Calculation of tax

[Guest]

My Comapny is registered under TNVAT Act.We are engaging contractors to do some civil/Electrical works in our Company.They are giving bills charging TNVAT,Service Tax. In some bills material portion, Labour portion is given separately.In some bills there is no separate figures. My issue is whether TNVAT TDS is to be made only on the material portion only.whether we can apply 70/30 formula if material portion is not given separately for calculating the material portion. Presently we calculating TNVAT TDS on material portion(Excluding TNVAT) only.If no separate figure available we apply 70/30 formula for finding material value. Whether this procedure is correct?

[Guest]

Works contract is applicable where there is a composite contract involving both supply and labour. As per works contract TDS under TNVAT Act, in respect of payment on works contract, tax should be deducted on the amounts paid. There is no provision to deduct labour portion for the purpose of TDS even if given separately and should be deducted on the entire amount and further the basis of applying 70/30 ratio is also not available.

[Guest]

Works contract is applicable where there is a composite contract involving both supply and labour. As per works contract TDS under TNVAT Act, in respect of payment on works contract, tax should be deducted on the amounts paid. There is no provision to deduct labour portion for the purpose of TDS even if given separately and should be deducted on the entire amount and further the basis of applying 70/30 ratio is also not available.

AI Summary

Clarification Issued: TNVAT TDS Must Be Deducted from Entire Contract Amount, Including Labor and Materials. No 70/30 Split. A company registered under the TNVAT Act inquires about the correct procedure for calculating TNVAT TDS on civil and electrical works contracts. The issue arises when bills include both material and labor costs, sometimes without separate figures. The company currently deducts TDS on the material portion only, using a 70/30 formula when figures are not provided. The response clarifies that under the TNVAT Act, TDS should be deducted from the entire contract amount, including both supply and labor, without applying the 70/30 formula, as there is no provision to separate the labor portion for TDS purposes.