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Tds on purchasing trophy for function

kapil (accountant) (178 Points)

07 January 2020

Hello experts,
please guide me whether tds is applicable of purchasing trophy for award function?
these trophies will be given to business partners.
and if not please elaborate.

Thanks in advance.

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7 Replies

Deepak Gupta (CA Student) (15922 Points)
Replied 07 January 2020

Situation-1

You give order to A for 10 trophies with you company logo, name etc.

TDS not applicable since it is a contract for sale and outside ‘works’ definition u/s 194C

Situation-2

You give trophies to A and ask him to modify them with your company logo, name etc.

Then TDS will be applicable here u/s 194C

u/s 194C,works include, “manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer, but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer.“

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debora M (BUSINESS DEVELOPMENT MANAGER) (1697 Points)
Replied 07 January 2020

TDS Provisions as applicable u/s 194 C of the Income Tax act as applicable for Financial year 2013-14 .Major Changes has been made in the section 194C wef 01.10.2009. Thereafter only cut off amount has been increased only .

Separate rates for contractor and subcontractor has been removed.Now the tax rate has been categorised according the status of deductee and new TDS rates for contractors are as under
- For payment made to Individual & Hindu undivided family=1 %
- For payment to others =2%
Concessional rate of 1 % for advertising Contracts has been removed and now rates as defined under (1) above is applicable on all type of contractor including Advertising contracts.
No TDS on payment to transport operator (i.e in the business of playing,hiring or leasing goods carriage),if he/it furnishes his PAN to payer.
No surcharge and cess applicable on basic TDS rate in FY 2009-10 on payments made to resident except salary
The basic limit of 30000 and 75000 per annum remains unchanged.
No TDS in case of payment of Job work, if raw material has not been supplied by the payer.
In case of work contract being manufacturing or supplying a product according to specification(by using material from such customer),TDS shall be deducted on the invoice value excluding the value of material purchased from such customer,if such value is mentioned separately in the invoice. where the material component has not been separately mentioned in the invoice, tds shall be deducted on the whole value of the invoice.

manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer,but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer.

SOWJANYA M (840 Points)
Replied 07 January 2020

Pls explain pt 5 basic limit on which?

CMA M.Keerthi chandra (C.A FINAL STUDENT AND QUALIFIED C.M.A) (561 Points)
Replied 07 January 2020

Agree with Deepak Gupta.

Regarding pt 5, it is the threshold limit U/s 194 C .It means where the value of single bill exceeds Rs 30,000/- or else cumulatively the value exceeds 75,000/- regarding all the bills, then T.D.S U/s 194 C has to be made.(where 194 C applies).

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kapil (accountant) (178 Points)
Replied 11 January 2020

Dear Deepak ji..if my company purchase trophies with its name mentioned on trophies then will tds be applicable?

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Deepak Gupta (CA Student) (15922 Points)
Replied 11 January 2020

Originally posted by : kapil
	Dear Deepak ji..if my company purchase trophies with its name mentioned on trophies then will tds be applicable?

No. TDS won't be applicable.

Following is the meaning of 'work' u/s 194C

"manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer, but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer."

So, the bold line means that it is only a contract for sale, i.e. you are purchasing the trophies with company name from a seller. You haven't given him the trophies for any modification.

The seller purchases the goods from his supplier and not you and that's not your concern.