Tds on dyeing charges

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 January 2015 Sir,

I am a manufacturer of readymade garments in which i have to dye fabrics and yarn.

i want to know on which TDS is applicable or not and what % of TDS in which section.

Thanking you

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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29 January 2015 if you urself purchasing and doing the work then no tds is applicable.

Querist : Anonymous

Querist : Anonymous (Querist)

29 January 2015 Sir,

i only purchase grey fabrics or yarn and dyeing work done by outsider.

pls tell me what % of TDS applicable and in which section.

Thanking you

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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27 July 2025 If you are a manufacturer of readymade garments and are **outsourcing the dyeing work** to a third party, the TDS implications will depend on the nature of the payment you are making to the third party (the contractor providing dyeing services).

### **TDS on Dyeing Charges:**

Since you are **outsourcing the dyeing work** (which is essentially a **contract for services**), the TDS will apply under **Section 194C**, which is related to **contracts for work** (including work involving manufacturing, processing, or modification of goods).

### **TDS Applicability:**

* **Section 194C** is applicable on payments made to contractors for the **execution of work**. Since dyeing work is essentially a service and involves **processing the fabric**, this section would apply.

### **Rate of TDS:**

* **For individual/HUF**: The TDS rate is **1%** (if the payee is an individual or HUF).
* **For other entities (e.g., companies)**: The TDS rate is **2%** (if the payee is a company or other non-individual entity).

### **TDS Deduction:**

* You must **deduct TDS** from the payment you make to the third-party vendor for dyeing charges, provided the payment amount exceeds the threshold for TDS deduction (₹30,000 in a financial year).

### **When to Deduct TDS:**

* TDS should be deducted at the time of **payment** or **credit** to the contractor’s account, whichever is earlier.

### **No TDS in the Following Cases:**

* **If the payment is below ₹30,000** in a financial year to the contractor.
* **If the contractor is exempt** from TDS under any other specific provisions (e.g., some small businesses or startups).

### **Example:**

If you are paying **₹50,000** for dyeing services to a contractor, the TDS will be:

* **TDS at 1%** (for an individual or HUF) = ₹500.
* **TDS at 2%** (for other entities like a company) = ₹1,000.

You would deduct the applicable TDS and remit it to the government, and issue a TDS certificate (Form 16A) to the contractor for the TDS deducted.

### **Conclusion:**

* **TDS is applicable under Section 194C** for dyeing charges paid to the contractor.
* The **TDS rate is 1%** if the contractor is an individual/HUF and **2%** if the contractor is a company or other entity.
* **TDS should be deducted** if the payment exceeds ₹30,000 in a financial year.

Let me know if you need any further clarification or help!

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