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TDS Applicability

KRISHNAMURTHY (Article Trainee) (83 Points)

02 January 2019

Please do the needful on below:

Supply of machinery including Erection & commissioning / Installation. (mentioned in PO terms)
But PO raised only for supply (as material PO)

Now we are paying advance of Rs.30 lakhs to vendor..
What is your opinion on applicability of TDS??

Please give some reference if possible..

Thanks

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7 Replies

Subrato (Chartered Accountant) (710 Points)
Replied 02 January 2019

You need to cut 2% TDS(other than an individual) on Erection & commissioning / Installation under section 194C.

Not on Machinery since machinery is a fixed asset.

Hope it helps you.

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KRISHNAMURTHY (Article Trainee) (83 Points)
Replied 02 January 2019

No separate values mentioned for the same on PO or in Proforma received from vendor...
In PO under scope of work it mention as Erection commissioning to done by vendor

Subrato (Chartered Accountant) (710 Points)
Replied 02 January 2019

You need to cut 2% TDS on Erection & commissioning / Installation under section 194C.

KRISHNAMURTHY (Article Trainee) (83 Points)
Replied 02 January 2019

Thanks sir
But PO value is 70 lakhs which is inclusive of Erection and commissioning. No separate charges for labour and services. In that case on what amount we need to consider TDS?

THANK YOU

CA ABHAY GUPTA (Practice) (3230 Points)
Replied 03 January 2019

since amount not shown separately thus no need to deduct tds..

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KRISHNAMURTHY (Article Trainee) (83 Points)
Replied 03 January 2019

Thanks for the reply..
But I got one case law below from my senior..

1. TDS @ 2% is to be deducted u/s- 194C.
Case Laws:
1. Pr. CIT Vs. Bharat Heavy Electricals Ltd 390 ITR 322
2. ABCAUS 2228 (2018) (03) ITAT

Absence of agreement will not alter the nature and substance of transaction.