TDS
This query is : Resolved
19 September 2010
Is TDS to be deducted on contract made with contractor to build a building (Capital assets) ?
19 September 2010
yes. need to deduct, In tds no difference between Capital expenses and revenue expenses
20 September 2010
27 July 2025
Yes, TDS is applicable even if the contract is for construction of a **capital asset** such as a building.
---
### 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**.
---
### 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.
---
### Summary:
| Payment for | TDS Applicable? | Section | Rate |
| ------------------------------------- | --------------- | ------- | -------- |
| Building construction (capital asset) | Yes | 194C | 1% or 2% |
---
If you want, I can guide you on how to deduct and deposit TDS for such payments. Let me know!
---
### 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**.
---
### 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.
---
### Summary:
| Payment for | TDS Applicable? | Section | Rate |
| ------------------------------------- | --------------- | ------- | -------- |
| Building construction (capital asset) | Yes | 194C | 1% or 2% |
---
If you want, I can guide you on how to deduct and deposit TDS for such payments. Let me know!
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