TDS on material value reimbursement

This query is : Resolved

Krishna Murty (Querist)
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04 June 2010 X company received a work order from A Company. X company purchasing required material for the work and payments made by X Company immediately to the creditors.But after one month X comapny put a bill to A company for reimbursement of material cost.In the above situation only material cost is reimbursing. In such a case what is the TDS position on reimbursement of material cost.Kindly clarify it and note that any latest circular or notification.

Deepak Goel

Deepak Goel (Expert)
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04 June 2010 u/s 194C TDS is to be deducted on gross amount if material and labour is consolidated. But if material cost bill is issued separately then TDS is to be deducted only on labour component.

Krishna Murty

Krishna Murty (Querist)
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04 June 2010 Sir! as per the agreement steel and cement are reimbursable by "Company A" to "Company X".So X company submitting seperate bill to Company A. But at the time reimbursing the amount Company A is deductions TDS. Is it correct or not.In my openion TDS is not deductible on material reimbursable value. Kindly give the relevent notification or Circular number for not to deduct TDS on material reimbursement value.
Thanking you

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