Regarding TDS

This query is : Resolved

Rajnish (Querist)
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19 January 2010 Dear All,

please take a note that, our vendor
issued Proforma Invoice of Rs. 30,000/-
as profession fees.
As per our payment term & condition as below,
- 40%
- 40%
- 20%
for e.g. when i pay 40% of Invoice value i.e. 12,000/-.
Can deducte TDS on Rs. 12,000/- or Rs. 30,000/-
please guide me.

Further to inform you that, if vendor charge Service tax i.e. 10.3% then that i dedcute TDS on full value i.e. invoice value + Service tax or invoice value.
please help me

Regards
rajnish

Venkat Rao Marella

Venkat Rao Marella (Expert)
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19 January 2010 TDS should be deducted on payment or credit which ever is earlier basis.Hence, when you pay 40%, deduct TDS on that payment, when you pay the second 40%, deduct TDS on that payment and while making the final payment of 20%, deduct TDS on the 20%. Thus once you make payment of the entire invoice, you will end up deducting TDS on the total invoice but in three different stages.
TDS should be deducted on the gross invoice (fees +service tax). Excluding the service tax for TDS in only in case of payments falling U/s 194-I (circular 8/2008).

CA Prashant Gupta

CA Prashant Gupta (Expert)
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19 January 2010 Dear Rajnish
TDS will be deducted on Payment or credit whichever is entered in books first. So if you have entered the bill and credit the vedor then you will enter TDS on that moment. So when you will pay first payment you will pay him 40% less TDS on full payment.
But if you are paying him as advance i.e. 40%, 40% 20% and then enter the bill. in this case you will deduct TDS on payment basis like first 12000-TDS on 12000.

for second query if he is charging Service Tax also then you will deduct TDS on full amount i.e. bill amount+service tax.

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Rajnish

Rajnish (Querist)
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19 January 2010 Dear Mr. Venkant Rao/Mr. Prashan Gupta

Thanks your prompt reply.
Lot of thanks

Regards
Rajnish