We have given Civil Contract to a contractor & processed his invoice by deducting TDS.
Now contractor is requesting us to pay the amount to his sub contractor directly on his behalf by debiting account.
Please suggest whether TDS will be applicable on payment to third party on behalf of contractor, however we have already deducted the TDS on contractor Bill.
08 October 2013
No TDS to be deducted, you can make direct payment to sub contractor, but in your books you have to debit the contractor only. Please take instruction from him in writing for the future record..
08 October 2013
then your sub contractor will become creditor in your books and therefore you will have to deduct and pay TDS in subcontractor name, which is not possible in your case as you have already deducted and paid TDS on behalf of contractor. Further please note that you are always liable to make payment to contractor or to any person on direction given by contractor, therefore the subcontractor does not owe any money to you but to contractor only. therefore better you debit contranctor only but can make payment/ make cheque in the name of subcontractor..
CAclubindia
