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TDS LIABILITY

swohra (none) (537 Points)

30 April 2010

Dear Members

If a assessee pays Rs. 15000/-, 7000/-, 9000/- i.e. total 31000/- diffrent point of time against 3 bills of contract for the same amount on say 1.4.2010. Is he liable for TDS U/s. 194C?

Thanks in advance...

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14 Replies

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 30 April 2010

Hi, 194C says if the amount is paid TO SINGLE CONTRACTOR (and not "BY" a single assessee) exceeding Rs. 20000 by a SINGLE BILL... Then a contractor is liable to deduct TDS..

So, in ur case, if the amount is paid to A SAME CONTRACTOR against one bill on the same date, though at different point of time.. I think, yes, TDS is liable to be deducted....

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swohra (none) (537 Points)
Replied 30 April 2010

Dheeraj will you elobarate it please?

Rachit (Analyst) (913 Points)
Replied 30 April 2010

(upto 30-06-10) The limits under section 194C are Rs.20,000/= for a single transaction and Rs. 50,000/= for aggregate of transactions with the same party during the financial year.

from 01/07/10 it is 30,000/= and 75000/= respectively

ashish gupta ( student) (1922 Points)
Replied 30 April 2010

just check if there are 3 different contracts or 3 bill for a single contract. If there are 3 different contracts, then no need to deduct the Tax, otherwise yes.

Rachit (Analyst) (913 Points)
Replied 30 April 2010

Originally posted by : ashish gupta
	just check if there are 3 different contracts or 3 bill for a single contract. If there are 3 different contracts, then no need to deduct the Tax, otherwise yes.

Can you elaborate your view "If there are 3 different contracts, then no need to deduct the Tax,"

eg. If there are 3-different contracts of Rs. 19,000/= each with the same contractor. then according to your view there is no TDS liability? is it? even though the aggregate amount paid exceeds Rs.50,000/=.

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ashish gupta ( student) (1922 Points)
Replied 30 April 2010

My dear , but amount under this case does not exceed Rs.50000/- its just Rs. 31000/-. Ya if aggregate amount exceeds Rs.50000/- then liability to deduct TDS arises.

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 30 April 2010

Hi swohra, sorry for the above reply, i actually took all this 2 years back so could not remember about the bill v/s transaction...

So, now i do consider that though amount exceeds Rs. 30000, but still there will be no liability of deducting TDS..

Reason being, the transactions defer,. I mean, though it may be one single bill to one single creditor.. But the payment is made in parts, i.e in different transactions. In none of the transactions, contractor is receiving Rs. 30000 in single Receipt...

But still, let other experts too comment

Santosh Madanlalji Malu (Certified Public Accountant Chartered Accountant Company Secretary) (123 Points)
Replied 30 April 2010

as per section 194 C it is payment per transaction and not per contract hence in your case TDS is applicable

Pradip Narsingani (Income Tax & GST Consultant/ CA-Final) (572 Points)
Replied 30 April 2010

in section 194(c)amount under this case does not exceed Rs.50000/- its just Rs. 31000/-. Ya if aggregate amount exceeds Rs.50000/- then liability to deduct TDS arises. and it is payment per transaction and not per contract hence in your case TDS is applicable././././

But still, let other experts comment for right opninan for more confidance

vikash rathi (Chartered Accountant) (787 Points)
Replied 30 April 2010

hey if there are three different bill for different contract.....however payment is to same ...then no need of tds but if its for...same contract then tds has to be deducted and whole amount will be disallowed u/s 40(a)

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vikash rathi (Chartered Accountant) (787 Points)
Replied 30 April 2010

sudhir rawal (B.COM/PCC/ARTICLE/'O'LEVEL) (314 Points)
Replied 01 May 2010

law provides

(5) No deduction shall be made from the amount of any sum credited or paid or likely to be credited or paid to the account of, or to, the contractor, if such sum does not exceed twenty thousand rupees :

Provided that where the aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year exceeds fifty thousand rupees, the person responsible for paying such sums referred to in sub-section (1) shall be liable to deduct income-tax under this section.

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now my opinion

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you can raise one equation to learn it easily

tds = payment to one contactor>20,000/- in single bill

tds = aggregate payment to one contractor>50,000/- in current year

as in your query

no tds is requirement because

your single payment is less then 20,000 and as well as aggreage payment is less than 50,000/

correct me if i'm wrong

Rajesh P (CA) (25 Points)
Replied 01 May 2010

As per my knowledge, even if the amount is paid at different point of time of the same day, TDS will be attracted, if it exceeds Rs 20000. As per clause 3 of section 194C, the word used is "any sum credited, paid or likely to be credited or paid" . Here, the amount likely to be paid in the same day exceeds Rs. 20000. It is the payments that matters not the number of bills.