Any person responsible for making any payment to a resident contractor for a contact to carry out any work or in connection to a contact for carrying out any work has to deduct TDS under section 194C of income tax act, 1961.
Section 194C is also applicable to a sub contractor and any contractor supplying labour to carry out any work. As such, TDS has to be deducted by the person responsible for making any payment.
Tax from such contractor or sub contractor has to be deducted at the time of payment or credit whichever is earlier.
Section 194C of income tax act says payment for carrying out any work will attract TDS. Work for the purpose of section 194C will include;
- advertising;
- broadcasting and telecasting including production of programmes for such broadcasting or telecasting;
- carriage of goods or passengers by any mode of transport other than by railways;
- catering;
- manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer,
But it 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.
Cases where Section 194C is not applicable
- Provision of deducting Tax at source under section 194C will not be applicable where the payer being an individual, HUF, AOP or BOI have total sales, gross receipts or turnover from business or profession carried on by them is below the monetary limit of Rs. 1 Crore in case of business and Rs. 25 lakhs in case of profession during the financial year immediately preceding the financial year in which such amount is credited or paid.
- Provision of section 194C for deducting Tax at source is not applicable to an individual or HUF if the sum is paid towards personal expenses of such individual or any member of HUF.
Threshold limit for Section 194C
The payer has to deduct Tax at Source from the sum to be paid to the contractor or sub-contractor where;
- The total sum credited or paid during the financial year exceeds Rs. 75, 000 or
- Any single sum credited or paid exceeds Rs. 30, 000
Budget 2016-17 proposed to increase the above limit of Rs 75,000 to Rs 1,00,000 with effect from the 1st day of June, 2016
Rate of TDS under section 194C
Where the payment is being made or credit is being given to an individual or a HUF, TDS has to be deducted @ 1% on the contract value.
Where the payment is being made or credit is being given to a person other than an individual or HUF, TDS has to be deducted @ 2% on the contract value.
Other relevant points for Section 194C
- Cases where the contractor is engaged in plying, hiring or leasing goods carriage, any freight charges paid to such contractor will not be subject to Tax Deduction at Source under section 194C if such person provides his PAN to the person responsible for deducting TDS.
- TDS has to be deducted under section 194C from any sum payable to sponsorship of debates, seminars and other functions with a view to earn publicity. Even any sum payable towards cost of advertisement issued in souvenirs which are brought out by various organizations will attract TDS under section 194C.
- Section 194C for deducting TDS will not be applicable for any payment made to Doordarsan, a government agency for advertisement. But payment to any other print and electronic media will attract TDS under section 194C of income tax act.
- Payment to courier agencies for theirservices will attract TDS under section 194C.
- Any advance payment for executing a contract covered under section 194C will attract TDS.
- Transportation charges paid by the purchaser to the seller/owner for transporting gas will not attract TDS under section 194C even though such charges are shown separately in the invoice or included in the cost of gas. However if such transportation charges are paid to a third party for transportation of gas then TDS will attract under section 194C of income tax act.
WEATHER THE PARTNERSHIP FIRM CAN SUBLET THE WORK TO TH EPARTNER UNDER SECTION 194C OF TH EINCOME TAX ACT
What if a person (seller of goods) charged me (Purchaser of Goods) penalty through raising debit note for not taking delivery of material on time. Will such kind of penalty attract applicability of TDS? If Yes, then under what section will it be charged?
sir,
what TDS deducted as on Room Rent in finincial year?
Professional service security services TDS rate may please be intimate to us
My builder has given penalty to me for late possession of my flat i.e. around 2lakhs. It is being reflected under 194C in my form 26AS. 1% TDS has already been deducted. Which ITR I need to fill and how can I get this money reduced from my tax liability because, when I add this amount to my income, I have to pay 30% tax on that amount which I dont wnat to. Please suggest
what % TDS deduct on Lab testing Charges
Is threshold limit of 75000 or 30000 applicable to transporter in present scenario
SIR I WORKING IN GOVT ORGNISATION.WE ADVERTISE A SHORT TENDER NOTICE FOR PURCHASING FURNITURE, A SUPPLIER M/S HS FURNITURE HOUSE SUPPLIES FURNITURE AND INVOICE RAISED AS FOLLOW:-
73000.00
VAT @14% 10220.00
TOTAL-83220.00
CAN I DEDUCT TDS IN THE TIME OF PAYMENT
Wheather income tax is deductable for any advance payment to contractor like mob.advance/materials advanc before commencement of work?
sir, if repair work of a vehicle entrusted to a garage owner comes under the perview of section 194C i;e works contract?
Payment made to contractors is as follow : 05-07-14 24000, 14-07-14 10000, 15-11-14 17000, 01-01-15 20000, 25-01-15 20000, 10-02-15 22000. whether tds applicable on all the amounts paid or only when they exceed 75000, assuming that all are separate contracts.
Payments are to one contractor or different contractors
Clothes supplied by the customer to the tailor for making shirts and trousers. At the time of making payment to the tailor, TDS is to be deducted or not.
thanks.
payment is receivable from Deppt. of Agriculture, state govt. of Jharkhand stateagainst supply of seed.
IN CASE IF THE SEED PURCHASED FROM FARMERS AND SOLD TO GOVT. AGENCY WHETHER THE PAYMENT SHOULD BE MADE WITH OR WITHOUT TDS DEDUCTION?
Can you please let me know to whom exactly you are making payments
ANY PAYMENT TO GOVERNMENT IS NOT LIABLE TO DEDUCT TDS
Will repair and maintenance of vehicle at an authorized service center, where the threshold is met either at a one time payment or in total during the year attract TDS u/s 194C?
Any case you could refer to?
Do you mean to say that the person has a contract with the service center and services are rendered on the basis of contract? Please explain your question…
please advise TDS U/S 194 C IS APPLICABLE OR NOT ON REAPIR AND MAINTENANCE OF VEHICLE PAID TO AUTHORISED DEALER ABOVE 2 LACE IN A YEAR …..