TAX DEDUCTED AT SOURCE ON CONTRACT AMOUNT

[SURYAKANT MITHBAVKAR]

We renewed our office premises and same contract has been given to interior with materials.

while making payment we have following descripancy.

While deducting Tax Deucted at Source - we have to consider contract amount with Taxes like Value Added Tax or only Contract amount (Excluding Taxes)

 

[CAGOPALJI AGRAWAL]

It would be on gross amount . See circular no. 715

[CASeetharaman KC]

TDS is deductible on the gross amount only

DEAR ACCORDING TO SEC 194C(1)

TDS SHOULD BE DEDUCTED ON GROSS AMOUNT ONLY WHEN THE PRESON RESPONSIABLE TO PAY IS OTHER THAN INDIVIDUAL OR HUF ,AND THE SINGLE PAYMENT EXCEED RS 30000 OR AGGREGATE AMOUNT IN A YEAR EXCEED 75000 AT THE RATE OF 1% WHERE PAYMENT IS MADE TO INDIVIDUAL OR HUF AND 2% WHERE PAYMENT IS MADE TO ANY OTHER PERSON

AI Summary

Tax deduction at source on contract payments must be calculated on the gross amount, inclusive of indirect taxes.
TDS on payments to contractors is required to be calculated on the gross contract amount, inclusive of taxes such as value added tax, rather than on the net amount after indirect taxes. Applicability depends on payer and payee classification, specified thresholds for deduction, and differentiated withholding rates for individuals/HUFs versus other persons.