The Karnataka Authority of Advance Ruling (AAR) ruled that the TDS is applicable on all services purchased on account of innovative ideas to minimize the cost of housing.
The applicant, Udupi Nirmiti Kendra is a society registered under the Karnataka Societies Registration Act, 1960 and is dealing with innovative ideas in order to minimize the cost of housing for the purpose of benefiting the public. In this process, they purchase goods and services.
The applicant has sought the advanced ruling on the issue in the absence of any contract, or contract of continuous supply, whether TDS provisions under section 51 are applicable for every supply of goods and services.
The applicant explains the practical scenarios.
First, Procure goods and services on a need basis without any contract, i.e. at the prevailing terms and conditions (at the time of purchase). The value of such supply under a single invoice is more than the threshold limit of Rs.2,50,000.00.
Second, Procure goods and services on a need basis without any contract i.e. at the prevailing terms and conditions (at the time of purchase). The value of such supply under a single invoice does not exceed the threshold limit of Rs.2,50,000 00. However, the total purchase in a year exceeds this limit.
Third, Procure goods and services on call off basis under the terms and conditions of the agreement of continuous supply and the value of the single invoice as well as total annual supply is less than the threshold limit of Rs.2,50,000.
Fourth, Procure goods and services on a call-off basis under the terms and conditions of the agreement of continuous supply and the value of a single invoice is less than the limit, but the annual supply is more than the threshold limit of Rs.2,50,000.
The coram of Members M.P. Ravi Prasad and Mashhood ur Rehman ruled that the tax deduction at source is applicable to all supplies subject to the condition that the value of supply under a contract when procuring goods and services on a need basis without any contract i.e. at the prevailing terms and conditions (at the time of purchase). The value of such supply under a single invoice does not exceed the threshold limit of Rs.2,50,000 and purchase order when Procure goods and services on a need basis without any contract i.e. at the prevailing terms and conditions (at the time of purchase). The value of such supply under a single invoice does not exceed the threshold limit of Rs.2,50,000 00. However, the total purchase in a year that exceeds this limit is more than Rs.2,50,000-00 and invoice value is only applicable when Procure goods and services on a call-off basis under the terms and conditions of the agreement of continuous supply and the value of the single invoice, as well as total annual supply, is less than the threshold limit of Rs.2,50,000 as the basis for determining the “value of supply” under a contract.
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