23 March 2012
Section 194 C is all about tax deduction at source to contractors and sub contractors.
Payment to the contractors: - the conditions to deduct TDS are as follows in condition of payment to contractors.
1- Contractor to be resident of India u/d 194C (1) and section 194C does not apply to non resident Indian.
2- TDS applies to a payment exceeding Rs. 20000 u/s 194C (3) and if the payment does not exceeds 20000, no TDS will be deducted. However, where aggregate of the amount of such sum credited or paid during the financial year exceeds Rs. 500000, the person responsible of making such payment to the contractor or sub-contractor is liable to deduct TDS.
3- Advance payment made to the contractor or sub contractor and to be adjusted at the time of final settlement of account, is also covered under TDS provision.
Person responsible for making TDS [Section 194C (1)]:- Tax will be deducted at source only be specified bodies which includes
1- government
2- local authority
3- any corporation established under a central, state or provincial act
4- any company
5- any cooperative society
6- any housing board set up to cater to the needs of housing
7- any society registered under societies registration act 1860
8- any trust
9- any university or deemed university
10- any firm
11- any association of person or body of individual whether incorporated or not
12- Individual or a H.U.F. whose gross receipt from business 40 lakh and profession 10 lakh. SectioAB.
However no individual or H.U.F. is liable to deduct income tax on the sum credited or paid to the account of the contractor where such sum is credited or paid exclusively for personal purpose of such individual or any member of H.U.F.
Scope of TDS: - any specified person responsible for making payment to a resident contractor for carrying out any work, including supply of labour for carrying out any work, is liable to deduct tax at the prescribed rates.
Section 194C also includes
1- advertising
2- Broadcasting and telecasting, including production programmes for such.
3- Carriage of goods or passengers by any mode of transport other than railways.
4- Catering
Central Excise duty list on all products in India There is always confusion and less knowledge about the central excise duty on different products. - 32 hours ago Income tax Excise Custom and Service tax rates after budget In this annual budget, Finance minister has purposed some changes in the total taxes including income tax slabs, excise tax as well as service tax. - 5 days ago Excel based form 15G and 15H with auto fill facility It is high time to give form 15G and 15H of income tax to the deductor of TDS on your deposit. - 10 days ago All about scrutiny assessment section 143 3 of income tax act Where the assessee has furnished the return of income, either suo moto under section 139 of income tax or on the order of the assessing officer under section 142(1) of income tax act and the assessing officer wants to verify its correctness in all respects, he may proceeds to make scrutiny assessment in accordance with the following provisions - 12 days ago All about credit report Credit points is the past mirror for the financial companies which shows them the future of their money. - 2 weeks ago Loan vs own funds calculator This will tell you as you should use your own fund or take the home loan for purchasing a house. - 3 weeks ago The most corrupted Indian politicians-Three kuwaris In India the corruption is in the root of politics. - 3 weeks ago SEBI announces standardised lot size for future and option market Securities and exchange board of India (SEBI) has announced standardized lot size for initial public offer. - 4 weeks ago Provisions for section 194C apply only where contract is either a work contract or a contract for supply of labour for works contract. Thus the provisions are not applicable for payments made under contract for sale of goods.
Guidelines issued by CBDT following Supreme Court decisions.
The provisions of section 194C apply to all types of contracts for carrying on any work including transport contracts, service contracts, advertisement contracts, broadcasting contracts, telecasting contracts, labour contracts, material and work contracts.
The term transport contracts would in addition to contracts for transportation and loading/ unloading of goods, also cover contracts for plying of buses, ferries, and so on along with staff.
The provisions of section 194C would not apply in relation to payments made for hiring or renting of equipments and so on.
The provision of section 194C would not apply in relation to payments made to banks for discounting bills, collecting/receiving payments through cheques/draft, opening and negotiating letters of credit and transactions in negotiable instruments.
Service contracts would be covered by the provision of the section since service means doing any work as explained.
The provisions are wide enough to cover not only written contracts but moral contracts too.
The provisions of the section would not cover contracts for sale of goods.
Circular no. 714 and circular no 715 dated 3-8-1995 may also be noted and clarifications.
(i) Advertising contracts: - the payment made directly to print and electronic media would be covered under sec 194C and there are in nature of payments for purpose of advertising. In such cases tax will be deducted at the rate of 1% of the payment made for advertising including production of work of broadcasting and telecasting. In all other cases of work of broadcasting and telecasting where no advertising, TDS will be deducted at 2%.
Hoardings: - the contacts for putting up a hoarding are the nature of advertising and provision of 194C would apply. If a person takes a space on rent and then sub lease the space for hoarding, it also comes under TDS act Income tax Excise Custom and Service tax rates after budget In this annual budget, Finance minister has purposed some changes in the total taxes including income tax slabs, excise tax as well as service tax. - 5 days ago ALL ABOUT DIVIDENDS AND INCOME TAX TREATMENT Dividend is the profit of a company which is paid to the shareholders. - 16 months ago All about credit report Credit points is the past mirror for the financial companies which shows them the future of their money. - 2 weeks ago ALL ABOUT SECTION 154 OF INCOME TAX ACT The power to rectify the mistake has been conferred on the tax authorities to ensure justice to both the assessee and the revenue. - 19 months ago New PAN Application form 49A and 49AA Income Tax Income tax department has issued new forms for PAN application. - 4 months ago Income Exempted under Income Tax Act Section 10 Section 10 of income tax act defines that some income are exempted from income tax means there is no income tax on these income. - 2 years ago EXCEL BASED CALCULATORS FOR ALL OF YOUR NEED Excel based calculators includes calculation of wealth tax,loan emi,vat,advance tax,income tax,nsc calculator,section 89(1) relief calculator,import export duty calculator,post office investment calculator etc. - 15 months ago All about scrutiny assessment section 143 3 of income tax act Where the assessee has furnished the return of income, either suo moto under section 139 of income tax or on the order of the assessing officer under section 142(1) of income tax act and the assessing officer wants to verify its correctness in all respects, he may proceeds to make scrutiny assessment in accordance with the following provisions - 12 days ago (i) Sponsorships: - the agreement of sponsorship for debates, seminars, or other functions for catching the eyes of public is the essence an agreement for carrying our work of advertisement. Therefore, provisions of section 194C will apply.
(ii) Payments to airlines/travel agents: - purchase a ticket is not subject to TDS. But if someone chartered a plane or a bus is the subject to TDS under section 194C.
(iii) Payments made to clearing and forwarding agents: - payment made to clearing and forwarding agents for carriage of goods are subject to TDS under section 194C.
(iv) Payments to courier: - the carriage of documents and goods as courier is subject to TDS under section 194C.
(v) Payment to recruitment agencies: - payments to recruitments agencies are in nature of payments for services rendered. So provisions of section 194C do not apply.
(vi) Fixed deposit commission/ brokerage: - not covered under section 194C of TDS.
(vii) Advertisement in souvenirs: - TDS applied under section 194C.
(viii) Electrical contracts: - where the service of a regular electrician is engaged on a contract basis or services provided by the contractor, attracts TDS under section 194C of income tax act.
(ix) Maintenance contracts: - routine maintenance contacts including supply of spares would be covered under section 194C.
(x) Payment to sub contractor: - where a contractor engages a resident sub contractor to carry out any work or to supply labour for carrying out the work taken up by contactor, the contactor is required to deduct tax @ 1%.
Sub contractor not owing more than two goods carriage: - an individual sub contractor engaged in the business of plying. Hiring or leasing goods carriage and not owing more than two goods carriage at one time during the previous year is exempted from TDS provisions from 1-6-2005
CAclubindia
