TDS for Water Supply Service

[Guest]

Payment is made to an agency for supply of water. The payment includes the amount to be paid for water + transportation cost. Please advice if this payment attracts TDS u/s. 194C

[CA Rachit Agarwal]

Section 194C is attracted on sale of services and not sale of goods.

Supply of water in our opinion is sale of services. Further procurement of water is contractual in nature may be for year or month. Hence TDS should be deducted u/s 194C.

[rishi mohan]

Tds is applicable on water supply. It shall be levied under section 194C (Payments to contractors and sub-contractors) of the Income Tax Act,1961.

AI Summary

TDS on water supply applies where contractual payments for water, including transport, fall under the contractor-payments regime. Payment to an agency for water supply made under a contract, including transportation charges, is treated as a payment for services under the contractor-payments regime and is therefore subject to tax deduction at source; transportation components bundled into the contractual payment form part of the taxable sum and must be included when applying the withholding obligation.