Income tax (tds) contractor - u/s.194c

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

08 July 2013 SIR, IF a Registered contractor makes a contract with Public works Department or Forest Department or any other State Government Department and executes work. Income tax u/s.194C has to be recovered from the bill presented.
U/s.194C -TDS is to be made @ 1% where payment is to be made to an individual or a HUF and @ 2% in other case.
Registered contractor (bills in a financial year around Rs.50 lakhs) . Should we treat him as individual or others. How do we know a contractor is an Individual or others..
Please let me know how what is the percentage of tax to be recovered and other statutory deduction to be recovered like surcharge, education cess and labour cess etc.,

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
Follow

08 July 2013 If he issues bills in the name of company then its company u can get to know and accordingly uneed to charge only TDS at the rate aplicable to others (no surcharge or edu cess is to be deduted).

else he is an individual.

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

08 July 2013 Thank you Tushar Sampat for replying to my query.
I read an article as under, please comment on it.

SECTION 194C  PAYMENTS TO CONTRACTORS
AND SUB-CONTRACTORS
1114. Applicability of section 194C to service contracts - Clarification regarding Supreme Court judgment in Associated Cement Co. Ltd. v. CIT [1993] 67 Taxman 346/201 ITR 4351
1. Sub-section (1) of section 194C of the Income-tax Act, 1961 lays down that any person responsible for paying any sum to any resident (hereafter referred to as contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and the bodies mentioned therein shall, at the time of credit of such sum to the account of the contractor or payment thereof in cash or by issue of a cheque or draft by any other mode, whichever is earlier, deduct an amount equal to 2% of such sum as income-tax on the income comprised therein.
2. Sub-section (2) of section 194C of the Income-tax Act, 1961 lays down that when a contractor makes payment of any sum to a resident sub-contractor in pursuance of a contract made with him for carrying out the whole or any part of the work undertaken by the contractor, or, for supplying any labour, the contractor shall deduct an amount equal to 1% of such sum as income-tax on the income comprised therein.

Ganeshbabu K

Ganeshbabu K (Expert)
Follow

08 July 2013 As per section 194C(1) rate of TDS deuctable is as folows

(i) one per cent where the payment is being made or credit is being given to an individual or a Hindu undivided family;
(ii) two per cent where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family,

Individual means proprietor ship,

See PAN provided by your contractor if 4th letter of it is "P" or "H" deduct 1% other wise dedcut TDS @ 2%

Thanks & regards
ganesh babu k

Message likes : 1 times

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now