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)

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)

29 July 2021 Yes, TDS applicable under section 194c @ 2%>

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CA Rajat Pathak

CA Rajat Pathak (Expert)

30 July 2021 U/s 194C
Individuals/HUF 1%
Others 2%

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CMA Poornima Madhava

CMA Poornima Madhava (Expert)

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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