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Tds on contractual work

04 June 2018

sir if i donot deduct tds on these two bills of rs 20000 and at the end of the f.y. 20th march two more bill also comes of rs 25000 ... then total bills amount will be rs 40000+20000+20000+25000+25000 then the total bill amount exceeds of rs100000 then can i cannot deduct tds on bill amount of rs 40000 as i have already deducted tds on this bill i deduct tds on bill amount of rs 20000+20000+25000+25000 at one time...Am i right sir???? plz reply me sir

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8 Replies

Siddharth Goel (Chartered Accountant) (3031 Points)
Replied 04 June 2018

TDS on contract or the Payment of Contractor under Section 194C shall be deducted at the below-mentioned rates if single payment is made in excess of Rs. 30,000 and aggregate payment is made in excess of Rs. 1,00,000 on the following rates:

1% if the payment is being made to Individual or HUF
2% in all other cases (i.e. cases except payment to Individual or HUF)

The person responsible for making payment to resident contractor/sub-contractor should deduct TDS either at the time of crediting such sum to the account to the payee or at the time of payment thereof in cash or by issue of a cheque or by any other mode, whichever is earlier.

In this case, the limit of Rs. 1,00,000 exceeded when the first bill of Rs. 25,000 was received. Hence TDS on Rs. 65,000 (20,000+20,000+25000) should have been deducted at the time of credit or payment, whichever earlier.

Subsequently, TDS on Rs. 25,000 should have been deducted from the next bill of Rs. 25,000.

Therefore, TDS to be deducted (assuming rate @ 2%), 2% of Rs. 65,000 = Rs. 1300

TDS to be deducted (assuming rate @ 2%), 2% of Rs. 25,000 = Rs. 500

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Rajkiran Ghosh (480 Points)
Replied 04 June 2018

sir the first bill was rs 40000 so i deduct tds on first bill... but when i deduct all bill excluding 1st bill then i can dont deduct tds on 1st bill .... am i right sir???

Siddharth Goel (Chartered Accountant) (3031 Points)
Replied 04 June 2018

Yes. Once you have deducted TDS on the first bill of Rs. 40,000, then you don't have to deduct TDS on the same bill again. You just have to deduct TDS on the remaining bills.

Rajkiran Ghosh (480 Points)
Replied 04 June 2018

u mean on the remaining bills i will deduct tds at a same time???plz reply sir

Siddharth Goel (Chartered Accountant) (3031 Points)
Replied 04 June 2018

Yes. You can deduct TDS on the remaining bills at the same time.

This will be the calculation:

Therefore, TDS to be deducted (assuming rate @ 2%), 2% of Rs. 65,000 = Rs. 1300

TDS to be deducted (assuming rate @ 2%), 2% of Rs. 25,000 = Rs. 500

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Rajkiran Ghosh (480 Points)
Replied 04 June 2018

sir i have taken unsecured loan in feb 2018 and also taken loan in march 2018 from same party.I calculate interest both loans . in that case if i consider first loan then in f.y. 2017-18 interest amount doesnot exceeds of rs 5000 but if i take both loans then the interest amount exceeds of rs 5000 in f.y. 2017-18. so for deducting TDS will i consider both loans as in that case interest amount exceeds of rs 5000. sir please clear me....