4/1/2019 TDS Under Section 194C

Income Tax GST One Solution Int. Tax FEMA & Banking Competition Law Company Law IBC Accounts & Audit Indian Acts Book Store Exams Support Login Register

Welcome: Guest
Taxmann Search...
Research Box

HOME CASE LAWS ACTS RULES FORMS CIR. & NOTIF. FINANCE ACTS CBDT DTC REPORTS ARTICLES DTAA TAX PRACTICE COMMENTARIES All About Income Tax Act

Press Releases Blog Posts

TDS Under Section 194C SHARE

Section 194C:
Sec 194C provides for deduction of tax from payment of works contract made to contractor or sub-contractor. Any
person carrying out any work in pursuance of a contract between a specified person and the resident contractor is
required to deduct tax at source. Related Stories

New CA Examination Schedule for

Who is liable to deduct tax?
May 2019 released by ICAI

Any person, other than an Individual or HUF, responsible for making payment to a resident contractor or sub- The ICAI has postponed the May 2019 CA exam

contractor for carrying out any work (including supply of labour) is liable to deduct tax at source under Section owing to the Lok Sabha Elections due to be held

194C. this year. Read here to know more

However, an Individual or HUF who is liable to tax audit during the financial year immediately preceding the
financial year in which such sum is credited or paid, shall deduct tax under section 194C. Is Real Boost Given To The Real

Estate Sector?

On February 24, 2019, the GST Council has

announced to cut the GST rates on housing

projects, so as to boost real-estate sector. Know

more here.

Understanding the Concept of

Angel Tax & Its Impact on Startups

Angel Tax on Startups - This article explains the

Which works contract is covered under Section 194C? concept of Angel tax & its impact on startups,

Angel tax exemption limit for startups, etc.

It includes the following:

a) Advertising

b) Broadcasting and telecasting including production of programmes for such broadcasting or telecasting

c) Carriage of goods and passengers by any mode other than railways

d) Catering

e) Manufacturing or supplying a product in accordance with requirement or specification of a customer using

material purchased from such customer. However, it will not include material purchased from person other than
customer.

f) Supply of labour for works contract.

Also Read: TDS Under Section 194J

What is the rate of Tax?

A. 1%, if payment is made to an Individual or HUF

B. 2%, if payment is made to any other person

The tax shall be deducted at these rates without including the surcharge, education cess and secondary and higher
education cess.

https://www.taxmann.com/blogpost/2000000231/tds-under-section-194c.aspx 1/4
4/1/2019 TDS Under Section 194C
However, if PAN of recipient is not available, then tax shall be deducted at the rate of 20% in accordance with the
provisions of Section 206AA.

When is TDS under Section 194C not applicable?

Tax is not required to be deducted in the following cases:

1. If amount is payable to a person who is engaged in business of plying , hiring or leasing goods carriages and he
does not own more than 10 goods carriage vehicle’s, during the financial year. Such exemption is provided only if
the recipient furnishes his PAN and payer intimate’s the details to IT Dept. in TDS Return.

2. If amount paid or credited does not exceed Rs. 30,000 in a single payment and Rs. 1, 00,000 in aggregate
during the financial year.

File your TDS Returns with Taxmann's One Solution TDS

Software

When is tax to be deducted?

Any person responsible for making payment to resident contractor/sub-contractor should deduct tax at the time
of actual payment to the payee or at the time of credit to the accounts of the payee, whichever is earlier.

What is the time limit for payment?

Government Deductor Non-Government Deductor

Tax is paid without production of an Income- Amount is paid or credited in the month of

tax challan on the same day on which tax is March on or before April 30

deducted

Tax deposited with Income-tax challan on or Amount is paid or credited before March 1
th th
before 7 day from the end of the month in on or before 7 day from the end of the

which tax is deducted month in which tax is deducted

Issue of TDS certificate:

Every deductor is required to issue TDS certificate in Form 16A (For tax deducted on payments other than salary)
to the deductee on quarterly basis. Every deductor shall issue Form 16A by downloading it from TRACES website
and properly authenticated by using digital signature or manual signature.

Time limit for filing TDS Return and TDS certificate:

Every deductor responsible for deduction of tax from payment other than salary shall file quarterly return in Form

26Q and issue quarterly TDS certificate’s by following dates:

Quarter Due date of filing TDS Due date for TDS

return Certificate

April to June st th
31 July 15 August

July to September st th
31 October 15 November

October to December st th
31 January 15 January

January to March st th
31 May 15 June

What are the consequences of non-compliance?

A. Non-Deduction or Non-Payment of TDS on payment made to contractor/sub-contractor on or before due date
as specified in Sec 139(1) will lead to disallowance under section 40(a) (ia)

TDS default If such expense is If such expense is

deductible in the current deductible in any

previous year subsequent year

Tax is deductible but not 30% of expenditure is If tax is deducted in the

deducted disallowed in the current subsequent year, the

year expense (which is

disallowed in the current

year) will be allowed in the

year in which TDS is

https://www.taxmann.com/blogpost/2000000231/tds-under-section-194c.aspx 2/4
4/1/2019 TDS Under Section 194C
deducted and deposited by

the assesse.

Tax is deducted in the 30% of expenditure is If tax is deposited after the

current year but is not disallowed in the current due date of filing income tax

deposited on or before due year return, the expense will be

date of filing Income-tax allowed in the year of

return deposit

B. The deductor shall be deemed to be in default and he shall be liable to pay interest in accordance with Sec
201(1A).

i) If a person fails to deduct tax:

Interest is levied at the rate of 1% per month or part of the month from the date on which the tax was deductible
to the date on which such tax is deducted.

ii) If a person has deducted tax but after deduction has failed to deposit tax :

Interest is levied at the rate of 1.5% per month or part of the month from the date on which the tax was deducted
to the date on which such tax is actually paid.

C. The Deductor will also be liable to pay fee under sec 234E for default in furnishing quarterly TDS return in
Form 26Q, which is Rs. 200 for every day during which failure continues. However, the fees shall not exceed the
maximum amount of TDS deducted. It is mandatory to pay late fee before furnishing return.

Is deduction of Tax allowed at lower or nil rate?

Sec 197 allows deduction of tax at lower or nil rate. For this purpose, contractor or sub-contractor has to file an
application in Form 13 to the concerned Assessing officer.

If Assessing Officer is satisfied that total income of the contractor /sub-contractor justifies deduction of tax at
lower or nil rate, then he may issue such certificate.

Disclaimer: This information is updated till 29 November 2017.

https://www.taxmann.com/blogpost/2000000231/tds-under-section-194c.aspx 3/4
4/1/2019 TDS Under Section 194C

16 Comments Sort by Oldest

Add a comment...

Lalu Ray
good idea
Like · Reply · 1y

Didige Jagan
thank you sir
Like · Reply · 1 · 38w

Sushil Mishra
good post
Like · Reply · 35w

Asit Baran Mondal

helpful post..Thanks
Like · Reply · 33w

Parmanand Prasad
thanks for
Like · Reply · 27w

Ramesh Swaminathan
sir,
the payment made to agency i.e the human resource supply made to the company in turn they claim every
month the payment in the way salary plus esi etc admn cost and s.tax
in what portion the tds to be applied the fully agency payment we made or the portion of admin cost what
portion we have to deduct tds kindly clarify email swaminathansubramanian@rocketmail.com
Like · Reply · 1 · 27w

Bal Krishan Kashyap

realy helpful
Like · Reply · 27w

Kunal Saha
i enrich my knowledge...
Like · Reply · 26w

Rama Chandra Patra

Thanks
Like · Reply · 23w

Ashwani Raghav
very good post
Like · Reply · 22w

Load 6 more comments

Facebook Comments plugin

taxmann.com

Apple Android Facebook Twitter LinkedIn You Tube

About Us Careers Press Blog Site Map Dealers Forget Password New Registration My Account Payment Terms Return Policy Disclaimer EULA Contact Us

Taxmann Technologies Tan Prints Bookmann India

PAYMENT

Best view in 1140 x 768

https://www.taxmann.com/blogpost/2000000231/tds-under-section-194c.aspx 4/4