Who is responsible for tax deduction - any person responsible for paying any sum to any resident contractor for carrying out any work (including labour for carring out any work) is pursuance of a contract between a specified person and the resident contractor is required to deduct tax at source. For this purpose, payer himself is treated as person responsible for paying any sum to contractor. if, however, payer is company, the company itself including the principal officer thereof, is the person responsible for paying to resident contractor.
Specified Person: Meaning of - Tax deductible under section 194C(1) only if payment is made in pursuance of a contract between a specified person and a resident contractor. The Following are the 'Specified Person' for this purpose :
Specified Person: Meaning of - Tax deductible under section 194C(1) only if payment is made in pursuance of a contract between a specified person and a resident contractor. The Following are the 'Specified Person' for this purpose :
- The Central Government or any Statement Government
- any local authority
- any corporation established by or under a central, state or provincial Act
- any company
- any co-operative society
- any authority constituted in India by or under any law, engaged either for the purpose of dealing with and satisfying eh need for housing accommodation or for the purpose of planning, development or improvement of cities towns and villages, or for both
- any society registered under the societies registration act, 1860 or under any law corresponding to that act in force in any part of India
- any trust
- any university established or incorporated by or under a central, state or provincial act and an institution declared to be a university under section 3 of university grants commission act 1956
- any foreign Government or a foreign enterprise or any association or body established outside India
- any firm
- any individual or HUF whose books of account are required to be audited under section 44AB(a) / (b) during the immediately preceding financial year and sum credited / paid is not exclusively for personal purposes
- with effect from 01 June 2008 AOP/BOI whose books of accounts are required to be audited under section 44AB(a)/(b) during immediately preceding financial year
When Tax has to be deducted at source - tax is to be deducted either at the time of credit of such sum to the account of payee or at the time of payment thereof in cash or by issue of cheque or by any other mde whichever is earlier
for this purpose any sum credited to any account, whether called "Suspense Account" or by any other name, in the books of account of the payee, is treated as credit of such income to the account of the payee.
Consideration / sum exceeding a particular sum is subject to tax deduction at source - The provisions are given below:
Petty Cases - to avoid tax deduction in petty cases, tax is required to be deducted at source where the amount credited or paid to a contractor or sub contractor exceeds Rs. 30,000/- in a single payment or credit or Rs. 75,000/- in the aggregate during a financial year. In other words, tax is not be deductible under section 194C if the following two conditions are satisfied -
a. the amount of any (single) sum credited or paid (or likely to be credited or paid) to the contractor or sub contractor does not exceed Rs. 30,000/- and
b. the aggregate of the amounts of such sums credited or paid (or likely to be credited or paid) during the
financial year does not exceed Rs. 75,000/-
If payment recipient is a transport operator and furnishes his PAN to the deductor, tax is not deductible with effect from October 1 2009.
Who is Contractor - A "Contractor" is one who makes an agreement with another to do a piece of work, retaining in himself control of the means, methods and the manner of producing the result to be accomplished, neither party having the right to terminate the contract at will.
Sub-contractor is one who takes portion of contract from principal contractor or another sub-contractor.
Meaning of work contract - Provision of 194C relating to the tax deduction from payment to contract/sub-contractor are applicable only where contract is either a "work contract" or a contract for supply of labour for works contract. Theses provisions are, therefore, not applicable for payments made under contract of sale of goods.
"work" shall also include a few servies [explanation III to sec 194C]
Consideration / sum exceeding a particular sum is subject to tax deduction at source - The provisions are given below:
Petty Cases - to avoid tax deduction in petty cases, tax is required to be deducted at source where the amount credited or paid to a contractor or sub contractor exceeds Rs. 30,000/- in a single payment or credit or Rs. 75,000/- in the aggregate during a financial year. In other words, tax is not be deductible under section 194C if the following two conditions are satisfied -
a. the amount of any (single) sum credited or paid (or likely to be credited or paid) to the contractor or sub contractor does not exceed Rs. 30,000/- and
b. the aggregate of the amounts of such sums credited or paid (or likely to be credited or paid) during the
financial year does not exceed Rs. 75,000/-
If payment recipient is a transport operator and furnishes his PAN to the deductor, tax is not deductible with effect from October 1 2009.
Who is Contractor - A "Contractor" is one who makes an agreement with another to do a piece of work, retaining in himself control of the means, methods and the manner of producing the result to be accomplished, neither party having the right to terminate the contract at will.
Sub-contractor is one who takes portion of contract from principal contractor or another sub-contractor.
Meaning of work contract - Provision of 194C relating to the tax deduction from payment to contract/sub-contractor are applicable only where contract is either a "work contract" or a contract for supply of labour for works contract. Theses provisions are, therefore, not applicable for payments made under contract of sale of goods.
"work" shall also include a few servies [explanation III to sec 194C]
- Advertising
- broadcasting and telecasing including production of programmes for such broadcasting or telecasting
- carriage of goods and passengers by any mode of transport other than by railways
- catering
- manufacturing & supplying a product according to the requirement or specification of a customer by using material purchased from such customer. However, it will not include if material is purchased other than such customer
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