for TDS in only in case of payments falling U/s 194-I (circular 8/2008).
19 January 2010
Dear Rajnish TDS will be deducted on Payment or credit whichever is entered in books first. So if you have entered the bill and credit the vedor then you will enter TDS on that moment. So when you will pay first payment you will pay him 40% less TDS on full payment. But if you are paying him as advance i.e. 40%, 40% 20% and then enter the bill. in this case you will deduct TDS on payment basis like first 12000-TDS on 12000.
for second query if he is charging Service Tax also then you will deduct TDS on full amount i.e. bill amount+service tax.
CAclubindia
