REGARDING TO SUBCONTRACTORS

This query is : Open

rajesh (Querist)
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02 January 2010 DEAR SIR
WE HAVE SUB CONTRACTORS(X,Y,Z). WE ARE PAYING TO THEM(X,Y) THROUGH BANK ACCOUNT BUT ONE SUB CONTRACTOR THERE IS NO BANK ACCOUNT(Z). AT THIS SITUATION WE ARE PAYING TO THAT SUB CONTRACTOR(Z) THROUGH ANOTHER SUB CONTRACTOR BANK A/C(X) IS IT CORRECT OR NOT ? IN THE ABOVE SITUATION WE ARE PASSING THESE ENTRIES:
1.X A/C DR 2. Z A/C DR
TO BANKA/C TO X A/C

NOTE: WE ARE PAYING AMOUNT NEARLY 7 TO 8 LAKHS TO SUB CONTRACTOR (Z)
1. IF THE ABOVE PROCEDURE IS CORECT WHICH SECTION WILL APPLY?
2. IN THE ABOVE PROCEDURE IF THERE IS ANY DISALLOWANCES WHICH SEC WILL APPLY?
THANKS IN ADVANCE

Pawan Periwal

Pawan Periwal (Expert)
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02 January 2010 From view point of Income Tax it is ok if you are charging the requisite TDS, since you can pay the party thru any media i.e. to say cash, bank, or for any other consideration...

Bot instead of passing the composite entry, pass the dual entry for the clarity..

rajesh

rajesh (Querist)
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02 January 2010 thanks to pawan periwal.Is this entries is correct or not:

1.X A/C DR
TO BANKA/C

2. Z A/C DR
TO X A/C

We also deduct TDS from all sub contractors.
If the above procedure is correct which section will apply?

If there is any disallowances in the above procedure which section will apply?

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