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

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.