Tax Saving, Income Tax

[Purva Indulkar]

Hi guys!

I want to apply for a tender for which I dont qualify .

I have approached two companies , who can apply for the tender .The transaction assuming the company gets the contract is as under:

1. The total invoice to be billed by company to client is 30,00,000 plus service tax .In the 30,00,000 amount , INR 6,00,000 work the company would do by themselves and balance work of 24,00,000 would be done by me. There is no legal documentation maintained between me and company .I assume that out of INR 24,00,000 my profit would approximate INR 10,00,000 . Now the company says that , the company would pay me INR 8,00,000 after deducting tax at 33 percent (as they shall pay tax at that rate to government as the profit shall be taxable to them) .

I have to ask:

1. should the company provide me any tds certificate for the said tax deduction( remember no legal documentation exists between us)?

2. is there any way out to escape the said tax deduction?

3. is this legal?

Posts / Replies

[MARIAPPAN GOVINDARAJAN]

The company cannot deduct tax for the whole amount. It has to deduct tax at the prescribed rate according to the nature of the transaction. For example if it is a contractor only 2% is to be recovered. The deductor is to give Form 16A to you for the purpose of income tax. The credited tax will be reflected in Form 26AS in your account. There is no provision from escaping TDS unless otherwise the income is exempted.