Vat or TDS

[manoj gupta]

we h.ave got advertisement hoardings prepaired from vendor and he raised a bill of rs: 1.25 lacs, with Vat charged on the bill. Now whether we should treat it as a sales transaction or work contract , and do we need to deduct TDS or not. pls clarify.

[udit gupta]

yes, tds would be applicable on advertisement u/s 194C ,in this case if the vendor is individual /HUF the rate is 1% ,for others it is 2%. Anil

[DEV KUMAR KOTHARI]

It appears taht you have got advertisement hoardings prepared on and with materials provided by your vendor- that is some valuable commercial goods are transferred in your favour. It does not seems a simple case of works contract or advertisement contract. Therefore VAT is applicalbe and TDS is not applicable. In case the hoardings space and boards etc are provided by you and the vendor has simply prepared hoarding in the sense of paining, installing etc. then it will be a works contract and VAT may not be applicable and TDS will apply. The nature and character of the vendor is important. In some situations if there is composite amount it may involve professional fees ( for preparing designs), works contract and supply of goods. So check with full facts.

AI Summary

TDS applicability on advertisement hoarding payments hinges on whether the vendor supplies goods or only performs works services. Applicability of VAT or TDS on advertisement hoardings depends on whether the vendor supplies materials (constituting supply of goods, attracting VAT and negating TDS) or merely performs work such as painting and installation on client-provided boards (constituting a works contract or service, attracting TDS). The vendor's character and any composite billing involving professional fees, work and goods must be examined to determine correct tax treatment.