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Tds related

dharmendra (student) (39 Points)

12 June 2017

whether tds deducted or not if customer give their specification of goods to manufacturer or supplier of goods without purchase material from such customer?

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4 Replies

Vatsal (Student) (453 Points)
Replied 13 June 2017

Yes u/s 194C

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Sanjay S (Chartered Accountant) (1375 Points)
Replied 13 June 2017

Please refer the image below:

Example:1:

Bata shoe company has issued purchase-cum-work-order of boxes according to company specification for packing of shoes to ABC Ltd. ABC ltd purchased the required raw material from market to manufacture such boxes and supplied the boxes to Bata shoe company.

Answer: In above situation Bata shoes company is not liable to deduct TDS on payment to ABC company .As per note (iv) to explanation of section 194C ,contract to manufacture the product according to customer specification ,but where material is not supplied by the customer ,is not covered under work contract definition as per section 194 C .

Hence the transaction entered into by you.. would amount to "sale of goods" since material is not supplied by customer and hence TDS need not be made u/s 194-C.

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dharmendra (student) (39 Points)
Replied 13 June 2017

Sir as per section 194c stated that work 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.