A comprehensive guide to understanding TDS levied under Section 194C on payments to contractor.
WHO IS THIS GUIDE FOR ?
Persons to whom payments of any amount in relation to contractors or sub-contractors are made.
The expression "work" in this section would include-
A "sub-contractor" would mean any person
As per the provisions of Income Tax Act, any person (being a contractor and not being an individual or a Hindu Undivided Family),
|S. No||Nature of Payment||TDS Rate if PAN available||TDS Rate if PAN not available|
|1||Payment / Credit to resident individual or HUF||1%||20%|
|2||Payment/Credit to any resident person other than individual / HUF||2%||20%|
|3||Payment/ credit to Transporters||NIL||20%|
Note:- No Surcharge, Education Cess and SHEC shall be added. Hence, TDS shall be deductible at basic rates.
No tax is required to be deducted in the following cases:
Where the payment is made by or on behalf of the Government - On the same day.
Where the payment is made in any other case than the government
Note: The payer is the person responsible for TDS.
In case of payments other than salary, TDS certificates are to be issued on quarterly basis in Form No.16A. As per rule 31, every person responsible for deduction of tax from payments other than salary has to issue a quarterly TDS certificate in Form No. 16A. The certificate is to be issued by following dates:
|Quarter||Due date for Non-Government deductor||Due date for Government deductor|
|April to June||30th July||15th August|
|July to September||30th October||15th November|
|October to December||30th January||15th February|
|January to March||30th May||30th May|
According to Section 194C where the AO is satisfied that the total income of contractor or sub-contractor justifies the deduction of income-tax at any lower rate or non deduction of income-tax, as the case may be, the AO shall, on application made by the contractor or sub-contractor in this behalf give to him such certificate as may be appropriate.
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