Sir, An Awarder make part payment to the Contractor after deducting retention

Sir,
An Awarder make part payment to the Contractor after
deducting retention money @5%. The retention money will be
paid to the contractor when the contract work is fully
completed.
Here my question is,when the Awarder has to deduct tax on
retention money, at the time of deducting the retention
money or at the time of payment of retention money when the
contract is completed?

Here "Tax" means Income Tax, VAT, Service Tax etc.

Please reply

Thanking You

Question Posted / siju varghese

2 Answers
6697 Views
I also Faced
E-Mail Answers

Answers were Sorted based on User's Feedback

Sir, An Awarder make part payment to the Contractor after deducting retention money @5%. The reten..

Answer / ritesh nigam

TDS should be deducted at the time of deducting retention
money and not on payment of retention money. For example,
contractor raised one bill of Rs.100000/- on 31.03.2010 and
you are required to deduct retention @ 5% on it. Then while
deducting TDS on payment of retention of Rs.5000/- will fall
in the next F.Y. whereas you have to claim expense in
previous F.Y., if you do so then you will deduct TDS on Rs.
95000.00 only in previous F.Y. but booking of expenses is
Rs. 1.00 Lac. in that claiming of expense on Rs. 5000/- will
be disallowed and c/f to next F.Y.

Regards,

Ritesh Nigam

Is This Answer Correct ?

3 Yes

0 No

Sir, An Awarder make part payment to the Contractor after deducting retention money @5%. The reten..

Answer / surjetsharma

TAX MEANS IS TDS OR INCOME TAX

Is This Answer Correct ?

3 Yes

1 No

Post New Answer