Limit of TDS on contractor

Save Share

This query is : Resolved

Quick Summary

This discussion clarifies the TDS (Tax Deducted at Source) thresholds for contractors in the UK. For payments made to a contractor, the limit is typically £1 lakh per year under Section 194C. However, for individuals or HUFs not requiring a tax audit, Section 194M applies with a higher threshold of £50 lakh per year, at a rate of 5%. The conversation also addresses a scenario where a contract payment spans across financial years, concluding that if the total payment within a financial year does not exceed the relevant threshold, TDS may not be applicable.

Sanjay Budhiraja

Sanjay Budhiraja (Querist)
Follow

20 January 2022 Hello All
Sir I want to know about TDS of contractor threshold limit..
My client is the owner of floor in a building.. he gave to one contractor the total contract of say 60 lac to rebuild his floor.. if he give the ready floor in say around 1.5 years then the TDS to be deposited by the owner can be ignored or not..
Threshold limit for TDS is 50 lac per year or what?
Regards

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

20 January 2022 TDS under section 194C applicable at 2% on 60 lacs contract value to be deducted by owner of the building. Threshold for contractor is 1 lac.

Sanjay Budhiraja

Sanjay Budhiraja (Querist)
Follow

20 January 2022 Sir.
According to my knowledge contract payment made to person is 50 lac and TDs is 5 percent in new TDs section..
Pl clarify.
Regards

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

20 January 2022 Yes, you are right section 194M applicable at 5% in case of payment in a year exceeds 50 lacs in case of individual or huf where tax audit not applicable.
Threshold is 50 lacs per year.

Sanjay Budhiraja

Sanjay Budhiraja (Querist)
Follow

22 January 2022 Good morning
Sir as mentioned by you the limit is 50 Lac per year.. I want to know if the contract payment goes to one person to the next FY say upto Nov22. Then also the TDS will be applicable. For example Total value of contact is 60 Lac out of which we make payment of 40 upto March 22 and 20 in next FY upto Nov 22. Then TDS @5 percent be deducted and deposited by the owner or can be applicable or not .
Pl guide.
Regards

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

22 January 2022 In such a case TDS not applicable.

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