TDS u/s194C

[CA.S Ganesh]

Our company has sending the material worth Rs.20.00 to jobworker for further processing on payment of duty. Jobworker purchased a material from his vendor and fix it into material which was sent by us. Vendor has charging in the invoice is as follows.

Finished material                                                                    100.00

Excise Duty 10% (Rs.20+Rs.100)                                          12.00

VAT 5%                                                                                           5.60

Total invoice value                                                                    117.60

On what amount we should deduct tax at source?

Please help me...

 

[Mahaganapathi V]

Sir

How you send your invoice to your job worker? Can you send the format?

However in plain reading of the illustration i am of the view that there is no TDS attracted on this transaction since proper sale invoice is raised and excise duty and vat is collected from you.

There may be a contract to fix your part with another part but that does not automatically constitute contract of service. If nothing is done the job worker will return your product. In that case you will credit their account as material return or sale return.

Since Excise and vat is collected by your job worker the process is confirmed as manufacture of a new product hence you sell one product and he sells you another product and hence TDS is not applicable for sale of goods.

Take an example of purchase order (also a contract) sheduling the supplier to deliver at various dates with various quantities. This cannot be considered as contract under section 194C. What you get is a purchased goods and not a service.

[r.rajkumar kumar]

for job work why excise come in to picutre. any how the excise is chargable by the pricipale manufacturer

but you asked for tds tds can be deducted from 112 tks

[Dinesh Sagade]

We can treat this transaction as a customised sale, where a material sold by you to the said jobworker is attatched to another material purchased by him to produce a new product ( as excise & VAT are levied). It will not attract TDS u/s 194C

AI Summary

TDS under section 194C inapplicable where transaction is a sale/customised manufacture evidenced by excise and VAT invoices. Whether TDS under section 194C applies when supplied material is assembled with parts purchased by a jobworker: invoices showing excise and VAT and a sales invoice indicate manufacture or sale of a new product, making the transaction a sale/customised sale rather than a contract for services, and therefore not attracting TDS under service provisions.