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tds

Manali (Job) (29 Points)

13 July 2009

Hi!! I wanted to ask about tds on construction contract. Whether to deduct tds on full amount or can i bifurcate material and labour and deduct tds only on labour amount.

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8 Replies

(Guest)

Follow Ankur sir comment.

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CA. Rashi Goyal (Chartered Accountant) (512 Points)
Replied 13 July 2009

Hi Manali,

As per section 194C, in case of contracts, the TDS needs to be deducted on the full bill amount. You can not bifurcate the material & labour.

(Guest)

TDS is to be deducted only on labour part and not materials. as TDS is deducted on services and not goods supplied.

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 13 July 2009

Hi Khushboo,

I would like to draw your kind attention towards proviso to Section 309(1) which reads as follows:

“Provided that any remuneration for services rendered by any such director in any other capacity shall not be so included if –

(a) the services rendered are of a professional nature, and

(b) in the opinion of the Central Government, the director possesses the requisite qualifications for the practice of, the profession]. “

Thus on the basis of above provision and in your case such payment as royalty shall not be treated as remuneration to director if and only if such the 2 conditions mentioned above fulfill simultaneously.

In proviso to Section 309(1) above you have to file application to CG in order to obtain CG approval.

Best Regards

1 Like

(Guest)

Hi khusboo,

plz ignore my previous comment, I have check proviso of Section 309(1). Mr. Ankur is absolutely correct. Follow as he mentioned.

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Khushboo Maheshwari (Company Secretary) (548 Points)
Replied 14 July 2009

Originally posted by :Ankur Garg
"	Hi Khushboo, I would like to draw your kind attention towards proviso to Section 309(1) which reads as follows: “Provided that any remuneration for services rendered by any such director in any other capacity shall not be so included if – (a) the services rendered are of a professional nature, and (b) in the opinion of the Central Government, the director possesses the requisite qualifications for the practice of, the profession]. “ Thus on the basis of above provision and in your case such payment as royalty shall not be treated as remuneration to director if and only if such the 2 conditions mentioned above fulfill simultaneously. In proviso to Section 309(1) above you have to file application to CG in order to obtain CG approval. Best Regards	"

But Ankur Sir i dont think possessing patent right is any professional qualification........so does this section still applies

(Guest)

Hi Khushboo,

Ankur Sir is correct. It depends on the facts of the case such as if the director is professionally qualified to posses such patent, ie. he has phd. degree or sicentist or whatever may be the case, then sec 309 shall apply but incase if he ordinarilly gets possession of it then sec 309 shall not apply. So we need to look at the circumstances.

kamaljeet (C.S) (51 Points)
Replied 16 July 2009

Hi khushboo,

I totally agree with your point of view, there is no need of any kind of CG approval or Expression of Opinion under Section 309(1) of the Companies Act as it is completely a different transaction which doesn't attract provisions of Section 309 of the ACT.