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Tds issue

sachin (ARTICLES) (434 Points)

05 August 2014

Case The company has given job work to another company for cutting and printing fabric. . So tds is applicable. Job worker has charged VAT amount. My question tds is to be on including VAT or excluding vat.. Support ur answers with case laws if any Thanks in advance Regards Sachin

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10 Replies

satish (Accoountant) (29 Points)
Replied 05 August 2014

First thing For job work vat I'll not applicable.. It's only TDs applicable

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Tribhuvan Aditya Singh (Student as well as Self-employed) (3710 Points)
Replied 05 August 2014

normally in case of job work, vat is not applicable. but where additional material have been used, the job worker can charge value of such materials with vat as applicable on it.

tds u/s 194C will be deducted only on service portion, where the invoice separately mentions the service charges in it. where the amt. in invoice issued by job worker, does not separately show value of material and service charges then tds to be deducted on whole amt including vat.

Anubhav (Chartered Accountant) (429 Points)
Replied 05 August 2014

Hi,

Jobwork is covered under finance act. Hence service tax need to be paid, and TDS should be deducted. Incase VAT is charged, this means there is a sale of goods involved, which does not involve deduction of TDS.

TDS need to be deducted on service portion only.

For any further uery PM or mail me.

AJH & CO.

anubhavjain @ ajhco.in

maharaj (accountant) (165 Points)
Replied 05 August 2014

Dear Sachin

If in your bill there have VAT & service tax both are applicable then TDS will be on (Actual work value+vat).

See the example below.

e.g. Say Actual Amount = 10000.00

S. Tax = 1236.00 (For Service Portion value)

VAT = 1450.00 (For Material Portion valued)

Total = 12686.00

Then TDS will be on Rs. (10000+1450)= 11450 - TDS value as per contract.

If STDS rule applicable as per state WB state law then for Regs. concern it has 2% deduction and other withour Regs. 4% deduction will be applicable.

Hope you understand.

Thanks.

Tribhuvan Aditya Singh (Student as well as Self-employed) (3710 Points)
Replied 05 August 2014

@ maharaj... could you explain how did you charge vat on service portion?? and also tds on service charge + vat???....

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maharaj (accountant) (165 Points)
Replied 05 August 2014

Dear Aditya Singh

As you explain earlier its was truly right if we find division in bill both S.tax and vat. Other wise TDS will be applicable including S.tax also.

When I have give example my basic intention to understand on which value TDS will be applicable.

Don't stay only in bracket portion ( ) in my example.

Otherwise its true from your point of view.

Stay happy.

Tribhuvan Aditya Singh (Student as well as Self-employed) (3710 Points)
Replied 05 August 2014

@ maharaj... i dont have any problem because i know the provisions. but your answer is intended to solve someone's query who is not very well aware of provisions, so atleast give proper example so that the person asking ques. is able to understand it and not confuse... it is just a request from me that kindly give complete answers.

mahesh poddar (business) (47 Points)
Replied 06 August 2014

one point here that if the job work done results in a new product that is new h.s. code under excise then service tax will not be payable as it will amount to manufacturing.

Jayam Ramesh K C (Group Chiefr Accountant) (99 Points)
Replied 06 August 2014

Dear All

TDS has to be paid on total value of the bill if service and Vat portion are together billed. Eg:

A works contract bill is given for RS 10000.00 Here the contractor bills VAT @ 70% and Labour @ 30%. Then the value is read as under: 7000+VAT 5% RS 350+ 3000 Labour. The total value of the bill is RS 10350.00. The TDS @ 2% is payable by Contractee is RS 207 and the net amount payable is RS 10143.00. This is very clear. Though the above work is Job Work VAT is applicable if the Contractor is not able to apportion material and Labour from their Work.But TDS is always deductable on the total amount of the bill only.

Jayam ramesh K C