Home > TDS > TDS on Payments to Contractors Last Updated: Feb 24th 2023
TDS applies to contractor, subcontractor payments. Income Tax Act 1961 Section 194C. Learn more on who to deduct TDS from, applicability, rates, timing, returns.
Any person responsible for paying any sum to a resident contractor for carrying out any work in pursuance of a contract between the contractor and the specified persons as follows
TDS is not required to be deducted if the payment to a contractor or sub-contractor does not exceed Rs 30,000 in a single payment or Rs 1,00,000 in an aggregate during the financial year
Rs 25,000 on 01/06/2022, Rs 28,000 on 31/10/2022 , Rs 26,000 on 31/12/2022 and Rs 24,000 on 28/01/2023
Ans : Even though the individual payments to Mr Bharat is not exceeding Rs 30,000 per payment, the aggregate payments are exceeding Rs 1 lakhs on 28/02/2023. The total payments made to Mr Bharat is 1,03,000 and Mr Rama is required to deduct 1% TDS on Rs 1,03,000 at 1% from his last payment of Rs 24,000 on 28/02/2023
Payment on 28/02/2023-24000
TDS @ 1%- 1030
Payable on 28/02/2023- 22970
TDS u/s 194C needs to be deducted at the following times which ever is earlier
Refer https://eztax.in/tds-on-payments-to-resident-contractors-and-professionals for the applicability of TDS on payments for personal purpose.
Work includes
TDS u/s 194C is not required to be deducted on the payments made to contractors during the course of plying, hiring or leasing goods carriages, if the contractor furnishes his PAN to the deductor. However, the person needs to fulfil the following 3 conditions.
The due date for payment of TDS deducted u/s 194C is within 7 days from the end of the month in which deduction is made. However, for the March month, due date is April 30
The contractor or Sub contractor can apply for lower deduction or nil deduction of TDS in Form 13 and submit the certificate to deductor for non-deduction or lower deduction of TDS