Hi All,
We have assigned a work contract to the main contractor who will take care about compleation of the turnkey project. The total project cost bifurcated as 'material & labour' and 'co-ordination fee'. In this scenario, what is the cost on which TDS 2% is to be deducted, is it on 'material & labour' or only on 'labour'. Aslo what would be the cost on which WCT is to be deducted by us.
Thank You
Clarification on TDS: 2% on Total Sales for Turnkey Contracts; Split Contracts Exempt from WCT. Coordination Fee TDS at 10%. A query was raised regarding the deduction of Tax Deducted at Source (TDS) on a work contract, specifically whether TDS at 2% should be applied to both 'material & labour' or only to 'labour.' A response clarified that Withholding Tax (WCT) TDS should be deducted from the total sales price, including material, labour, and coordination fees, for a turnkey lump-sum contract. In contrast, if the contract were split into separate agreements for supply, labour, and coordination, WCT would not apply. The inquirer also mentioned deducting TDS at 10% on the coordination fee and sought further clarification on TDS application. (AI Summary)
TaxTMI 
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