Tds deduction

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

28 August 2012 Amount of Rs. 16000 is debited to security charges account. out of this amount of Rs. 1000 is credited to penalty account and the TDS is applicable @ 1% to the concerned party. so now on which amount the TDS should get deducted-i.e. whether on 16000/- the amount of expenses or Rs. 15000/- i.e the amount after deducting penalty?????

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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28 August 2012 Since the amount of Rs. 1,000 shall not be paid to the service provider, TDS will be deducted only on Rs. 15,000.

Arun Biyani

Arun Biyani (Expert)
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28 August 2012 Any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract. here it depends on the language of ur contract as to whether u will pay 16,000 and receive 1000 back as penalty or u will pay Rs 15000 after reducing the penalty amount. if its the second case u will have to deduct tds on 15000 only as pursuant to contract ur responsible for paying 15000 only. also if agreement is silent its always better to deduct tds on 16000 to avoid future disallowance of expenses.

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