Application of TDS

This query is : Resolved

Ghuliani (Querist)
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16 October 2007 A company which is doing Job work and producing finished product in the name of other manufactureres, has arranged for providing LABOUR in the factory with a Cooperative society formed by the very same labourors. As per the terma Society is billing to the Company for the Labour supplied based on the Minimum Wages as applicable (inclusive of add ons such as HRA, DA etc)PLUS 2.69% as SERVICE CHARGES thereon on monthly basis.
Till now Coop. was able to produce Exemption Certificate for TDS provions u/s 194, but from current year they are unable to do so.
The question which arise Now is on What amount TDS u/s 194 is applicable from the company side:
Is it applicable on the Total amount of Bill ie Minimum Wages Plus Service Charges? OR
Is it applicable only on the Service Charges on the plea that Minimum Wages which are being billed to the company is reimbursement of wages to the labourors.
Please Clarify. If possible reply may please be sent to following email as well
ghuliani@gmail.com
Thanks
Ghuliani

Suresh Agrawal

Suresh Agrawal (Expert)
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17 October 2007 TDS will be applicable on the total amount of the bill (and not on the service charges only) as the society is acting as contractor u/s 194C.
Wages is a reimbursement from the society's point of view but from company's point view its a payment for the labour provided.

Ghuliani

Ghuliani (Querist)
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22 October 2007

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Mridula

Mridula (Expert)
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23 October 2007 Dear Mr. Ghuliani,

Expert Mr. Suresh agrawal is correct. TDS is deducted on the total payment to be made to the contractor inclusive of wage charges and taxes.

R.V.RAO

R.V.RAO (Expert)
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23 October 2007 TO ME IT APPEARS THE WHOLE ISSUE IS
IS IT A CONTRACT?
YES THERE ARE TWO PARTIES COMING TOGETHER FOR HIRING OF MANPOWER SERVICES FOR A CONSIDERATION IN MONEY.I PRESUME NECESSARY AGREEMENT IN WRITING IS THERE PUTTING IN BLACK AND WHITE ALL TERMS MUTUALLY AGREED BY THE PARTIES.
SO SEC.194 C COMES INTO PLAY BEING A CONTRACTUAL PAYMENT THE CONSIDERATION INVOLVED IS A TOTAL OF LABOUR COST REIMBURSED AND APPLICABLE SERVICE CHARGES AND TDS IS APPLICABLE ON BOTH.
R.V.RAO