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Tds exemption limit

venkata sathyanarayanan.k (Accounts Assistant) (50 Points)

19 October 2016

Dear all, Kindly clarify my doubt regarding Tds slab rate for section 194-C. We have made payment to our contractor Rs.1,18,000 and we have deducted TDS @ 1% and remitted the tds amount on our due date. Now again for same party we are going to pay Rs.15,000. Now i have to deduct tds for him for Rs.15,000 ?. Aggregate slab is 1,00,000 in the financial year. Pls clarify my doubt. Thanks in advance.

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CA Harshal Totla (Chartered Accountant) (2229 Points)
Replied 20 October 2016

The payer has to deduct Tax at Source from the sum to be paid to the contractor or sub-contractor where;
The total sum credited or paid during the financial year exceeds Rs.1,00,000
or
Any single sum credited or paid exceeds Rs. 30,000.
The threshold limit provided is two-fold i.e. you have to check whether the individual payment is above Rs.30,000 and at the same time check whether the aggregate of sum paid to such contractor exceed or is likely to exceed Rs.1,00,000.
Since in your case, you have made a payment of Rs.1,18,000 to contractor earlier in same F.Y. hence it surpassed both the threshold limits. Now, if you make any payment to such contractor in the same F.Y. you have to deduct tds u/s 194C.

Just to remind you that 1% tds rate is applicable where contractor is individual or HUF and in other cases it is 2%.

Regards

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