Applicability of TDS

[madhavvan n]

a vehicle maintenance company which services vehicles and also supplies parts to customers some customers are deducting tax u/s 194c on the entire invoice value the vehicle maintenance company contends that tds should be only on labour portion and not on supply pls give your views

AI Summary

Tax Deduction Dispute: Should TDS Under Section 194C Apply to Entire Invoice or Just Labor Costs? A vehicle maintenance company raises an issue regarding the deduction of tax under section 194C on entire invoice amounts by some customers. The company argues that tax deduction at source (TDS) should apply only to the labor portion, not the supply of parts. A respondent clarifies that TDS should be deducted on works contracts, and if service and sale contracts are independent, only the service contract is subject to TDS. However, if both contracts are part of the same agreement, TDS should be applied to the gross amount, including material value, as the materials are used in service provision.