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About TDS To advance payment

27 August 2019

Dear sir

we are construction company, we make advance payment to contractor before completion work, how do treat TDs 194C without bill , any body share your opinion.pls.

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6 Replies

Kapadia Pravin (17264 Points)
Replied 27 August 2019

At least you will be taking receipt for advance payment to your contractor that is ok for time being for 194C. Hope it's cheque payment.

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Mahendravarman Rajagopal (6 Points)
Replied 27 August 2019

yes we make it receipt on that time, always cheque payment, can do we deduct TDs on receipt and how to adjust in invoice

RAJA P M ("Do the Right Thing...!!!") (128101 Points)
Replied 27 August 2019

Just make it as advance payment. After received invoice/bill from contractor adjust the same against the advance.

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Jatin (Accountant) (3479 Points)
Replied 27 August 2019

You are required to deduct TDS on Advance payment to contractors if total contract value is more than 1 Lac

At a time of payment to contractor, you need to deduct TDS @ 1% for individual or 2% for other than individual

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CMA Sagar Das (Working in Manufacturing Comapny) (155 Points)
Replied 02 January 2020

If you are purchasing materials against the advance payment, then no TDS deduction is necessary.

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CMA M.Keerthi chandra (C.A FINAL STUDENT AND QUALIFIED C.M.A) (561 Points)
Replied 02 January 2020

Many of the entries in 26AS statement for Contractors resemble advance payment (regarding R.A Bills)rather the final bill . It is commonly seen in this Industry.

In general you have to make T.D.S since its the 'payment or credit which is earlier' at the time you make a payment and after completion of contract or otherwise arriving at final bill, adjust the same.