Sub Contractor TDS

This query is : Resolved 

27 August 2009 Dear Friends

We are into Corporate Interiors. Our System of Work is as below

We undertake Interior works from Our Clients.We received Purchase Order for the same. Our Clients Deduct TDS @2%

We hire different Contractors(Material/Labour/Material & Labour) to carry out the work entrusted to us by our clients.
Agreement between us and our subcontractor is oral.
We are deducting them TDS @1% plus appicable Surcharge & Education cess.

Is the agreement between us and our subcontractor is Mandatory as per IT Act? Is there any section/rule or Case law which says that agreement is mandatory? In the absence of any agreement is there any need to deduct TDS @2%.

28 August 2009 contract is not manadatory but sub- contract means in sec 194C when project is outsourced to sub contractor. if any work is got done by contractor for completion of his work then , tds @ 2 % is deductible.



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