Tds deduction bracket for contract employees.

This query is : Resolved

TARUN (Querist)
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16 February 2018 SIR,
I HAVE A QUERY IF YOU PEOPLE CAN HELP ME OUT. MY WIFE IS A CONTRACT EMPLOYEE (TEACHER) OF A SCHOOL, SHE EARNS 15K PER MONTH THUS HER ANNUAL INCOME WOULD BE 1,80,000. THE ACCOUNT DEPT SAYS THAT FOR CONTRACT EMPLOYEES TDS DEDUCTION IS DONE FOR PEOPLE EARNING MORE THAN 1,00,000 AND NOT 2,50,000. IS IT TRUE?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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16 February 2018 Payment to contract employee should be considered as salary payment and TDS to be deducted only when payment exceed 2.50 lacs

Arpit

Arpit (Expert)
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16 February 2018 TDS should not be deducted in your case.

Salary paid by company to contracted employees who worked under its control and management and whose salary was charge on its profits, did not constitute payment made for works contract coming under section 194C and, thus, company is not liable to deduct tax at source while making said payment if the said payment does not exceed Rs. 2.5 lacs.

TARUN

TARUN (Querist)
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16 February 2018 Thank you so much sir. But these account people showed me something in which they are saying that its a different case for the contract employee. What should I show them? Are there any different rules for contract people?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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16 February 2018 Terms of employment is contract but payment is only salary.

Arpit

Arpit (Expert)
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16 February 2018 You can show him the case law Bhagyanagar Gas Ltd. v. Assistant Commissioner of Income-tax, Circle 1(3), Hyderabad

It clearly state the facts that Seetharaman Sir or I have mentioned above

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