SECTION 194C Tds on Payment to Contracts

TDS ON PAYMENT TO CONTRACTORS

Section: 194C

Payer:

 Any Person (Other than Individual or HUF who are not liable to tax audit under sec 44AB in the Last PY)

Payee:

 Any resident (hereafter in this sec referred to as contractor)

Nature of Transaction:

 Payment for carrying out any work (including the supply of labor for carrying out any work) in pursuance of a contract.

Threshold limit (No Tds): 

• Single payment upto ₹ 30,000 (or)
• Aggregate of Payment in PY upto ₹1,00,000.

Tds Rate :

• (i) if Payee is Individual or HUF - 1%
• (ii) Other than Individual or HUF - 2%

Notes : 

1. In case of Job Work Tds should be deducted

• on the invoice value excluding the value of material, if such value is mentioned separately in the invoice; or
• on the whole of the invoice value, if the value of material is not mentioned separately in the invoice.

2. No Tds for individual or Hindu undivided family if such sum credited or paid is exclusively for personal purposes.

3. No Tds shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of a contractor during the course of business of plying, hiring or leasing goods carriages, where such contractor owns ten or less goods carriages at any time during the previous year and furnishes a declaration to that effect along with his Permanent Account Number, to the person paying or crediting such sum.

4. "work" shall include—

(a) advertising;

(b) broadcasting and telecasting including production of programmes for such broadcasting or telecasting;

(c) carriage of goods or passengers by any mode of transport other than by railways;

(d) catering;

(e) Job work : Manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer or its associate, being a person placed similarly in relation to such customer as is the person placed in relation to the assessee under the provisions contained in clause (b) of sub-section (2) of section 40A,]

but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer.

5. Where any sum credited to any account, whether called "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.

Source "income tax india"

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