TDS rate on invoice/payment related to EPC contract

[Ramesh Rangani]

Hi All,

I just want to confirm the rate of TDS in below case.

ABC Ltd.has issued a contract for design and construction of roads on EPC (Engineering, procurement and construction) basis to XYZ Ltd. Please advise at which rate TDS should be deducted by ABC Ltd on invoice/payment to XYZ Ltd.

Rgds,

Ramesh

[Ganeshan Kalyani]

Sir, 1% under 194C if service provider is Individual /HUF and 2% if other than individual/HUF.

Alternatively if you receive two invoices I.e. one for designing and second for construction then on designing 10% under 194J will be applicable. Thanks.

[Ramesh Rangani]

Ganeshan Kalyani Sir,

Thank you very much. Is there any case law/ clarification on this so that I can show to my management.

[Ganeshan Kalyani]

Sir please refer section 194 of Income Tax Act 1961. Thanks.

AI Summary

TDS on EPC payments: invoice classification determines whether contractor or professional-fee deduction rules apply. TDS treatment for EPC contract payments depends on invoice characterisation: payments for contractor services attract TDS under contractor provisions with lower rates for individual or HUF payees and higher rates for other payees, while separately invoiced design or professional services are treated as professional fees and attract the higher professional-fee TDS rate; proper classification of invoices determines which deduction rate applies.