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

Main Contractor Must Deduct TDS Under Section 194C; Sub-Contractor Responsible for Own Tax Liabilities A query was raised about shifting tax liability from a sub-contractor to a main contractor. The main contractor reported turnover and paid tax on work assigned to a registered sub-contractor, who claimed exemption by showing that the main contractor paid the tax. A response clarified that under Income Tax laws, the main contractor must deduct TDS if conditions of Section 194C apply, but tax liabilities are separate, and the sub-contractor is responsible for their own tax. The sub-contractor can request a nil or lower TDS rate from their Assessing Officer. The issue pertains to sales tax laws, not income tax.