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Tds rate on contractual employee

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Shankar

Finance Manager

21 Points Posted on 31 August 2014

If a person giving services to a Co on contract basis 1 yr and renewal for next 1 yr after successful completion. As per contract, employer is giving 2 days earned leave in a month and deducting EPF @ Rs 1200/- p.m. Presently Co is deducting TDS @ 1% u/s 94 c . I have suggested to deduct TDS u/s 192 B " Salaries other than govt employees".

Is this is correct? In above condition which section will be imposed.

Replies (1)

Rohit Gupta

Audit Executive

209 Points Posted on 31 August 2014

Dear Shankar,

Under the provisions of section 192, any person responsible for paying any income chargeable under the head “Salaries” is required at the time of payment to deduct income-tax from the amount payable.

if the employer employee relationship is established then TDS is required to be deducted under section 192B only and not under any other section. It does not matter whether the employer employee relationship is contactual or not.

So in my opinion your advice is correct. However, litigation is possible.

Regards

Rohit Gupta

RHT1203 @ GMAIL.Com