Student
308 Points
Posted on 26 December 2015
Agreed that the nature of billing is crucial here, but in order to deduct TDS u/s 194C, contract between the parties plays a vital role. Kindly refer to the below text.
Section 194C (1) reads as-
Any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a specified person shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to—
(i) one per cent where the payment is being made or credit is being given to an individual or a Hindu undivided family;
(ii) two per cent where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family,
of such sum as income-tax on income comprised therein.
Hence, existence of contract is one of the condition to deduct tax at source u/s 194C.