The present article briefly covers the important provisions relating to TDS section 194C of the Income Tax Act along with the Frequently Asked Question.
Basic provisions of section 194C of the Income Tax Act –
Section 194C of the Income Tax Act states that any person making payment to a resident person, who is carrying out any ‘work’ in terms of the contract between the ‘specified person’ and the resident contractor, is required to deduct TDS.
The ‘specified person’ mentioned above means the following –
Further, it is mention here that the term ‘contract’ includes ‘sub-contract’.
Explaining the meaning of the term ‘work’ –
The term ‘work’ includes the following –
Rate of TDS –
When provisions of section 194C of the Income Tax Act gets attracted, the Deductor is required to deduct TDS at the following rates –
|Particulars||Rate of TDS|
|Payment made / credited to an individual or HUF||1%|
|Payment made / credited to a person other than an individual or HUF||2%|
However, in case the PAN is not furnished, the Deductor would be liable to deduct TDS @ 20% i.e. at the maximum marginal rate.
List of exception i.e., cases wherein TDS not to be deducted –
Under the following circumstances, TDS is not required to be deducted –
1. The amount paid or credited to the contractor in a single contract doesn’t exceed INR 30,000.
2. The aggregate amount paid or credited during the financial year doesn’t exceed INR 1,00,000.
3. The amount paid / credited to the account of the contractor engaged in the business of hiring, plying or leasing goods carriage, where the contractor doesn’t own more than 10 goods carriage at any time during the previous year. The Contractor is required to furnish the declaration along with the PAN to the Deductor.
4. The amount is paid or credited to the contractor by an individual / HUF for carrying out work in the nature of personal use.
Time of deduction of TDS –
If the Deductor is required to deduct TDS as per provisions of section 194C of the Income Tax Act, then, the Deductor is required to deduct TDS within earlier of the following dates –
Due date of deposit of TDS –
The Deductor is required to duly deposit the deducted TDS within following due dates –
|TDS payment for the months from April to February||Within 7 days from the end of the month in which TDS is deducted|
|TDS payment for the month of March||On or before 30th April|
|TDS payment to be done by Government Deductor (without production of challan)||On the same day|
Issuance of TDS certificate –
The Deductor is required to issue TDS certificate in Form 16A within following due dates –
|April to June||15th August|
|July to September||15th November|
|October to December||15th January|
|January to March||15th June|
Return filing requirements –
Every Deductor deducting TDS in terms of section 194C is required to file a quarterly return in Form 26Q within following due dates –
|April to June||31st July|
|July to September||31st October|
|October to December||31st January|
|January to March||31st May|
Important points –
In such case, the TDS would be deducted on –
|Particulars||Value for TDS deduction|
|Price of the material indicated separately in the invoice||Invoice value excluding the value of material|
|Price of the material not indicated separately in the invoice||Total invoice value|
What is Section 194c?
Section 194c requires any person making payment to person, carrying out any work in accordance with a contract between a specified person and the resident contractor, to deduct TDS at the specified rates.
What is the limit to deduct TDS US 194c?
The Deductor is required to deduct TDS @1% in case the payment is made to individual or HUF and @2% in case of payment done to any other person.
What is TDS exemption limit for contractor and sub-contractor?
TDS exemption limit is INR 30,000 in case of a single contract and INR 1,00,000 in case of aggregate amount during the financial year.
What is TDS rate for contractor?
TDS rate for contractor is 1% in case payment is done to individual or HUF and 2% in any other case.
|TCS – Tax Collection at Source – A Complete Guide|
|TDS Rate Chart for Financial Year 2019-2020|
|Section 192 – TDS on Salary|
|Section 192A – TDS on Premature withdrawal from EPF|
|Section 193: TDS on Interest on Securities|
|Section 194 – TDS on dividend|
|Section 194A: TDS on interest other than interest on securities|
|Section 194B and Section 194BB – TDS|
|Section 194D – TDS on insurance commission|
|Section 194DA – TDS in respect of Life Insurance Policy|
|Section 194E – TDS on payment to Non-resident Sportsmen or Sports Association|
|TDS under Section 194EE and Section 194F|
|Section 194G TDS on Commission on Sale of Lottery Tickets|
|Section 194H – TDS on Commission or Brokerage|
|Section 194I of Income Tax Act, 1961 – TDS on Rent|
|Section 194IA TDS on transfer of immovable property|
|Section 194IB – TDS on Rent paid by Individual / HUF|
|Section 194LA: Payment of Compensation on acquisition of certain immovable property|
|TDS under Section 194LB, 194LBA, 194LBB and 194LBC|
|Section 194LC: TDS on income by way of interest from an Indian Company or a business trust|
|Section 194LD TDS on income by way of interest on certain bonds and Government Securities|
|Section 194J TDS on Fees for Professional or Technical Services|
|Section 194N – TDS on Cash Withdrawals|
|Section 194M: TDS on Payment of certain sum by certain Individual / HUF|
|Section 195 TDS on payment of any other sum to a non-resident|