A complete guide on Section 194C TDS – on payment to contractors

A complete guide on Section 194C TDS – on payment to contractors
-
Introduction
- Section 194C of the Income Tax Act deals with the tax deducted at source (TDS) that is required to be deducted from any payments made to a resident contractor or a subcontractor. Do not worry if you have no idea about Section 194C TDS, This article will provide all the information related to the purpose of section 194C for Contractors and Sub-contractors, and other related information on TDS under Section 194C of the Income Tax Act.
- According to Section 194C of the Income Tax Act, any person making a payment to a resident person who is carrying out any “work” under the terms of the contract between specified person and the resident contractor is required to deduct TDS (Tax Deducted at Source).
-
Meaning of Section 194C TDS (Tax Deducted at Source)
- The term “Patent” refers to one of the pillars of Intellectual Property Rights (IPR), and it is a government-granted right that the inventor has over his or her idea. Furthermore, the term “right” refers to the power to sell, create, use, and import the product or process, as well as the ability to prevent others from doing so.
-
The term specified person refers to the following:
- The term “Patent” refers to one of the pillars of Intellectual Property Rights (IPR), and it is a government-granted right that the inventor has over his or her idea. Furthermore, the term “right” refers to the power to sell, create, use, and import the product or process, as well as the ability to prevent others from doing so.
- Any Trust
- Local Authority
- The State government or Central government
- Any company
- Any Firm
- University or Deemed university
- Any authority established in India by or under any law for the purpose of dealing with and satisfying housing accommodation needs, or for the purpose of planning, development, or improvement of cities, towns, and villages, or both.
- Any company
- Any corporation formed as a result of a Central, State, or Provisional Act
- Co-operative society
- Any society registered under the Society Registration Act, 1980, or any similar law in any part of India.
-
The term Work refers to the following:
- Broadcasting and telecasting services, including the production of such broadcasting or telecasting programmes.
- Advertising services.
- Transportation of goods and passengers by means other than railways.
- Catering services.
- Manufacturing and delivering products to customers using materials supplied by them.
- Provision of labour for a construction contract.
- Note: The GST (Goods and Services Tax) component should not be subject to taxation.
-
Briefing on TDS to Sub-contractor
- According to the provisions of the Income Tax Act, any person (whether a contractor or a Hindu Undivided Family):
- Accountable for any sum owed to any resident
- According to a contract with the subcontractor for carrying out, or supplying labour for carrying out, the whole or any part of the work undertaken by the contractor, or for supplying whether wholly or partly any labour which the contractor has agreed to supply, the contractor shall,
- At the time of crediting such sum to the subcontractor’s account or at the time of payment thereof in cash, by cheque or draft, or by any other mode, whichever is earlier.
- Deduct 1% of the total as income tax on the income contained therein.
- TDS Rate for Contractors under Section 194C of the Income Tax Act
- 1% where a payment is made or credit is extended to an individual or a HUF.
- 2% wherever the payment or credit is to be made to another entity.
- If PAN is not specified in the preceding cases, the TDS rate will be 20%.
- Important Note: Surcharges, education Cess, and SHEC (Secondary and Higher Education Cess) will not be imposed on taxpayers. TDS should be deducted at the standard rate.
-
Section 194C TDS is not deductible under certain condition
- The person responsible for paying such sums will not deduct TDS under this section if the sum paid or credited in pursuance of any contract does not exceed INR 30,000.
- Alternatively, if the aggregate of such sums credited or paid or likely to be credited or paid during the fiscal year does not exceed INR 1,00,000.
- If the payment or amount credited to the contractor is for personal use, the individual or HUF (Hindu Undivided Family) may not deduct tax.
- No individual or HUF shall be liable to deduct income tax on any sum credited or paid to the contractor’s account if such sum is credited or paid solely for the personal benefit of such individual or any member of HUF.
- On furnishing his PAN, no deduction shall be made from any sum credited or paid or likely to be credited or paid to the account of a contractor during the previous year in the course of business of plying, hiring, or leasing goods carriages to the person paying or crediting such amount.
-
Due date for the Issue of TDS Certificate
- TDS certificates in Form 16A must be issued quarterly for payments other than salary. According to Rule 31, anyone who is responsible for deducting tax from payments other than salary must issue a quarterly TDS certificate in Form 16A. The certificate is due on the following dates:
-
FAQs on Section 194C TDS – on payment to Contractors
- Should 194C TDS be deducted on the gross or net amount including GST?
- TDS should be deducted from the invoice amount, excluding all other taxes such as GST.
- When does TDS apply to contractors?
- If the payment to the contractor is less than INR 30,000, no TDS is required to be deducted. TDS must be deducted under Section 194C if the total of all such payments made or to be made during a fiscal year exceeds INR 1,000,000.
- Is TDS required to be deducted under Section 194C if a payment is made to a non-resident contractor?
- Only payments to resident contractors or subcontractors are covered by Section 194C. TDS on payments made to non-resident contractors will be governed by Section 195.
Blog
- 4 types of Patent Applications in India and Advantages of Patent Registration in India
- A Complete guide for taxpayer on ITR 4 Form Filing
- A complete guide on Cancellation of a registered Trademark
- A complete guide on DPIN (Designated Partner Identification Number)
- A complete guide on GST Returns on Exports & Refund Process
- A complete guide on Removal of a Partner in a LLP (Limited Liability Partnership)
- A complete guide on Section 194C TDS – on payment to contractors
- A complete guide on “How to file GSTR 8 on GST Portal?”
- A Complete Guide to reduce personal taxes
- A guide for Start-Up entrepreneurs on Section 80-IAC Tax Incentives for Startups
- A guide on Company (Incorporation) Amendments Rules, 2022
- A Guide on Letter of Undertaking under GST
- A guide on Outsourcing a Bookkeeping Service for Small Businesses in India
- A guide on Performance and Credit Rating Scheme for MSME
- A guide on Section 111A of Income Tax Act, Section 112 & Section 112A of Income Tax Act
- A guide on Section 111A of Income Tax Act, Section 112 & Section 112A of Income Tax Act
- A guide to voluntary and mandatory GST registration
- Advantages of Income Tax E Payment & Process for Income Tax Online Payment
- All About filing the Form AOC 4
- All About filing the Form MGT 7
- All about Form 15G and Form 15H
- All about Nidhi Company Registration
- All about ROF registration- Partnership Firm Registration
- All you need to know about compliance requirement of Trust in India
- All You Need To Know About GST Refunds
- All you need to know about payroll compliance
- All you need to know on Conversion of Partnership to Private Limited Company
- All you need to know on Disqualification of Directors u/s 164(2)
- All you need to know on Exempted Income in Income Tax
- All you need to know on Rights and Duties of Directors in a Company
- An Overview On Surrender Of IEC License
- Applicability of 80G Registration and 12A Registration
- BLOGS
- Can a director of one company be an employee of another company
- Clauses of the MOA (Memorandum of Association)
- Company Limited by Guarantee
- Complete guide to winding up a Private Limited Company
- De-Criminalisation of Compoundable Offences under LLP: A Complete Guide
- Difference between GSTR 1 and GSTR 3B – All you need to Know
- Director Identification Number: Importance of DIN and How to apply for DIN?
- DRC-03: Applicability and Procedure to pay Additional Tax
- Easy Guide to Form GST DRC-03 Voluntary & SCN Payments
- Eligibility and Ineligibility for Each Income Tax Return Filing
- EPF Registration for a Private Limited Company – A complete guide
- Everything you need to know about Filing Form ADT-1
- Everything you need to know on Authorized Share Capital of a Company
- Filing Form 10E is Mandatory to Claim Relief under Section 89(1)
- Filing Your ITR-1 Form on the Income Tax Portal
- Form 10 BB – Income Tax Department
- Get Your New GST Registration In Just Few Steps
- GST Penalties and Appeals
- Guide On GST Input Tax Credit In India
- Guide: Registration Aspect Of Educational Trust
- Highlights on the 48th GST Council Meeting
- How Do You Close A Business In India Using Fast Track Exit Mode?
- How To Close The LLP Company Online?
- How to E-Register Your Trademark? And Information on Trademark Status Application
- How to file Employees’ State Insurance (ESI) Return?
- How to File Income Tax Return for the Deceased by Legal Heir
- How to file revised TDS Return? And Documents required to file revised TDS return
- How to Legally Register a One Person Company
- How to Strike off an OPC And Documents required for OPC Strike Off
- How to submit Form INC-9 ?
- HUF (Hindu undivided Family) and Tax benefits of HUF
- Impact Of GST On Restaurants Or Food Service Business
- Income Tax rules for Startups and Tax saving schemes for Startups
- Modified Norms of Interest Equalization Scheme for MSME Exporters by RBI
- NITI Aayog Registration/NGO Darpan Registration Procedure, and FAQs on NGO Registration
- Procedure for Private Limited Company Name Change
- Process for Conversion of Company into One Person Company
- Process of shifting a Registered Office from one state to another
- Section 17(5) of CGST Act – When ITC cannot be claimed & reporting
- Tax on Online Gaming under GST Return
- Trademark Renewal in India and Trademark Renewal Process
- Types of Assessment Under Income Tax Act
- What are the common bookkeeping mistakes made by small businesses?
- What are the difference between EPF and PPF
- What Are The Different Types Of Income Tax Return Forms In India: Introduction
- What are the reasons for Company Name Rejection?
- What are the types of corrections in TDS return
- What is a Partnership Deed? And Partnership Deed Clauses
- What is Form 12BA of Income Tax? And Applicability of Form 12BA
- What is Form MGT 14? – Types of Resolutions
- What is GSTR 9 – All you need to know about annual filing of GST return
- What is Professional Tax? And consequences of professional tax violations
- What is SAC Code in GST?
- What is the Procedure for Revocation of Cancelled GST Registration?
- What is the treatment of GST on employee notice pay recovery?
- Words that are restricted by MCA for a Company Name
- “What is Capital Exemption?”, Long Term Capital Gain Exemption, and information of Sections for Capital Gain Tax Exemption
- “What is Start-up India?”, Advantages of Start-ups in India and Eligibility Criteria for Start-up India Registration
Quick Links
- Add / Remove a partner in LLP
- All about filing Form 10BD Online
- Annual Filing for Trust in India
- Apply for the Extension of Name Reservation Application
- Change Company Name
- Change in Director Identification Number
- Change of Registered Office Address
- Change your LLP’s Registered Office
- Company Annual Filing in XBRL Filing Mode
- Company Registration
- Conversion from Private Limited Company to Limited Liability Partnership (LLP)
- DIR-3 eKYC
- DIR-5 Surrender of DIN
- E-Registration Services
- E-Return Filing
- Easily Appoint Auditors
- File form CSR-1 online
- File Form DPT 3 Return of Deposits
- File your Form 15CA
- File your Form GSTR 1
- File your GSTR 9C
- Get Your Digital Signature
- Get your NGO registered Under Section 12AB
- GST Letter of Undertaking
- Intellectual Property Rights
- Make the TDS Payment on the Purchase of Property
- NGO / NPO / Section 8 Company Annual Filing
- NGO Darpan Registration / Niti Aayog Registeration
- Nidhi Company Annual Filing
- OPC Annual Filing
- Private Limited Company Annual Filing
- Producer Company Annual Filing
- Public Limited Company Annual Filing
- Removal or Resignation of Director
- ROC Search Report
- Special Services
- Start-up India
- Surrender of DIN
- Talk to an expert Tax Consultancy Services