The present article briefly covers the important provisions relating to TDS section 194C of the Income Tax Act, 1961.

Payer:- All Assesses, except Individuals & HUF who are not subjected to Audit u/s. 44AB(a)&(b) during preceding Financial Year.



Time of Deduction:-

Credit or Payment, Whichever is earlier.


-Individual/HUF- 1%


Threshold Limit:-

  • 30,000 for single contract and
  • 1,00,000 for aggregate in a financial Year (w.e.f. 01/06/2016)

 No TDS u/s.194C in the following cases

  • Personal expenditure of Individual/HUF
  • Contractor engaged in business of Playing, hiring or leasing goods carriages, where he owns 10 or less goods carriages at any time during the P.Y & furnishes a declaration to that effect along with PAN to the payer.

Some important clarifications by CBDT on applicability of 194C

1. Cold storage charges paid for keeping articles in cold storage:

  • Main Function: Preserves perishables goods by means of a mechanical process.
  • Storage of such goods is only incidental in nature. Cooling charges are not in the nature of rent, as the customer is not given any right to use any demarcated space/place or the machinery of the cold storage and thus, does not become a tenant.
  • Therefore Section: 194C is applicable not 194-I(Rent)

2. It is clarified that in case the owner/seller of gas sells as well as transport the gas to purchaser till the point of delivery, where the ownership of gas to purchaser is simultaneously transferred, remains essentially a contract for sale and not work contract. Hence, the provisions of Sec.194C will not apply on transportation of gas. However, transport charges paid to third party by seller or purchaser will be covered u/s 194C.

3. FD Commission and brokerage are not covered under section 194C.

4. Payment made to an electrician or payment made to a contractor for providing electrician service is covered under section 194C.

5. Payment made to courier covered under section 194C.

6. Payment made to travel agent or an airline for purchase of a ticket is not subjected to TDS under section 194C. However, if the plane, bus or any other mode is chartered, then TDS is liable to be deducted under section 194C.

7. Payment made to clearing and forwarding agents for the carriage of goods is liable to TDS under section 194C

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March 2021