Shifting of liability of tax

[Guest]

The main contractor has claimed the tds and reported the turnover and paid the tax on the works given to a registered sub contractor. The Sub contractor has claime d exemption showing that the main contractor has paid the tax. Can the tax liablitiy can be shifted to main contractor from sub contractor

[DEV KUMAR KOTHARI]

Main contractor may be is liable to make TDS from payments to sub-contractor if the conditions of S. 194C apply. Income of contractor and sub-contractor are assessable separately. The liability of income tax cannot be shifted to contractor. Sub contractor is liable to pay tax on his income. however, sub-contractor may apply to his A.O. for TDS at nil or lower rate.

[Guest]

In continuation of my query , it is to be added that the issue is under SALES TAX LAWS and not Income Tax Act

AI Summary

TDS liability: subcontractor remains separately taxable; main contractor must withhold when statutory withholding conditions apply. If statutory withholding conditions for payments to a subcontractor apply, the main contractor may be obliged to withhold TDS, but the incomes of contractor and subcontractor are assessable separately and the subcontractor remains liable to tax on its income; the subcontractor may apply to the assessing officer for nil or lower withholding. The factual query also raises that sales tax law, not income-tax law, may be the operative regime.