TDS on payment to contractor

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This query is : Resolved

Deepika Bhardwaj (Querist)
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03 May 2010 Dear Professionals

Pls help in solving the foloowing query:

According to amendment made by CBDT to the provisions related to deduction of tax at source (TDS), TDS @ 20% shall be deducted by the deductor if PAN is not provided by the deductee to the deductor.

However, according to section 194C i.e. deduction of TDS on paymnet made to contractor, if amount does not exceed Rs. 20,000 then Tax is not required to be deducted at source.

Query: Pls clarify, if payment to a contractor is less than 20000 & PAN is not provided to the deductor then is deductor required to deduct tax at source @ 20%?

pls guide with case laws on the matter.

thanks & regards
CS. Deepika Bhardwaj

CA. Mahesh Agarwal

CA. Mahesh Agarwal (Expert)
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03 May 2010 not at all. as the matter is now so there can not be any case law which has been decided.

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Deepika Bhardwaj

Deepika Bhardwaj (Querist)
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03 May 2010 thanks, is there any clarification issued by authority on the matter. Otherwise hw can we prove our stand of not deducting TDS.

thanks & regards
CS. Deepika Bhardwaj

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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03 May 2010 Payment to contractor's (for tax deduction) is covered under section 194C. But sub-section (5) says no deduction shall be made ...... if such sum does not exceed Rs. 20,000/- (now proposed to increase in the Finance Bill,2010 to Rs.35,000/-). So in the query raised, the payment is less than the threshold limit meaning thereby no TDS is required. If there is no tax deduction no need to get PAN of the deductee.

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Deepika Bhardwaj

Deepika Bhardwaj (Querist)
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03 May 2010 thanks, is there any clarification issued by authority on the matter. Otherwise hw can we prove our stand of not deducting TDS.

thanks & regards
CS. Deepika Bhardwaj

Deepika Bhardwaj

Deepika Bhardwaj (Querist)
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03 May 2010 thanks, is there any clarification issued by authority on the matter. Otherwise hw can we prove our stand of not deducting TDS.

thanks & regards
CS. Deepika Bhardwaj