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As per section 194C
TDS is to be deducted on Contractors at 1% in case of (Individual / HUF) and Single Contract at 2% on (Partnership / Companies)
However, No TDS is to be deducted if annual expense is upto 100000 p.a. or upto 30000 single Contract per annum. If annual expense is 100001 p.a. or 30001 single Contract per annum then TDS is deducted.
From 1.6.2016
|
Section |
Description |
Cut off |
Rate of TDS |
|
Section 194C |
Payment to Contractors |
100000 p.a. or 30000 single Contract |
1 % (Individual / HUF) or 2% (Partnership / Companies) |
Changes in 194C Due to Lockdown
However,Due to Lockdown,Government has temporarily reduced Rate by 25%
hence,TDS Rate on Payment to Contractors is Changed as follows
| Current Rate | New Rate (Temporary) | ||||||||||||
| TDS on Payment to Contractors | Individual/HUF | 1% | 1%*75%=0.75% | ||||||||||
| Partnership/Companies | 2% | 2%*75%=1.5% | |||||||||||
Note - This New Rate is Temporary only if TDS Deducted form 14 May 2020 to 31 Mar 2021
After this old Rate will be applicable
What services are covered in 194C?
|
Services covered in 194C |
Services normally not covered in 194C |
|
Those services which are not falling in any section taxable under 194C Example (1) Taxi services (2) Security guard (3) House keeping (4) Printing (5) Employers on contract (blue collared) (6) Advertisement Service |
(1) Freight Service Refer Note Below (2) Utility bills [Telephone / electricity / water] If paid direct to agency no TDS |
What is the Rate of TDS under 194C?
Rate of TDS under 194C
1% = Individual / HUF
2% = All others like
(a) Companies (Pvt. Ltd.)
(b) Companies (Ltd Co.'s)
(c) Partnership
4th digit of pan to be checked
|
Fourth Digit |
Constitution |
Rate of TDS in 194C |
|
P |
Proprietor |
1% |
|
F |
Partnership |
2% |
|
C |
Company [Both private & Limited co.’s] |
2% |
Q1.
Security Guard bill received of Rs. 10000 pm. for April.
-a-
Since amount paid during year = 10000 ×12
= 120000
Since amount paid is more than 75000 p.a.
TDS under 194 C applicable
Q2.
What is the rate of TDS in Q1 If Security guard bill is paid to
|
Party name |
Pan no |
|
Rajesh |
BBUPR5192h |
|
Rajesh Private Limited |
BBUCR5192h |
|
Rajesh Limited |
BBUCR5192h |
|
Rajesh & Co. |
BBUFR5192h BBOPR5192h |
|
Rajesh Associates |
BBUFR5192h BBOPR5192h |
|
Party name |
Pan no |
Type of Deductee |
Rate of TDS under 194C |
|
Rajesh |
BBUPR5192h |
P=Proprietor |
1% |
|
Rajesh Private Limited |
BBUCR5192h |
C=Company |
2% |
|
Rajesh Limited |
BBUCR5192h |
C=Company |
2% |
|
Rajesh & Co. |
BBUFR5192h BBOPR5192h |
F=Partnership P=Proprietor |
2% 1% |
|
Rajesh Associates |
BBUFR5192h BBOPR5192h |
F=Partnership P=Proprietor |
2% 1% |
What is TDS Rate on Transport charges like Freight and Taxi?
TDS on Transport Charges
Transport is of 2 types
1,Passenger Transport (Cab Charges)
2 Goods Transport (Freight Charges/Truck Charges)
1,Passenger Transport (Cab Charges)
In this case,Section 194 C is applicable
TDS is to be deducted @ 1% if Cab Operator is Individual/Proprietorship
And 2% if Cab Operator is Partnership/Company
Goods Transport (Freight Charges/Truck Charges)
In this case,Section 194 C is applicable as follows
|
Case |
Rate of TDS |
|
If Pan Number Provided
|
No of trucks upto 10- No TDS No of trucks > 10 TDS @ 1%/2% under Section 194C
|
|
If Pan not provided |
TDS is to be deducted @ 20%
No of trucks not relevant) |
How to determine number of trucks?
The truck operator will give declaration in writing that he has x.number of trucks
If truck operator does not give declaration,then assume he has more than 10 trucks and deduct 1%/2% TDS
Whether Employees on contract are covered in 194C or 194J?
Section 194C @ 1% covers Blue collared Employees like like peon, guard, driver, delivery boy etc
Section 194J @ 10% covers White collared Employees like Accountant,Sales Executive,HR, Admin etc
Let's learn the Employees on contract covered in 194C and 194J in detail- Click Here
