1112. Rules and forms prescribed for the purposes of deduction of tax at source from payments to contractors and sub-contractors under the section

1. Reference is invited to this Ministry’s Circular No. 86, dated 29-5-1972, on the subject mentioned above.

2. Rules relating to the provisions for deduction of tax at source from payments made to contractors and sub-contractors have since been made. The following instructions may please be noted for general guidance :

1. Application for certificate for deduction of tax at lower rates – Under section 194C(4), it is open to a contractor or sub-contractor, as the case may be, to make an application to the Income-tax Officer concerned and obtain from him a certificate authorising the payer to deduct tax at such lower rate or deduct no tax as may be appropriate to his case. The application for the certificate is to be made in the newly prescribed Form No. 13C.

2. Obligations and liabilities of persons deducting tax at source under section 194C – to pay tax to the credit of the central government – As per rule 30 any tax deducted by or on behalf of the Government has to be paid to the credit of the Central Gov­ernment on the same day by book adjustment. In other cases, the tax deducted at source is required to be paid to the credit of the Central Government within the following time limits :

(a)   where the relevant sum is credited by a person carrying on a business or profession to the account of the payee as on the date up to which the accounts of such business or profession are made, within two months of the expiration of the month in which that date falls ;

(b)   in any other case, within one week from the last day of the month in which the deduction is made.

l TO ISSUE CERTIFICATE OF DEDUCTION – The person responsible for deducting tax is required to give to the person receiving the payment a certificate in Form No. 19C.

l TO FURNISH QUARTERLY RETURNS OF DEDUCTION OF TAX – The person responsible for deducting tax is required to furnish to the Income-tax Officer having jurisdiction to assess him a return in Form No. 26C quarterly on July 15, October 15, January 15 and April 15 in respect of the deduction made by him during the immediately preceding quarter. Such a return is, however, not required to be sent if the tax is deducted by or on behalf of the Government.

Circular : No. 95 [F.No. 275/9/72-ITJ], dated 15-11-1972

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