Section 194C of the Income Tax Act deals with the tax deducted at source (TDS) that is required to be deducted from any payments made to a resident contractor or a subcontractor. Do not worry if you have no idea about Section 194C TDS, This article will provide all the information related to the purpose of section 194C for Contractors and Sub-contractors, and other related information on TDS under Section 194C of the Income Tax Act.
According to Section 194C of the Income Tax Act, any person making a payment to a resident person who is carrying out any “work” under the terms of the contract between specified person and the resident contractor is required to deduct TDS (Tax Deducted at Source).
The term specified person refers to the following:
The term Work refers to the following:
Note: The GST (Goods and Service Tax) component should not be subject to taxation.
According to the provisions of the Income Tax Act, any person (whether a contractor or a Hindu Undivided Family):
Important Note: Surcharges, education Cess, and SHEC (Secondary and Higher Education Cess) will not be imposed on taxpayers. TDS should be deducted at the standard rate.
TDS certificates in Form 16A must be issued quarterly for payments other than salary. According to Rule 31, anyone who is responsible for deducting tax from payments other than salary must issue a quarterly TDS certificate in Form 16A. The certificate is due on the following dates:
Quarter |
For government deductor |
For Non-government deductor |
April – June |
August 15th |
July 30th |
July – September |
November 15th |
October 30th |
October – December |
February 30th |
January 30th |
January – March |
May 30th |
May 30th |
TDS should be deducted from the invoice amount, excluding all other taxes such as GST.
If the payment to the contractor is less than INR 30,000, no TDS is required to be deducted. TDS must be deducted under Section 194C if the total of all such payments made or to be made during a fiscal year exceeds INR 1,000,000.
Only payments to resident contractors or subcontractors are covered by Section 194C. TDS on payments made to non-resident contractors will be governed by Section 195.
Realistic LLC Formation Costs in the US for Indian Entrepreneurs Introduction Starting an LLC in the US as an Indian…
LLC Annual Compliance: Mistakes Indian Entrepreneurs Commonly Make in the US Introduction Starting an LLC and registering it with the…
LLC Benefits in the US That Indian Companies Often Overlook Introduction Starting a business in the United States is a…
Compliance Calendar for the Month of August 2025 As we step into August 2025, it’s important for businesses, professionals, and…
LUT Renewal FY 2025-26: GST Exporter's Checklist Introduction If you're an exporter in India, you need to submit a Letter…
Cross-Border Compliance: Global Business Regulations Introduction Taking your business international can open exciting opportunities. But with that growth comes the…
Leave a Comment