• TDS on Car Cleaning/Painting services

Hi, Good day. Do I need to deduct TDS ( under income tax act ) for following payment.

TDS on Car Cleaning/Painting services ( GST SAC mentioned in invoice = 998539 ).

first invoice value = 38000 ( excluding GST)
seconds invoice value = 22 000 ( excluding GST)

u/s and What is threshold amount for deduct TDS for above case.

Thank you so much
Asked 17 days ago in Income Tax

Hi, 

Greetings for the day!!

I think TDS is to be deducted u/s 194C on the mentioned above Car Cleaning/Painting Services, as it is a work contract service. 

Threshold limit: TDS u/s 194C is deductible if a single contractor invoice exceeds Rs. 30,000 or consolidated value of all invoices the contractor gave during the FY exceeds Rs. 1,00,000. 

Here, TDS is to be deducted on the 1st invoice @1%(if the contractor is individual/HUF) or @2% (for other contractors).

Assuming the TDS rate as 1%. The amount of TDS=38000*1%=380

If you think that the total invoice value of the contractor will exceed Rs. 1,00,000 at the end of the year, it is advisable to deduct TDS on the 2nd invoice. The rate of TDS will be 1%. 

Further, in the case of individual/HUF deductors, the liability of TDS deduction will only arise if the books of accounts of such individual/HUF were audited in the previous financial year. 

 

 

Puja Sharma
CA, Jaipur
33 Answers

Not rated

If you are liable to deduct TDS and fail to deduct the TDS, then 30% of the expenditure will be disallowed for you while filing the Income Tax Return. 

Further, Suppose you get Form 26A from a Chartered accountant certifying that the income was subjected to tax by the contractor. In that case, you will not be considered an assessee in default, and no disallowance will be made.  

If you find my answer helpful then please give ratings to my answer. 

Puja Sharma
CA, Jaipur
33 Answers

Not rated

- You are liable to deduct TDS u/s 194C. Threshold limit for TDS is Rs.30k for a single invoice or Rs.1 lac in the aggregate during financial year. If recipient is an individual/HUF, TDS rate is 1% otherwise 2%.  What is the nature of business constitution of deductor? If deductee does not share PAN, you are liable to deduct TDS @20%. 

- Non-deduction will lead to disallowance of expense upto 30%.

 

For detailed discussion, you may opt for phone consultation.

Vivek Kumar Arora
CA, Delhi
4432 Answers
550 Consultations

5.0 on 5.0

If you are making payment from business which is getting covered under tax audit, TDS will be deducted.

Ruchi Goel Anchal
CA, Gurgaon
501 Answers
10 Consultations

5.0 on 5.0

its mandatory to deduct TDS, he can claim back refund later

Vishrut Rajesh Shah
CA, Ahmedabad
804 Answers
30 Consultations

5.0 on 5.0

The transaction might get covered under 194C and accordingly TDS needs to be deducted at 1% in case of person to whom payment is made is an individual and 2% in case he is other than Individual.

 

Since invoice value exceeds Rs. 30000 TDS should be deducted.

 

The yearly threshold is Rs. 1 lakh.

Hope you find the information helpful, if yes do rate if 5 and provide your valuable feedback for my improvement.

Thank you.

Naman Maloo
CA, Jaipur
4026 Answers
64 Consultations

5.0 on 5.0

Hi 

 

Yes you need to deduct TDS on first invoice value as it exceeds Rs. 30,000. TDS would be 1% for individuals and 2% for other payees u/s 194C. If your total payment is going to exceed Rs. 1 Lakh, then deduct TDS on second invoice also. 

 

If the contractor wants full amount, you can gross up the TDS because non-deduction would invite disallowance. 

Prerna Peshori
CA, Pune
60 Answers

5.0 on 5.0

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