REG SEc.194 C-Your Help Required sir

This query is : Resolved

pradeep (Querist)
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10 November 2009 We would like some explanation on section 194C, its applicability in transactions where Material is supplied by Customer and the supplier adds certain other material and supply it back to the customer:

e.g. Suppose X Ltd sold some "A" material to Y Ltd and Y Ltd added "B" material to "A" and sold "AB" material to X Ltd.

Then in such case is it require to deduct TDS under the provisions of New Section 194C.

Ram Avtar Singh

Ram Avtar Singh (Expert)
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10 November 2009 NO TDS ON Sale Purchase of goods

Only TDS on Cartage but if Transporter Provide PAN Photocopy then No TDS On transporter.

If No Pan No of transporter the IND/HUF @1% and other 2% from 1.10.09

CA SANJAY MUKHERJEE

CA SANJAY MUKHERJEE (Expert)
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10 November 2009 Agree with expert

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Guest

Guest (Expert)

10 November 2009 Agree with ram Avtar Singh

Sunil

Sunil (Expert)
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10 November 2009 If you read the latest provisions from this year for Section 194C, If the buyer is getting any material manufactured from the seller and he provides any material to the seller, TDS is applicable u/s 194C. The condition is seller can make anything as per specifications of buyer provided he has not purchased any of the raw material or intermediate from the buyer. He has to purchase everything in manufacture from persons other than the buyer. This provision was added to bring in factories and ancillary units who did job manufacture for the principal.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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10 November 2009 In the given example, if Y Ltd purchased goods from X Ltd and Y ltd adds labour on it and raises invoice to X ltd in such a way that the material and labour cost are shown separately in the said invoice, then X Ltd had to deduct income tax necessarily on the labour component alone w.e.f 01/10/2009.

Ref :- section 194C (3)(i) read with Explanation (iv) (e) thereon.

Sunil

Sunil (Expert)
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10 November 2009 Agreed. However, if the new product itself is sold after manufacturing by using product procured from buyer, without segregating the billing then the whole bill suffers TDS. Therefore it is better to show a seperate processing charge. Refer clause (iv)(e). "Manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer"

The scope is not just on job work. It is in manufacture of the article. Therefore They will have to show the cost of material and process separately and deduct TDS on processing charges or job work. Moreover, VAT will be paid on the entire transaction.

Ram Avtar Singh

Ram Avtar Singh (Expert)
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10 November 2009 Material is sold to y Ltd he added / manufactured material and sold to any party by Invoice under Excise Rule. then TDS Not applicable. if y is not chagin job charges then how TDS applicable on that.

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Sunil

Sunil (Expert)
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10 November 2009 Ram Avtarji. The substituted Section 194 C reads as
"Manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer"

Ram Avtar Singh

Ram Avtar Singh (Expert)
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11 November 2009 if he is saleing goods to only to suppliier of material then TDs to be deduct. if he is seling goods in open market then TDs not applicable.