TDS on Work Contract

[Asked by 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

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.