TDS on labour Charges

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

28 February 2011 Sir
A firm paid for a machinery repair bill of Rs. 110000 including Rs. 10000 as Service Tax.The Contractor also supplied material in this Rs. 110000 bill, but didn't charged any vat or CST...so plz tell me whether TDS to be deducted on 110000 ? if yes, whether 194 C or 194J ?

JIGAR DALAL

JIGAR DALAL (Expert)
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01 March 2011 If any contract is given to vendor with material then TDS is to be deducted @ 2% (194C) on Invoice Amt. If Firm is taking service tax credit then TDS is to be deducted on Gross Inv. Amt. (Amt. before S. Tax)otherwise on total invoice amount (Inv. Amt. + S. Tax)

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Querist : Anonymous

Querist : Anonymous (Querist)

01 March 2011 Sir
Thanks for the reply.One thing more, u refer about deduction of TDS on amount exclusive of ST if ST credit is taken.Plz tell me if there ia any rule behind such contention ? or u just think that ST is not expense for firm , so no need to deduct TDS ?

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JIGAR DALAL

JIGAR DALAL (Expert)
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01 March 2011 If any for is taking Service Tax Credit on amount paid by him then it is not the expense for the firm, hence TDS should not be deducted on that amount. Another thing is that if you deduct TDS on Service TAx Amount then it leads to Double Taxation i.e., Tax on Tax amount.