17 August 2010
How are the provisions of TDS applicable when I ask the printers to print some material as per our specifications when he issues a consolidated bill for printing + VAT.
17 August 2010
This is not a contract for sale but It is a composite contract for printing of stationery involving supply of materials.
This issue has already been examined vide circular no 715 dtd. 08-08-1995. The board is of the view that, TDS is attracted on supply of printed materials.
Contract for fabrication of articles or things as per specification given by assessee - Applicability of TDS provisions of section 194C on contract for fabrication of article or thing as per specifications given by the assessee - Contradiction between two Circulars of CBDT - Resolution thereof - Representations have been received in the Board seeking clarification on the applicability of section 194C on such transactions, where the assessee has outsourced certain work relating to fabrication or manufacturing of article or thing in accordance with the specifications given by the assessee. Circular No. 681, dated 8-3-1994 of the Board clarifies in para 7(vi) that the provisions of section 194C would not apply to contracts for sale of goods and further clarifies that where the property in the article or thing so fabricated passes from the fabricator-contractor to the assessee only after such article or thing is delivered to the assessee, such contract would be a contract for sale and so outside the purview of section 194C. However, in reply to question No. 15 in Circular No. 715, dated 8-8-1995 on the subject of applicability of section 194C, in respect of contract for supply of printed material as per prescribed specifications, it has been said that such contracts would also be covered under section 194C. It has been represented that the views expressed in these two circulars, to the extent as pointed out above, are in contradiction to each other.
The matter has been examined by the Board and it is considered that exclusive reliance on Question/Answer No. 15 of Circular No. 715, without taking into account the principles laid down in Circular No. 681 is not justified. Before taking a decision on the applicability of TDS under section 194C on a contract, it would have to be examined whether the contract in question is a ‘contract for work’ or a ‘contract for sale’ and TDS shall be applicable only where it is a ‘contract for work’.
It is, therefore, clarified that the provisions of section 194C would apply in respect of a contract for supply of any article or thing as per prescribed specifications only if it is a contract for work and not a contract for sale as per the principles in this regard laid down in para 7(vi) of Circular No. 681, dated 8-3-1994—Circular : No. 13/2006, dated 13-12-2006.
17 August 2010
If the printing press has purchased the required material from market (ie.you have not supplied the material) and supplied the the product according to your requirement and specification, this activity will not come under the substituted definition of "work" and accordingly TDS under section 194C will not apply w.e.f 01/10/2009.
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