Tax Deduction at Source

[Pradeep Kaushik]

Respected Sir,

 

We are an excisable goods manufecturing comapny. Out of our 5 suppliers, there is one suppllier to whom we are selling the Raw Material. He is adding some more parts to our material and selling back to us. (Excise and VAT is being charged by both of us on sale Invoice).  we are deducting the TDS on his invoice value, under contract ( TDS U/s 194C).

 

Now the suppliers is arguing with us for non duduction of TDS U/s 194C. He is saying that this is simple sale & purchase transection between us. He is not accepting our deductions.

 

Please send us the clearification, so that we can make our suppliers satisfied in this issue.

 

Best Regards.

 

Pradeep Kaushik

[PAWAN KUMAR SHARMA]

There cannot be any TDS on Sales & Supplies. Once a supplier raised a Tax Invoice and charged VAT/CST no TDS would be deducted.

In the given case TDS is deductible U/s194C. Attention is invited to Clause (iv)(e) of Explanation to Section 194C according to which "Work shall include-- (e) manufacturing or supplying of product according to the requirement or specification of a customer by using material purchased from such customer, but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from from a person ,other than such customer."

Further, non deduction of TDS may attract disallowance u/s 40(a)(ia).

[r.rajkumar kumar]

tds cannot be deducted when y are raising invoice with duty and local tax and he developed and send

back to y which the a new shape alongwth duty invoice and local tax . Than this comes under sale of goods hence no tds is reqired.

AI Summary

TDS under Section 194C applies to processing of customer-supplied material; non-deduction may attract disallowance under law.
Where a supplier adds parts to material supplied by a purchaser and issues an invoice, the transaction must be characterised as either a sale of goods or a contract manufacturing/supply service; if it falls within contractual manufacturing using customer-provided material, TDS is deductible on payments and failure to deduct can lead to disallowance under tax provisions.