I am an advocate , my question is that my co. has allotted to construct road work as a sub contractor. In this regard my party is third and allotted constricted part. Now question arises, first party has deducted tds and deposited to the department then my party raised bills to second party. Second party is also deducting tds from my party i.e. sub contractor now my party want the tax should not be deducted from my payment . Kindly guide me , what I should do now . thanks.As per the rule of TDS, it is deducted on the payment. If contractor receives payment, he is responsible to pay TDS and if sub contractor receives the payment, sub contractor will be responsible to deduct TDS and it is the duty of contractor to deposit this TDS to Govt. Account.
Read Rules :
Payments to contractors and sub-contractors (S.194C),
Section 194C- Payments to contractors and subcontractors exceeding Rs.20,000/-. For payments to contractors, the rate of TDS is one percent in case of advertising and two percent in other cases. Work includes advertising, broadcasting and telecasting including production of programmes for such purpose,
carriage of goods and passengers by any mode of transport other than by railways and catering.
For payments made by Contractors to sub contractors rate of TDS is one percent. The provision is not applicable in case of payment made by individuals and HUF if the gross receipts or turnover from the business or profession does not exceed the monetary limits specified u/s 44AB clause (a) or (b).
Section 194D - Insurance commission TDS on payments 4.6 Contractor - Section 194C applies to a person who is responsible for “paying any sum to a contractor or sub-contractor”. Such contractor or sub-contractor should be a resident.
If main contractor did say to perform his all work himself. But main contractor contracts with sub contractor as his branch. At that time, sub contractor will be the branch and not payable TDS. It is illegal, if the contracting Company/ Firm/ Agency shall be allowed to transfer, assign, pledge or sub-contract its rights and liabilities under this contract to any other Agency without the prior written consent of the first party.