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,
Like-
-
- 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
NATURE OF PAYMENT
TDS RATE IF pan Is not applicable
TDS rate if Pan is applicable
1
Payment/Deposit to individual
20%
1%
2
Payment/Deposit to other than individual
20%
2%
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.)
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.”