What is the procedure to treat TDS for contract employees are they to be deducted TDS @ 2% treating them as Contractors or are they to be treated as Normal Employees and deducted TDS as per slab.
We take employees on contract for 3 months, 6 months and after every 3,6 months we give them break of 2-3 days , as they can claim permanent job in government, ,and after 2-3 again give them contract so as per organisation after every 3,6 months their contract ended and a new contract is made after 2-3 days now the fact is the same employee is taken on contract, again and again as he knows the work. So even though officially he is to stay only for 3,6 months , he stays for even more than 1 year, there are some employees also who leave in 2,3 months also, so in this case during pre audit auditor checked the salary payments and pointed out that TDS has to be deducted for contract employees at the rate of 2%. Now in this case how to deduct the TDS from contract employees as many have already left and only few are working for more than 7-8 months in this case we cant even assume their total yearly income and deduct TDS accordingly because they are going to stay for 3 months only as per contract, also these contract employees dont get any benefits like PF, etc.
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