I gave a contract of building a shop of mine to a unregistered contractor with all the material used and labour all of his .. just i have to give money to him.. the thing is that I haven't done any paper work of contract with him and neither his is giving bill for tha .. what should i do now to show my property made iF INCOMETAX ENQUIRY EXISTS..? Iam just giving him the payment by cheque it's enough proof?
No I don't think that would be enough. You would require bill even to claim depreciation on same.
You either require his bill or atleast an affidavit from him that he has accepted this amount from you to build your shop.
Are you liable for audit?
If yes then you would also be required to deduct TDS on such contract if the amount is above 1 lakh.
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- It is good that you have made payment by cheque to the unregistered contractor. Get the invoices for the payment made from the builder. Also made an agreement with the contractor in respect to total cost of the construction , payment made on different dates.
He is an unregistered dealer how can he give the bill and secondly iam filing my return under 44ad so I can't claim depreciation and also iam not under audit.. what should i do now just gave cheque of 10 lakh rupees payment to that unregistered dealer
He is unregistered dealer so he can't give you GST bill but he can give you normal bill.
Normal people can also provide bill for their work done.
Under section 44AD also it is deemed that you would have claimed depreciation and as of now you are under 44AD in future if you come under audit you will have to show it's wdv in your books, so I just want to make you future proof.
I think if you can get his statement on affidavit it would be great or atleast his pan or Aadhar card photocopy.
If you want to discuss it further you can always call and discuss.
- If a person is unregistered under GST it does not mean that he can raise an Invoice. he can raise the normal invoice without GST.
- If your are availing benefit of Section 44AD then payment from bank is sufficient because you are not claiming the expense (i.e. depreciation).
- For other legal aspects then Income tax, you should draft a registered agreement with the dealer and obtain copy of PAN, Aadhaar from the dealer.
Hi,
In an ideal situation you should ask for bill. Even a unregistered contractor can issue bills. If not possible, at least get a receipt signed from him saying that he has received so much amount of cheque from you for this kind of work.
It's good that you are making payment by cheque. Also, in your cheque book where you record cheque details, mention that cheque is for what.
Suppose if am under audit and if i decide to build another shop myself by daily wage labourers and building raw materials myself without giving contract to contractor than how should i do the payments of the raw materials amd also daily labourers as they are not willing to accept cheque and each day different labour comes for work than how should i show my expenses and how to full value of property to show in balancesheet?
- In case of materials, insist for invoice otherwise obtain details on plain paper with his signature and stamp. Material supplier easily accepts cheque as they have bank accounts.
- In case of daily labourers, maintain internal register for your records and obtain the receipt from the recipient. It is better to prepare cash vouchers on the daily basis and obtain receipt on it. Limit for cash expenses per person per day should not exceed Rs.10,000.
In case you yourself will build the shop then just make sure to not make payment in cash above 10000 and atleast purchase material in cheque and if there is any issue your statement will be considered final and you can always have a valuer report to support your contention.
But best would be to find a contractor who can provide you proper bills.
Hi,
It is good that you are making payments through cheques, but take a normal bill without GST from contractor.
If you are filing return u/s 44ad then bank statement/bank payments are sufficient as a proof as you will not be claiming any expenditure including depreciation.
Hi,
For raw material, you can certainly get invoice from the vendor.
For labour , I would recommend you to keep a wage register wherein you can record wages given to different labour , his name, sign, date, amount etc.
Suppose i want to bulid a building worth rupee 1 crore and i file retun under sec 44ad do i have to deduct the tds in that case or it is applicable when iam undet audit... ? And what the limit above for tds dedication? 1 lakh per contract to a single contractor or 1 lakh all to any numbers in a single financial year? And what is 30000 limit? Also tell me if i build the bulding for residential purposes than should i have to deduct tds even if am under audit ? And that building due further time can be used for business? Also if tds no deducted from the contractor payment than what will be the penalty? And do i need tds number for deduction as i have to deduct once the payment of contractor as iam not going to build agian the building
You need to deduct TDS in the next year of audit.
For eg you get your accounts audited in FY 2017-18 then you need to deduct TDS from FY 18-19 and if you don't get your accounts audited for 18-19 then you are not required to deduct TDS in 19-20.
1 lakh limit is for aggregate amount paid to one person during a year and 30000 is for single bill.
No TDS if the building was constructed for personal purpose. No need for TDS even if it is later used for business purpose as it was first constructed for personal purpose.
For deducting TDS you will require TAN number.
If no TDS deducted you won't be allowed to claim 30% of that expense and you will be liable to pay interest @1% on that amount.
- If you are availing benefit of 44AD, you are not liable to deduct TDS as under scheme, maintenance of books of accounts is not required.
- If you are an individual and you tax audit was done last year then only you are required to deduct TDS. In case of contractor, you are required to deduct TDS if the aggregate payment or liability exceeds Rs. 1 lacs during the financial year. It is per contractor. 30,000 limit is for single invoice per contractor.
- If the building is not used for the purpose of business then no need to deduct TDS even though it will be used for business purposes in future.
- Penalty is equivalent amount of TDS.
I am in Delhi. If you need any kind of assistance, please let me know.
Suppose in fy 2018-19 i get my account audited so in 19-20 i have to deduct tds .. but in fy 19-20 if i opt for sec 44ad than also i have to deduct tds as in sec 44ad not liability for tds deductions?If in fy 2020-21 i have to deduct tds? If in 2018-19 accounts audit and 19-20 no audit than in 20-21 no audit than tds deductions required? Also if i pay rs 1-1 lakh to several contrator than also required to deduct tds as aggregate amount to 10 lakh? Also 44 ad liable to deduct tds?
You need to maintain wages register showing the rates of wages, hours of work, wage periods, dates of payments of wages etc. for record purpose.
Also, get the invoice for raw material.
For entire question, answer is NO.
It would be great if you can arrange a phone consultation as that would be easy and we can discuss all the scenario.
Neither section 44AD ask for TDS not section 44AB so it's TDS section individually which tells you who is liable for deducting TDS.
And 1 lakh limit is for each contractor. I.e. 1 lakh limit is for contract and not person.
If you need any assistance in income tax (i.e. return filing, TDS, assessment etc) do let me know as in this digital age I can provide you my services in Delhi by being in Jaipur we just need to communicate over mail and phone call
-If you are opting 44ad then there is no requirement of TDS deduction.
- Per contractor
-No need to deduct tds on building.
- Penalty equal to tds amount.
If you get your accounts audited in FY 2018-19, then you will be required to deduct TDS in FY 2019-20 irrespective of the fact that in FY 2019-20, you are opting for presumptive taxation.
If in FY 2018-19 you get your account audited so in 19-20 you will have to deduct tds even if you are opting presumptive taxation scheme.