TDS applicability under Section 194C

Section 194C under this section TDS should be deduct if any person is eligible or responsible under 194C for paying the total amount to a resident contractor for carrying out any work (including work related to carry supply of labor) in pursuance of contract between eligible parties,


    • State or Central Government; or
    • Any company;
    • Any Trust;
    • Any co-operative society;
    • Any firm;
    • Any established university or incorporated by under a central, state or provisional act and declared university under UGC Act, 1956;
  • Any local authority;
  • Any statutory corporation;
  • Any registered society under Societies registration act, 1860;
  • Any authorize statutory dealing in house accommodation or planning, development or advancement of cities, towns and villages purpose or for both;
  • Any foreign state government or foreign enterprise or any association or established body outside India;

Rate of TDS

  • TDS rate under section 194C on payments to contractors would be 1%, where the payee is an individual or HUF and 2% in respect of others payees. The same rates of TDS apply for both contractors and sub-contractors.

  • SI.NO


    TDS RATE IF pan Is not applicable

    TDS rate if Pan is applicable


    Payment/Deposit to individual




    Payment/Deposit to other than individual



    TDS shall be applicable at basic rates.

Threshold limit

  • Under section 194C TDS is not required to be deducted in following case: The amount of payment made to the contractor in a single bill does not exceed Rs.30000. If the sum amount of contracts in a financial year exceeds Rs.100000 TDS will be deducted.

(NOTE: If the contract amount is exceed Rs.30000 in single payment or Rs.100000 in sum total in financial year. Therefore, even if a single payment is not exceed Rs.30000 but sum of credited is exceeds Rs.100000 in financial year TDS provisions under section 194C is attracted.)

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Meaning of work under section 194C

Work included-

  • Advertising;
  • Broadcasting and telecasting includes production of programmes for broadcasting or telecasting;
  • Catering;
  • Carrier of goods or passengers by any mode of transport other then railways;
  • Manufacturing or supplying a product as per specification of customer using material supply/sale by such customer or its associate of customer covered/s 40A(2)(Job work).

Deduction of TDS under section 194C

  • At time of crediting such amount to the account to the payee; or
  • At time of payment in form of cash;

Whichever is earlier, and the sum is credited to Suspense Account.

Deduction of TDS in case of composite contract

  • Material supply made by Government;
  • Construction of Building or a Dam undertaken by Contractor;
  • Provide work for labour has undertaken by contractor.

“In closing, TDS 149C reflects our dedication to compliance. Let’s uphold tax regulations for a robust financial system. Thank you for your attention and commitment. Together, we ensure prosperity.”