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194C TDS Deduction Confusion

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Krishanu Majumder

Accountant

183 Points Posted on 02 November 2021

Dear Experts,
I paid a contractor for three times in different dates each worth Rs 27000.
Since the amount was below 30000, I didn’t deduct tds u/s 194C though already paid 81000.

Now I have to pay for another bill of Rs 25000 and adding this new bill, total payment would cross 100000 and I'm liable to deduct tds.

My question is, how much tds I should deduct now? Will it be 250 (1% on 25000) or it will be 1060 ( 1% on 106000).

Please guide me.

Replies (11)

Quick Summary

This discussion addresses confusion regarding TDS deductions under Section 194C of the Income Tax Act. The user initially paid a contractor three times, with each payment below the £30,000 threshold, thus not deducting TDS. However, a subsequent payment brings the total to over £100,000 within the financial year, making TDS deduction mandatory. Experts clarify that TDS should be deducted on the entire accumulated amount (£106,000) in the current quarter, not just the latest bill. There's also a brief discussion on whether interest is payable on the previously omitted TDS amounts, with the consensus leaning towards no interest being due as the threshold wasn't crossed at the time of those payments.

Rama chary Rachakonda

Master in Accounts & high court Advocate

9620 Points Posted on 02 November 2021

If the payment that is being made to the contractor does not exceed Rs. 30,000, No TDS on payment to contractor is required to be deducted. However, if the total of all such payments made or to be made during a financial year exceeds Rs. 75,000; TDS shall be deducted under Section 194C at the rates mentioned. So total instalment payments must be within a financial year.

Pradhish Raj

46 Points Posted on 02 November 2021

To be very clear.! you need to deduct TDS on 1,06,000

CA. Sourav Sarkar

Chartered Accountant

24588 Points Posted on 02 November 2021

On full amount

Krishanu Majumder

Accountant

183 Points Posted on 02 November 2021

First 3 payments were in Q2 and return filed. How to show this tds of 1060 in Q3 since some bills were of last quarter

Janak Shah

603 Points Posted on 02 November 2021

Just show 106000 in Q3 TDS return on which 1060 is deducted.

Pradhish Raj

46 Points Posted on 02 November 2021

You haven't shown those transactions in last Q as it does not cross the limit., So, there will be no issues showing the full amount the the Q3... But the question is ... The interest should be calculated from the date of payment. ? I'm not sure about that sorry.

Krishanu Majumder

Accountant

183 Points Posted on 02 November 2021

Should I pay interest for previous three tds payment?

ADHIP KUMAR MISRA

ACCOUNTS MANAGER

179 Points Posted on 02 November 2021

Though not sure whether interest is payable on the first three TDS payments but I think that since you were justified in not deducting TDS during those payments as threshold limit was not crossed during that period, so interest is not payable on them . But no doubt TDS of Rs 1060 is deductible now from the payment of Rs 25000 .