3.8. PAYMENT TO CONTRACTOR AND SUB-CONTRACTOR [ SECTION 194C]
Payment to Contractor
1. Who is require deduct Tax at source ( Tax Deducter) : Any person responsible for paying any sum to any resident contractor for carrying out any work (including supply of labor for carrying out any work) in pursuance of a contract between the contractor and following specified person.
Meaning of Specified Person
- The Central Government or any State Government or any local authority ; or
- Any PSU or any company or any co-operative society or any society and any trust ; or
- Any authority, constituted in India by or under any law, engaged either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning ,development or improvement of cities, towns and villages, or for both ; or
- Any University including a deemed university.
- Any Firm
Meaning of Work : The work shall also include ---
- Advertising ;
- Broadcasting and telecasting including production of programmes for such broadcasting or telecasting ;
- Carriage of goods and passengers by any mode of transport other than by railways ;
- Catering.
2. When to deduct tax at source : At the time of payment or at the time of credit, whichever is earlier.
3. What is the Rate of TDS : Where a sum is payable to a resident contractor for –
- Advertising contract @1% + surcharges & Education Cess as applicable
- Any other contract @2% + surcharges & Education Cess as applicable
4. When Tax is not required to be deducted at source : Where payment of such income is Rs. 20,000 or less in the previous year.
Payment to Sub-Contractor
1. Who is require deduct Tax at source ( Tax Deducter) : Any person responsible for paying any sum to any resident contractor for carrying out any work (including supply of labor for carrying out any work) in pursuance of a contract between the contractor and following specified person.
However individual and HUF who are covered u/s 44AB (where tax audit is compulsorily) are also required to deduct tax at source.
2. When to deduct tax at source : At the time of payment or at the time of credit, whichever is earlier.
3. What is the Rate of TDS : Where a sum is payable to a resident Sub-Contractor, the Contractor shall deduct an amount equal to 1% of sum payable + surcharges and education cess as applicable.
4. When Tax is not required to be deducted at source :
a. Where payment of such income is Rs. 20,000 or less in the previous year
b. Where an individual is a sub-contractor who is in the business of playing, hiring or leasing goods carriages and who has not owned more than two goods carriages at any time during the previous year.
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