TDS on Transportation

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Anil Kumar Kedia (Querist)
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01 June 2008 Sir, We are executing pipeline projects of govt and awarding sub-contract of one part of work.We are using trasnport vehicle for transportation of material to works site. I want to know that TDs on transporation will be applicable either Contract rate or sub-contract rate.

Thanks.

S. SRIKANTH

S. SRIKANTH (Expert)
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04 June 2008 From the reading of your query, it is clear that the contract of transportation does not exist between you and govt. The transportion is hired by you, which is incidental to the pipeline project.
Refer Para 159.4 Taxmann (Ready Reckoner 2008-09) cleary defines a subcontractor is on who takes a portion of contract from principal contractor.

Here transportion of goods is incidental but not the portion of contract. Hence it is a principal contract between you and the transporter. Hence tds is deductible at 2% + SC + Cess.
Dear friend! the above opinion is given based on the furnished facts by you and any contrary views pl forward to me.