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

WCT applicability: turnkey lump sum contracts attract tax on the entire invoice including materials, labour and coordination fees. WCT and related withholding apply to the gross total project value of an indivisible turnkey lump sum contract - the invoice value inclusive of material, labour and coordination fee. If the contract is split into separate supply, labour and coordination contracts, WCT would not be attracted on the supply component. The respondent did not definitively answer the Income Tax Act TDS question on whether TDS at the stated rate applies to labour and/or material.