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whether tds will be deducted in this case

Jitendra A Bathija (Employee) (122 Points)

09 March 2009

There is one company in whose office fire took place . company's office was insured . Company has given contract to renovate the office to a contractor and made payment 21000. company debited this amount to insurance claim receivale a/c . my question is whether tds will be deducted on this amount as payment to contractor.

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(Guest)

If payment made by the company and the payment/credit s cross the limit as per It TDS Must be deducted.

In your case it is not clear that you are paying 21000/- in one time or the total bill amount for the year is 21000/- if it is single payment tds must be deducted.

>> Rajesh

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Jitendra A Bathija (Employee) (122 Points)
Replied 09 March 2009

In one single payment it is made but whether it is expense for the company . no .the company will receive the same from the insurance company

CA.Tarun Maheshwari (CA, DISA) (7150 Points)
Replied 09 March 2009

The company is liable to TDS. First this is expense for the company. The reimbursement is the later stage story. The payment to contractor is made by the company itself. SO the TDS will have to be deducted in my opinion.

Audi murty (Manger) (35 Points)
Replied 10 March 2009

Payment to contractors : Any of the following “Person responsible for paying any sum of any resident contractor for carrying out any work including supply of labour for carrying out any work. In pursuance of a contract between contractor and any of the following person shall at the time of credit of such sum to the accounts of the contractor , or to any other account in the books of payer , or at the time of payment whichever is earlier shall deduct tax at source

Following contracts are covered u/s . 194 C (List is not exhaustive, but it only gives broad outline of the contract which are liable for T.D.S. u/s.194 C) 1) Works contracts. 2) Labour contracts. 3) Combination of works and labour contracts.4) Transportation contracts involving supply of labour for loading and unloading. 5) Contract for supply of labour for loading and unloading.6) Contract for hire of cars /buses etc. which includes hire charges and where driver cleaners and maintenance are provided by the contractor .

When payment can be made without deduction of tax payment can be made without deduction of tax where payment to contractor or sub-contractor , are made for any sum credited or paid in pursuance of a contract , where the amount for the contract does not exceeds Rs. 20,000/- in other words if the contract amount is 20,000/ -or more tax has to be deduct at applicable rate