TDS

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Hemant Mehta

Hemant Mehta (Querist)
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19 September 2010 Is TDS to be deducted on contract made with contractor to build a building (Capital assets) ?

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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19 September 2010 yes. need to deduct, In tds no difference between Capital expenses and revenue expenses

Hemant Mehta

Hemant Mehta (Querist)
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20 September 2010

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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27 July 2025 Yes, TDS is applicable even if the contract is for construction of a **capital asset** such as a building.

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### Details:

* **Section 194C** of the Income Tax Act covers TDS on payments to contractors.
* It applies to payments made to contractors or sub-contractors for carrying out any work including **advertisement, broadcasting, telecasting, transport, supply of labor, or services**.
* Construction of a building—whether for business use or capital asset—is considered a **works contract** under TDS rules.
* Hence, if you pay a contractor for building construction, you must deduct TDS under **Section 194C**.

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### Rate of TDS under Section 194C:

* **1%** if the contractor is an individual or HUF.
* **2%** if the contractor is a company or other entity.

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### Summary:

| Payment for | TDS Applicable? | Section | Rate |
| ------------------------------------- | --------------- | ------- | -------- |
| Building construction (capital asset) | Yes | 194C | 1% or 2% |

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If you want, I can guide you on how to deduct and deposit TDS for such payments. Let me know!

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