Second time payment

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This discussion clarifies whether a company needs to deduct Tax Deducted at Source (TDS) on a second payment to a service provider. The query centres on whether TDS is required if the cumulative transaction value, including this second payment, remains below the Rs 1,00,000 threshold. The consensus is that if both payments fall within the same financial year, TDS should be deducted on the second payment, even if the total doesn't exceed the limit, as the TDS liability is considered triggered.

Marimuthu

Marimuthu (Querist)

15 November 2023 Dear Experts,
1 A company pays Rs 45,0000.00 to the service provider after deducting the TDS u/s 194C
2 After the certain period, the same service provider provides the service for the amount of Rs 20,000.00
3 Upto this second time service provided by him, the total trasaction value does not cross Rs 1,00,000.00
4 The query
Whether the company needs to deduct the TDS on this second time payment.
Since upto this second time payment, it does not cross the limit of Rs 1,00,000.00
Or once the TDS attracts, it needs to be followed in subsequent transactions.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

15 November 2023 No need for TDS on second time payment as total value not crossed 1 lac.

RAJA P M

RAJA P M (Expert)

17 November 2023 Yes, TDS should be deduct if both said period is one FY.

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

28 October 2026 No TDS on the ₹20,000 payment: contractor TDS (194C, now Sec 393 of the Income-tax Act 2025) applies only if a single payment exceeds ₹30,000 or the year's total exceeds ₹1 lakh — but once later payments take the year's total past ₹1 lakh, TDS is due on the whole aggregate less amounts already subjected to TDS.

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