This section of TDS is very important as it hits millions of people in India. Hence, a proper and detailed understanding of the section is here-
As per this section, any specified person who pays money to the resident contractor (or subcontractor) for carrying out any work (including the supply of labor) is required to deduct tax on such payment. The above condition also requires the existence of a contract between contractor and contractee.
Now after reading the above answer, the question coming to everyone’s mind is
The term ‘work’ includes:
The rate of tax u/s 194C is 1% (when payment is given to Individual/HUF) or 2% (when given to others). And the time of deduction is earlier of the credit of income to the account of the payee (receiver) or actual payment (in cash, cheque, draft or other modes).
As discussed above, when work includes manufacturing or supply of a product as per the specification of a customer by using the material purchased from him/her. In such case, TDS will be deducted on:
As we said above, section 194C impacts millions of people around India and this raised many confusions among taxpayers. Hence, CBDT has made some special announcements relating to implications of section 194C which are as follows:
But TDS will be deducted when such payment is made for the chartered hiring of bus, plane or any mode transport.
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