On the time of constructing any fee, TDS is required to be deducted by the individual making the fee. The speed of TDS relies on the character of fee made and on this article; we might be specializing in Part 194C which offers with TDS on Cost to Contractor & Sub-Contractor.
There are numerous different sections beneath which TDS is deducted on different kinds of funds and for TDS on such different kinds of funds kindly refer the next articles:-
- Part 192: TDS on Wage
- Part 194A: TDS on Fastened Deposit
- Part 194H: TDS on Fee/ Brokerage
- Part 194I: TDS on Hire
- Part 194IA: TDS on Property Sale
- Part 194J: TDS on Skilled/ Technical Charges
- TDS on Recurring Deposit
Part 194C: TDS on Cost to Contractor
TDS on Payment to Contractor Any individual accountable for paying any sum to a resident contractor for finishing up any work (incl. Provide of labor for finishing up any work) beneath a contract shall deduct TDS on fee to contractor beneath Part 194C on the time of such fee thereof in money or by challenge of cheque or draft or by no matter title referred to as, whichever occurs earlier.
The TDS on Cost to Contractor beneath Part 194C shall be deducted on the under talked about charges:-
- 1% if the fee is being made to Particular person or HUF
- 2% in all different instances (i.e. instances besides fee to Particular person or HUF)
TDS on Cost to Sub-contractor
If a fee is being made to any resident sub-contractor in pursuance of a contract with the sub-contractor for finishing up, or for the provision of labor for finishing up, the entire or any a part of the work undertaken by the contractor, TDS shall be deducted @ 1% on the gross quantity of receipt on the time of fee in money or challenge of cheque or by demand draft or by way of every other mode (whichever is earlier).
Minimal Quantity of Cost for Deduction of TDS beneath Part 194C
If the fee that’s being made to the contractor doesn’t exceed Rs. 30,000, No TDS on fee to contractor is required to be deducted. Nonetheless, if the whole of all such funds made or to be made throughout a monetary 12 months exceeds Rs. 75,000; TDS shall be deducted beneath Part 194C on the charges talked about above.
This restrict of Rs. 75,000 has been elevated to Rs. 1,00,000 and efficient from Monetary 12 months 2016-17 onwards.
The standards for minimal quantity to be paid for TDS Deduction have been defined under with the assistance of some exemplary instances:-
| Case | Particulars | TDS to be deducted or not |
| Case 1 | Single contract of Rs. 30,000 in a 12 months | No |
| Case 2 | Two contracts of Rs. 30,000 every within the 12 months | No |
| Case 3 | Three contracts of Rs. 30,000 every within the 12 months | Sure, TDS to be deducted on Rs. 90,000 |
| Case 4 | Single contract of Rs. 40,000 in a 12 months | Sure |
| Case 5 | 5 contracts of Rs. 15,000 every within the 12 months | No |
| Case 6 | Six contracts of Rs. 15,000 every within the 12 months | Sure, TDS to be deducted on Rs. 90,000 |
The Quantity of TDS Deducted on Cost to Contractor is required to be deposited with the Govt. earlier than the due date of TDS Cost. A TDS Return can also be required to be filed for a similar stating the quantity of TDS deducted, the TAN Quantity of the individual making the fee, the PAN No. of the individual receiving the fee and so on.
The individual deducting the TDS on fee to Contractor can also be required to challenge Type 16A/ Type 16B on the finish of the 12 months for the quantity of TDS deducted and deposited with the govt.. The small print of TDS deposited will also be checked by the individual whose TDS has been deducted by checking the Type 26AS on-line.
Exceptions to deduction of TDS on fee to Contractor beneath Part 194C
Within the following case, No TDS on fee to contractor is required to be deducted beneath Part 194C and the individual accountable for making the fee could make full fee with out deduction of any TDS:-
- If the fee is being made by a class of taxpayer who isn’t required to get their tax audit carried out beneath Part 44AB; No TDS on fee to contractor shall be deducted beneath Part 194C
- In case a fee is being made by an Particular person or HUF for the non-public use of such particular person or a member of HUF, no TDS shall be deducted in such a case.
- If the fee is being made in the middle of enterprise of plying, hiring or leasing items carriages, No TDS is required to be deducted if the sub-contractor is an Particular person who has not owned greater than 2 items carriages at any time in the course of the 12 months.
- No TDS shall be deducted on funds made to journey brokers or airways for buy of tickets for air journey.