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Any person responsible
for paying any sum to any resident 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 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:-
·
1%
where the payment is being made or credit is being given to an individual or a
HUF.
·
2%
where the payment is being made or credit is being given to other than an
individual or a HUF.
Where any sum referred
to in sub sec. 1 is credited to any account, whether called suspense account or
by any other name, in the books of accounts of the person liable to pay such
income, such crediting shall deemed to be credit of such income to the account
of the payee and the provision of the sec. shall apply accordingly.
Specified person
includes (who is responsible to deduct tax u/s
194c):-
·
The central govt. or
state govt.
·
Any local
body
·
Any corporation
established by or under a CG or state govt.
·
Any company
·
Any authority,
constituted in India by or under any law, engaged either for the purpose
of dealing with and satisfying the need for housing accommodation or for the
purpose of planning, developing or improvement of cities, towns, villages or
both
·
Any society registered
under society act 1860
·
Any trust
·
Any university
established or incorporated by or CG or state or provincial act and
institution declared to be a university under sec 3 of the university
commission act 1956
·
Any government of a
foreign state or foreign enterprise or any association or body established
outside India
·
Any firm
·
Any person, being an
individual or a HUF or AOP or BOI
The specified persons
are liable to audit of accounts under clause (a) or (b) of sec 44AB during the
FY immediately preceding the FY in which such sum is credited or paid to the
account of the contractor.
IMPT note:-
Contract shall include
the sub- contract.
Work shall
include:-
·
Advertisement
·
Broadcasting and
telecasting
·
Carriage of goods or
passengers by any mode of transport other than by railways
·
Catering
·
Manufacturing or
supplying a product according to the requirement or specification of a customers
by using material purchased from such customer.
Work does not
include manufacturing or supplying a product according to the
requirement or specification of a customer by using material purchased from
other than such customer.
Contract of sale shall
not be covered under sec 194c. Purchase of advertisement material from a person
without supplying any material used in preparation of said material shall be a
contract for sale.
Under such
circumstances TDS u/s 194c is not deducted:-
·
Where single payment
does not exceeds Rs. 30000/-
·
Where the aggregate
payment does not exceeds Rs. 75000/-
·
In
case where TDS u/s 194C is not deductible, if the transporter provides it’s PAN
No.
·
In
case, where Payee applied in form 13 to AO for non-deduction, being his taxable
income including rent below tax limit, and has obtained certificate
thereof.
No payment are made to
non-resident contractor would come within the preview of this
section.
The provision of this
sec. shall not apply to franchise agreement as under franchise agreement, their
consist a mutual obligations and rights.
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