How much is TDS u/s 194C ?

VUELVE (CA- Student) (351 Points)

29 October 2010  

X & Co. (Firm) engaged in wholesale business assigned a contract for construction of its godown building to Mr. Ravi, a contractor. It paid Rs.25,00,000 to Mr. Ravi as Contract Payment. Please tell me which one of the following is correct ?


a) As the payment is made to Company then it comes under 194C, payment to contractors other than HUF or Individual and so 2% on the payment will be deducted as TDS.

Rs.25,00,000 * 2% =  50,000/-


b) The same 2% is applicable along with Education Cess & SHEC ?

Rs.25,00,000 * 2.3% = 57,500/-


Which one of the above amounts is correct as TDS deduction ?


Thanks & Regards !