Tds on contractual work

Hi

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

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.

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
 

Yes, you have to include both the interest for TDS calculation.