TaxTMI 
TaxTMI 
TaxTMI 
There is a labour contractor charging Rs. 12,000 per month for some service. The company has agreed to bear the TDS amount. The Bill submitted by the contractor is 12, 240 inclusive of TDS. Hence, the company deducts 244.80 from 12,240 and pays the net. IS IT OK from Income Tax Point of View.
Reimbursement of TDS
Siraj Shaikh
Company's TDS Deduction on Contractor Payments Complies with Sections 195A and 194C; PAN Required for Deduction. A labor contractor charges a company Rs. 12,000 monthly, with the company agreeing to bear the TDS amount. The contractor's bill is Rs. 12,240, inclusive of TDS, from which the company deducts Rs. 244.80 and pays the net amount. Experts confirm this approach aligns with income tax regulations, specifically under sections 195A and 194C, which stipulate a 2% TDS rate. The contractor's income increases by Rs. 240, which must be justified in case of scrutiny. The contractor must provide their PAN for the deduction. (AI Summary)