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TDS

amita (accountant) (45 Points)

09 October 2007

in case of contract payments the threshold limit is Rs. 20000, if the limit is crossed then what is the amount on which tax is deducted, Is it the amount over 20000 or we have to work backwards that is the full amount of bills received

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6 Replies

(Guest)

HI AMITA U HAVE TO DEDUCTED TDS U/S 194C . AND U HAVE TO DEDUCTED TDS ON FULL AMOUNT NOT OVER THE 20000/-

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S.RAVICHANDRAN (FINANCE MANAGER) (422 Points)
Replied 09 October 2007

Section 194 C deals with two situations. In the first case, if a contract crosses Rs.20000/-, then the contract has to be deducted TDS for the full contract amount. In the second case, if the individual contracts do not cross Rs.20000/- but the aggregate of such individual contracts crosses Rs.50000/-, then TDS has to be deducted from the first bill onwards.

CA. Rayan Sequeira (Chartered Accountant) (1439 Points)
Replied 09 October 2007

Just to add on to Mr Ravichandran, most assessees donot know whether their individual contract offered u/s 194c to a third party will exceed the threshold limit of 20000/- per payment or 50000/- in aggregate over a period of year in this case when during anytime such limit is crossed then the next payment should be made only after deducting tds on the entire liability