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Thresh hold limit of tds u/s 194c

CA Devanand Jethanandani (CA) (8003 Points)

29 May 2014

Whether the thresh hold limit of TDS u/s 194C is Rs.30,000/- per individual contract or per bill ?

Example,

If individual contract is for Rs.48,000 p.a., but billing happens quarterly Rs.12,000 per quarter, whether TDS will be applicable in this case ??

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15 Replies

Tribhuvan Aditya Singh (Student as well as Self-employed) (3710 Points)
Replied 29 May 2014

u/s 194c tds is required to be deducted when payment is in excess of 30000 in case of single payment or 75000 in case of aggregate of payments during the year.

CA Devanand Jethanandani (CA) (8003 Points)
Replied 30 May 2014

Hi Tribhuvan,

Thanks for your reply.

Can you please further clarify, that you mean to say TDS will not be applicable if single payment does not exceed Rs.30000 (aggregate not exceeding 75000) even though single contract amount exceeds Rs.30000 but less than 75000, am I right ??

Thanks

Tribhuvan Aditya Singh (Student as well as Self-employed) (3710 Points)
Replied 30 May 2014

by word "payment" i meant to say contract. payment can be any no. of times but if the contract amt. is in excess of 30000 or 75000 (as the case may be), you are reqd. to deduct tds. i am sorry for the confusion created.

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Lalit Sangani (M.Com. Asst. Manager Account) (731 Points)
Replied 30 May 2014

as the condition said by Mr. Devanand TDS should not be deducted, in their case neither single payment is exceeds of Rs.30000/- nor agreegate payment exceeds of Rs. 75000/- P.A.

akanksha (CA Final Student) (325 Points)
Replied 30 May 2014

Lalit Sangani Sir,

It means that if single contract value is more that 30000.00 then no TDS is to be deducted since payment is done in parts but if this payment in parts in aggregate is more than 70000 then tds is to be deducted on whole amount of 70000 or more as the case may be.

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Lalit Sangani (M.Com. Asst. Manager Account) (731 Points)
Replied 30 May 2014

Dear Akanksha,

I am totaly agree with you.

as example given by Mr. Devanand, in that case tds should not be deducted on the value.

"Example,

If individual contract is for Rs.48,000 p.a., but billing happens quarterly Rs.12,000 per quarter, whether TDS will be applicable in this case ??"

akanksha (CA Final Student) (325 Points)
Replied 30 May 2014

Now for example :

Payment made till 31.10.2013 is Rs 65000.00 (In parts of Rs 15000.00 so no TDS deducted)

Now on 15.11.2013 furthur Rs 15000.00 is to be paid. Now the aggregate limit of Rs 70000 is exceeding. In this case whether the assessee while making the payment of Rs 15000.00 will deduct 1% TDS on Rs 80000.00 (65000 + 15000) i.e. Rs 800 ?

TDS will be deducted on only rs 15000???

1 Like

Tribhuvan Aditya Singh (Student as well as Self-employed) (3710 Points)
Replied 30 May 2014

@ akansha... answer to your query is that tds is to be deducted on total 80000.00

Rupesh Soni (Taxation Consultant & CA final student) (493 Points)
Replied 30 May 2014

I have same Quryyy... Payement means single Bill amt or Payement made at a time???

Karan arora (Article assistant) (53 Points)
Replied 31 May 2014

U/c 194C TDS is required to be deducted when one single bill amount exceeds rs.30000.00 or aggregately amounts to more than rs.75000.00 But so far as payment is concerned then.... Payment or billing whichever is earlier. Whether one bill came whose amount exceeds rs 30000.00 or one payment goes which exceeds rs. 30000.00.... And furthur if we don't know about that in the year billing or payment exceeds rs.75000.00 then for safe side..deduct TDS from starting..otherwise penelty will be levied...

CA Lokesh Kumar Tiwari (Asst. Finance Manager) (195 Points)
Replied 31 May 2014

Dear Akanksha,

if we talk theoritically, in ur case, TDS is deductible on Rs.80000 but in practical it rarely happens.

because when we do business we most probably know that whether we are receiving any service from any vendor singlly in a year or it will be through out the year. so if we take any one time service we generally dont deduct tax if amount is less than Rs.30000 but for our regular vendors, company keeps itself on safer side and deduct TDS from very beginning irrespective of amount of the bill. means if bill if for say Rs.5000 we deduct TDS on that bill too.

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CA Santosh Dhumal (Practising CA.) (594 Points)
Replied 02 June 2014

I think we should go by bill amount. means bill is crossing Rs. 30000 TDS need to be deducted.payment to a party is just credit adjustment.

akanksha (CA Final Student) (325 Points)
Replied 02 June 2014

Thank You Ca Lokesh Kumar Tiwari Sir

I know that in practical life , we deduct tds on every bill as we are aware of future transactions.

But theoritically, please make it clear as to whether we have to take payment amount or bill amount for deduction of tds in case of single payment in a year

thank you

srinivasan (service) (898 Points)
Replied 02 June 2014

As per sub sec5 to sec 194C no tds is required only if the sum paid credited or likely to be paid or credited is less than 30000. Therefore if the contract value is in excess of 30000 is 48000, though the payments may be done in parts which is less 30000 still it will be attracted by the provision for tds. The proviso to sub sec 5 would be covering only those cases if there are many contracts where each contract is less than 30000 but aggregate of which exceeds 75000. Therefore it is not only the amount paid but likely to be paid for the transaction is to be evaluated

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