{"id":331,"date":"2024-07-01T15:36:16","date_gmt":"2024-07-01T10:06:16","guid":{"rendered":"https:\/\/www.caclubindia.com\/guide\/?p=331"},"modified":"2025-06-26T15:57:06","modified_gmt":"2025-06-26T10:27:06","slug":"tds-on-contractor","status":"publish","type":"post","link":"https:\/\/www.caclubindia.com\/guide\/tds-on-contractor\/","title":{"rendered":"TDS on Contractor: Key Insights into Section 94C of IT Act"},"content":{"rendered":"\n<p>TDS on Contractor is a tax mechanism where the payer deducts a certain percentage as tax when making payments to contractors and remits it to the government on behalf of the contractor.<\/p>\n\n\n\n<p>Under Section 194C of the Income Tax Act 1961, the various rules and regulations regarding tax deduction at source on payments made to contractors or subcontractors are laid down.<\/p>\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" title=\"TDS on contractor\" src=\"https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/07\/tds-on-contractor-1024x538.png\" alt=\"TDS on contractor\" \/><\/figure>\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\r\n<div class=\"ez-toc-title-container\">\r\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\r\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\r\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-contractor\/#Section_194C\" >Section 194C<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-contractor\/#Persons_that_are_responsible_for_deducting_tax_under_Section_194C\" >Persons that are responsible for deducting tax under Section 194C<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-contractor\/#Contractor_and_Sub-contractor\" >Contractor and Sub-contractor<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-contractor\/#Works_contracts_that_qualify_for_the_deduction_of_TDS_under_Section_194C\" >Works contracts that qualify for the deduction of TDS under Section 194C<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-contractor\/#When_to_deduct_TDS\" >When to deduct TDS<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-contractor\/#Rates_of_TDS_for_Contractors\" >Rates of TDS for Contractors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-contractor\/#Threshold_limit_for_deduction_of_tax_at_source_under_Section_194C\" >Threshold limit for deduction of tax at source under Section 194C<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-contractor\/#Time_limit_for_deposit_of_the_Tax_Deducted_at_Source\" >Time limit for deposit of the Tax Deducted at Source<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-contractor\/#Due_Date_for_filing_TDS_returns\" >Due Date for filing TDS returns<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-contractor\/#Due_Date_for_the_Issue_of_TDS_Certificate\" >Due Date for the Issue of TDS Certificate<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-contractor\/#Cases_where_TDS_for_contractors_is_not_required\" >Cases where TDS for contractors is not required<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-contractor\/#FAQs\" >FAQs<\/a><\/li><\/ul><\/nav><\/div>\r\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Section_194C\"><\/span>Section 194C<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Let us understand the following elements of Section 194C:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Persons_that_are_responsible_for_deducting_tax_under_Section_194C\"><\/span>Persons that are responsible for deducting tax under Section 194C<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Central Government or any State Government.<\/li>\n\n\n\n<li>Any Local Authority.<\/li>\n\n\n\n<li>Any Statutory Corporation.<\/li>\n\n\n\n<li>Any Corporation established under a Central, State or Provincial Act.<\/li>\n\n\n\n<li>Any Company, whether listed on a recognised stock exchange or not.<\/li>\n\n\n\n<li>Any co-operative society.<\/li>\n\n\n\n<li>Any society registered under the Societies Registration Act, 1860 or under any similar laws.<\/li>\n\n\n\n<li>Any authority established under the law for managing and developing municipal, panchayat or other local funds to meet the needs of housing accommodation or that of planning development or improvement of cities, towns or villages.<\/li>\n\n\n\n<li>Any firm.<\/li>\n\n\n\n<li>Any trust constituted for charitable or religious purposes.<\/li>\n\n\n\n<li>Any University deemed or otherwise.<\/li>\n\n\n\n<li>Any government of a foreign state or foreign enterprise or any association or body established outside the Indian frontiers.<\/li>\n\n\n\n<li>Any person being an individual, HUF, AOP or BOI having total sales from business exceeding 1 crore or total receipts from profession exceeding 50 lakh during the previous financial year.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Contractor_and_Sub-contractor\"><\/span>Contractor and Sub-contractor<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A contractor is engaged in any work including supply of labour for carrying out any work. <\/p>\n\n\n\n<p>A sub-contractor is engaged by the contractor to execute a part or whole of the work that has been undertaken by the contractor. <\/p>\n\n\n\n<p>The sub-contractor is hired by the main contractor to perform part or whole of the work that is originally undertaken by the main contractor.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Works_contracts_that_qualify_for_the_deduction_of_TDS_under_Section_194C\"><\/span>Works contracts that qualify for the deduction of TDS under Section 194C<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Advertising services.<\/li>\n\n\n\n<li>Carriage of goods and passengers by any mode other than railways.<\/li>\n\n\n\n<li>Catering services.<\/li>\n\n\n\n<li>Manufacture and supply of products to the customer using materials provided by such customer as defined under Section 40A(2). This doesn\u2019t include the manufacture or supply of a product according to the specifications of a customer by using the materials purchased from a person who is not the customer.<\/li>\n\n\n\n<li>Supply of labour for works contract.<\/li>\n\n\n\n<li>Broadcasting and telecasting services including the production of programs of such broadcasting or telecasting.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"When_to_deduct_TDS\"><\/span>When to deduct TDS <span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>TDS is to be deducted at the time of credit of such sum to the payee\u2019s account or at the time of payment whichever is earlier. <\/p>\n\n\n\n<p>The meaning of credit to the payee\u2019s account in the books of account of the payer can mean an account under the name \u2018Suspense account\u2019 or any other name, when credited with the sum shall be considered.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Rates_of_TDS_for_Contractors\"><\/span>Rates of TDS for Contractors<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>1% where the payment is being made or credit is being given to a resident individual or HUF.<\/li>\n\n\n\n<li>2% where the payment is being made or credit is given to any other resident entity, other than a resident individual or HUF.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Threshold_limit_for_deduction_of_tax_at_source_under_Section_194C\"><\/span>Threshold limit for deduction of tax at source under Section 194C<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>No TDS is required to be done if the payment for the contract does not exceed \u20b9 30,000.<\/li>\n\n\n\n<li>TDS is to be deducted if the payments to contractors exceed \u20b9 30,000 in a single payment or \u20b9 1,00,000 in aggregate during the financial year.<\/li>\n\n\n\n<li>TDS is to be deducted if either of the above is met. So TDS shall be deducted even if a single payment does not exceed \u20b9 30,000 as long as the aggregate payments made to the contractors in the financial year exceeds \u20b9 1,00,000.<\/li>\n<\/ul>\n\n\n\n<p><strong>Note : <\/strong>While deducting the tax, the GST component is to be ignored, i.e., no TDS on the GST component.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Time_limit_for_deposit_of_the_Tax_Deducted_at_Source\"><\/span>Time limit for deposit of the Tax Deducted at Source<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Payment made by or on behalf of the Government &#8211; tax to be deposited on the same day.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>In any other case &#8211;<\/li>\n<\/ul>\n\n\n\n<ol class=\"wp-block-list\">\n<li>The amount credited in March &#8211; tax to be credited on or before April 30th.<\/li>\n\n\n\n<li>In other months &#8211; tax is to be credited within 7 days from the end of the month in which the deduction is made.<\/li>\n<\/ol>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Due_Date_for_filing_TDS_returns\"><\/span>Due Date for filing TDS returns<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Quarter<\/strong><\/td><td><strong>Due Date<\/strong><\/td><\/tr><tr><td>April to June<\/td><td>31st July<\/td><\/tr><tr><td>July to September<\/td><td>31st October<\/td><\/tr><tr><td>October to December<\/td><td>31st January<\/td><\/tr><tr><td>January to March<\/td><td>31st May<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Due_Date_for_the_Issue_of_TDS_Certificate\"><\/span>Due Date for the Issue of TDS Certificate<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Quarter<\/strong><\/td><td><strong>Government Deductor<\/strong><\/td><td><strong>Non-Government Deductor<\/strong><\/td><\/tr><tr><td>April to June<\/td><td>15th August<\/td><td>30th July<\/td><\/tr><tr><td>July to September<\/td><td>15th November<\/td><td>30th October<\/td><\/tr><tr><td>October to December<\/td><td>15th February<\/td><td>30th January<\/td><\/tr><tr><td>January to March<\/td><td>30th May<\/td><td>30th May<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Cases_where_TDS_for_contractors_is_not_required\"><\/span>Cases where TDS for contractors is not required<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>TDS under Section 194C is not required to be deducted if the payment for one single payment doesn\u2019t exceed \u20b9 30,000 or \u20b9 1,00,000 in aggregate during a financial year.<\/li>\n\n\n\n<li>TDS on payments to transport operators is not required when the transporter is a person who is engaged in plying, leasing or hiring of goods carriages. This is only applicable if the transporter does not own more than 10 goods carriage vehicles during the financial year. For this exemption to be availed, the transporter has to furnish his PAN.<\/li>\n\n\n\n<li>Payments made by an individual or HUF to a resident contractor are not subject to TDS under section 194C if the payments are made for personal purposes. Example: hiring a contractor to renovate your house, section 194C shall not be attracted.<\/li>\n<\/ul>\n\n\n\n<p><strong>F&amp;O: Taxation for Futures &amp; Options Traders <a href=\"https:\/\/www.caclubindia.com\/guide\/f-and-o\/\">Click Here<\/a><\/strong><\/p>\n\n\n\n<p><strong>Senior Citizen Savings Scheme: Smart Choice for Retirees <a href=\"https:\/\/www.caclubindia.com\/guide\/senior-citizen-savings-scheme\/\">Click Here<\/a><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span>FAQs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1719826711971\"><strong class=\"schema-faq-question\">What is the limit of TDS 194C?<\/strong> <p class=\"schema-faq-answer\">The threshold limit for the deduction of TDS is if payments to a contractor more than Rs. 30,000 in a single transaction or Rs. 1,00,000 in total during a financial year.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1719826722999\"><strong class=\"schema-faq-question\">How to calculate TDS?<\/strong> <p class=\"schema-faq-answer\">For example &#8211; If the total amount paid or credited to the contractor (individual) during the financial year is 1,50,000. Then, TDS of Rs. 1,500 (1,50,000 @ 1%) would be deducted and remitted to the government<\/p> <\/div> <\/div>\n","protected":false},"excerpt":{"rendered":"<p>TDS on Contractor is a tax mechanism where the payer deducts a certain percentage as tax when making payments to [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":334,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center 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center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[4],"tags":[],"class_list":["post-331","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-income-tax"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\r\n<title>TDS on Contractor: Key Insights into Section 94C of IT Act - Tax Guide<\/title>\r\n<meta name=\"description\" content=\"TDS on contractor involves deducting a specified percentage of tax from payments which made to the contractors as per income tax laws.\" \/>\r\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\r\n<link rel=\"canonical\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-contractor\/\" \/>\r\n<meta 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