Dear Amir,

I have no doubt in first three cases, but If we change some points in  case 4 and 5, than what will be the answer-

1.If  the date of  payment in case no. 4 for all the contract are differents, and every contract were totaly seprate contract with each other but contractor were same.wt will be the answer.whether TDS is applicable since first contract payment or at the time of contract C, at this time limt 0f Rs.50000/- is applied.

2.if in Case 5, We change the amount of Contract B with Rs.10000/- in lieu of Rs.19000/-, than what will be the answer.whether still TDS is to be deducted on both contracts..?

Dear Arun,

That example was based on the assumption that the contror was same in all cases.

1) therefore Case 4 will not change.

2) THEN IT WILL BE JUST LIKE CASE 2 & ACCORDINGLY TDS WILL BE DEDUCTED ONLY ON CONTRACT A

In case only one bill exceed Rs.20000/-  and the gross doesnot exceed Rs. 50000, then tax has to be deducted only on the amount of bill that has exceeded Rs.20,000 and not on other bills. THe situation has been correctly illustrated by Mr. Amir.

Also, if the bill includes service tax also, the tax has to be deducted on the entire bill including the service tax thereon.

Dear Amir Sir,

I am agree with your answere regareding case no.04, wt my question to you that at which point of time we need to deduct tds, whether at the time of first contract, or 2nd or 3rd...? becacuse till 2nd contract its not fill in the limit of 50000/- or 20000/-( i assumed that no contract were related with each other)

In the above case, the tax has to be deducted when the aggregate of amounts exceed Rs. 50,000. Further the entire tax on all the contracts has to be deducted from the last contract amount when it aggregated to 50000.

Mr. Amol Mazumdar

If it is pretty certain at the time of First bill that Billing would exceed Rs. 50,000 then as per good practice, you should deduct Tds at the time of first payment itself. However going by law, you can very well dedeuct Tds on entire Bills at the time of Booking of the 3rd Bill.

However if nothing is certain at the time of First Bill,then also you have to deduct Tds on entire bills at the time of booking of 3rd bill, not before that.

Dear Amol Sir,

This is practical difficulty which one has to face........

Becos if it exceeds then u r supposed to deduct on all the contracts & if not deducted earlier then u have to pay interest for late deduction/deposit of TDS.....

there is no need to pay interest for late deduction as the act itself has mentioned that it has to be deducted at the time when the aggregate amount exceeds the specified limits. because the liability to deduct tax arises when it crosses the limit. No before that. So there is no question of late deduction  / payment.

You Should Deducat Only on rs 20000 Subjected to total billing in a year will not be more than 50000.

asa matter of service tax only in case of rent exp u are not requried to deducat tds on service tax portion otherwise on full amt you will have to deducat tdd including service tax portion

Thanks to all for replying

I brought up this issue for discussion because i saw two different approaches being adopted in different Companies....I felt totally confused

TDS IS REQUIRED TO DEDUCT ON ALL BILLS OF F.YR. .. & BILL AMOUNT FOR TDS PURPOSE IS GROSS AMOUNT INCLUSIVE OF ALL TAXES LESS REBATE ON SAME PARTICULAR BILL...

TAKE CARE.. BY...   

See TDS should be deducted on all bill if the total amount exceed Rs.50,000 in a year including service tax.

If the total amount paid including service tax does not exceed Rs.50,000 in a year then TDS should be deducted only on bils which exceed Rs.20,000(Including service tax).