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SECTION 194C - ALLIANCE TAX EXPERTS GUIDE TO TDS ON CONTRACTOR PAYMENTS

Comprehensive guidelines for contractors to understand the TDS levied under section 194C on payments.

Individuals who are paid any amount in relation to the contractor or sub-contractor.

WHAT IS SECTION 194C?

Section 194C states that the contractor and any person responsible for paying any amount to the resident contractor for carrying out any work (including labour supply) in accordance with the following agreement:

1.    Central Government or any State Government

2.    Any local authority

3.    Any corporation established by or under central, state or temporary law

4.    Any company

5.    Any cooperative society

6.    Any authority established in India by law or under any law, either for the purpose of the meeting and meeting the requirements of housing, or for the purpose of planning, development or improvement of cities, towns and villages, or both.

7.    Any organization registered under the Societies Registration Act, 1980 or any other law related to the law in any part of India

8.    Any Trust

9.    Any university or reputed university

10. Any firm

WHAT IS WORK MEANT BY SECTION 194C?

The expression "work" in this section will include:

1.    Advertising

2.    Broadcasting and broadcasting, including the creation of programs for such broadcasts or broadcasts

3.    Freight and passenger transport by any means other than rail

4.    Catering

5.    Section 40A (2) does not cover the production or supply of the product as required or specified by the customer using materials purchased from such customer or his associates, but does not include the product or supply as required. In addition to such customers, customer features use content purchased from an individual.

WHAT IS A SUB-CONTRACTOR UNDER SECTION 194C?

"Sub-contractor" means any person:

1.    Who contracts with the contractor to carry out, or

2.    With any person for the supply of labour to carry out the whole or part of the work undertaken by the contractor or

3.    To complete or partially supply the work to be supplied by the Contractor in accordance with his contract with any of the officers mentioned under this section.

WHAT IS TDS TO A SUB-CONTRACTOR?

According to the provisions of the Income-tax Act, any person (being a contractor and not having an individual or Hindu joint family):

1.    Responsible for paying any amount to any resident

2.    Contracts with the subcontractor, or for the supply of labour for completion or completion, will be undertaken to supply the whole or any part of the work undertaken by the contractor or to supply any or all of the labour to the contractor,

3.    When depositing such amount in the account of sub-contractor or

4.    In cash or at the time of payment

5.    By issuing a check or draft or by any other method, whichever is earlier

6.    Subtract the amount equal to 1% of the amount as income tax on the income included.

WHERE PAYMENTS ARE MADE TO SUBCONTRACTORS, WHAT CONDITIONS MUST BE MET?

1.    Payment is made to the resident sub-contractor under Section 6 of the Income-tax Act, 1961.

2.    Payment is made by a resident contractor, not an individual or HUF

3.    Pay for any work with a supply of labour

4.    The amount of the contract in which the payment is made is Should not be less than Rs.30,000

5.    This amount should be credited or paid in respect of the contract entered into by the contractor with the specified organization

WHEN IS TDS REQUIRED TO BE DEDUCTED UNDER SECTION 194C?

The person responsible for making the payment to the resident contractor / sub-contractor should deduct the TDS,

1.    Either when crediting such amount to the recipient's account or

2.    At the time of cash payment or

3.    By issuing a check or by any other mode, whichever is earlier. If any amount is credited to any account, then such deposit in the account book of the person responsible for making such payment in the name of "Suspense Account" or any other name, will be considered as credit of such income in the account. Recipients and the provisions of this section shall apply accordingly. Thus, the tax must be deducted even if the payer has transferred the amount due to the resident contractor/subcontractor to the suspense account in his books.

WHAT IS THE RATE OF TDS?

Under what circumstances cannot TDS 194C be deducted?

No tax deduction is required in the following cases:

1.    Where the amount paid or deposited under any contract is Not more than Rs.30,000, or

2.    The total amount deposited or paid in the financial year or the amount to be deposited or likely to be paid is not more than Rs.1,00,000.00 The person responsible for paying such amount will not deduct TDS under this section

3.    Personal or HUF tax deductions should not be made if the amount or amount paid to the contractor is for personal use

4.    No person or HUF shall be liable to deduct income tax on the amount deposited or paid in the contractor's account where such amount is credited or paid only for the personal purpose of such person or any member of HUF.

5.    During the business of operating, renting or renting a freight train, no deduction will be made from any amount deposited in his account in the previous year or any amount that has been deposited or is likely to be deposited. A person who pays or deposits such an amount

THE PERIOD IN WHICH THE TAX IS TO BE COLLECTED

1.    Where payment is made by or on behalf of the government - on the same day.

2.    Where payment is made in any case other than government

3.    If the amount has been deposited in the month of March - 30th April or earlier

4.    In other months - within 7 days from the end of the month in which the deduction is made

Regards

Santosh Patil

ICA & MBA

Founder & Director

Alliance Tax Experts

www.alltaxfin.com

9769201316

santoshpatil@alltaxfin.com

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