TDS on Work Contract

[Guest]

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

[PRASANTA KHATAI]

WCT TDS as applicable in the project state to be deducted from the total sales price , i.e.invoice value including material,labour,co-ordination fee etc,.

Yours being a turnkey lumsum indivisible contract,WCT shall be applicable on the gross total project value.

Incase the whole contract would have been awarded as a split contract , i.e.separate contract for supply,labour and co-ordination,WCT would not have been attracted , thus no WCT TDS.

Hope,I have adequately clarified , may revert for any further clf.

 

Prasanta Khatai,

9818830315

[Guest]

Thanks for your clarification on WCTDS.

But also wanted TDS as per Income Tax Act.

We are deducting TDS @ 10% on Co-Ordination Fee.

But my doubt is whether 2% TDS to be deducted on Labout as well Material or only labour ?

 

AI Summary

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.