13 April 2011
The nature of the transaction seems to be a contract u/s 194 C, however, have to check whether the police department is an exempted case in the TDS rules. IF so, no need to deduct else required to be deducted
13 April 2011
Please note that no TDS is to be deducted from Government as per following section:
Section 196. INTEREST OR DIVIDEND OR OTHER SUMS PAYABLE TO GOVERNMENT, RESERVE BANK OR CERTAIN CORPORATIONS.
Notwithstanding anything contained in the foregoing provisions of this Chapter, no deduction of tax shall be made by any person from any sums payable to-
(i) The Government, or
(ii) The Reserve Bank of India, or
(iii) A corporation established by or under a Central Act which is, under any law for the time being in force, exempt from income-tax on its income, or
(iv) A Mutual Fund specified under clause (23D) of section 10, where such sum is payable to it by way of interest or dividend in respect of any securities or shares owned by it or in which it has full beneficial interest, or any other income accruing or arising to it.
AS Police Department is part of the Government no TDS is to be deducted.
14 April 2011
Sir but as per Section 194 C ,TDS is to be deducted on payment made to Central gov. , state gov, local authority etc.and our case fall in sec. 194 C, i think that TDS should be deducted on the same .. Plz correct me if i am wrong.
14 April 2011
Section 194C comes under chapter XVII of Income Tax Act which comes under purview of Section 196 quoted above by me. Therefore, Any payments to Government under Section 194C is not liable for TDS.