Tax Audit of Contractor

This query is : Resolved

kanchan (Querist)
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26 August 2010 sir,

A person gets a work contract of Rs.2 crore and he further sub contract it to any body. As soon as the actual contracter receives the payments he immediately transfers all his payments to the sub contractor account. This is the first year of business of main contractor and he has not deducted any TDS on the sub contractor bills. the sub contractor is also covers under Tax Audit and also works for other contractors, which have deducted the TDS. My query is that

a) what will be TDS liability for the actual contractor and how it will be represent in Form 3CD.
b) What will be the balance sheet of actual contractor.
c) what will be tbe position of income and expenditure account of sub contractor (because his receipts will exceed from the total of TDS certificates, which he has received from other contractors)

mohinder kansal

mohinder kansal (Expert)
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27 August 2010 as this is the first year of the main contractor when his accounts are required to be audited u/s 44AB, he is not liable to deduct tax on sub contract work as above said. ( in case person is individual). in this case in form 3CD it will be shown as not applicable.

balance sheet of the contractor will be as usual. receipts shall be shown and expenses shall be deducted.

it will not affect the sub contractor as gross receipt may be greater than the turnover as per tds certificate. there may always be some turnover on which tds not deducted. it will not affect the position in any way. sub contractor will pay the tax calculated on his total income after deducting the tds deducted on other receipts.