TDS on Advance for construction of Building

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This discussion clarifies whether Tax Deducted at Source (TDS) is applicable when an advance payment is made for the construction of a building. TDS is indeed applicable under Section 194C, with rates of 1% for individuals/HUFs and 2% for others. Additionally, Section 194M may apply to individuals/HUFs not subject to tax audit, requiring a 5% TDS on payments exceeding Rs. 50 lakhs.

Sonnal Khandaray

Sonnal Khandaray (Querist)
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29 July 2021 Hi
Whether TDS is applicable for advance given for construction of building? What will be rate?

Thanks in advance.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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29 July 2021 Yes, TDS applicable under section 194c @ 2%>

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CA Rajat Pathak

CA Rajat Pathak (Expert)
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30 July 2021 U/s 194C
Individuals/HUF 1%
Others 2%

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CMA Poornima Madhava

CMA Poornima Madhava (Expert)
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30 July 2021 Further, in case of individuals/HUFs not being subject to tax audit, section 194M would apply in which case TDS @5% on exceeding the threshold limit of Rs.50 lacs.

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