Section 194C – An Overview
Section 194C of the Income Tax Act, 1961 is a provision that deals with the Tax Deducted at Source (TDS) on payments made to contractors and subcontractors. This provision is applicable to all taxpayers who are required to deduct tax at source while making payments to contractors or subcontractors for carrying out any work or for providing any services.
TDS Rate Under Section 194C
As per section 194C, any person making payment to a contractor or subcontractor for carrying out any work or for providing any services is required to deduct TDS at the rate of 1% if the payment exceeds Rs. 30,000. However, if the contractor or subcontractor is a transport operator and owns less than ten goods carriage, the TDS rate would be 2%.
Due Date for TDS Deposit and Filing of TDS Return
It is important to note that the TDS deducted under section 194C needs to be deposited to the government by the 7th of the following month in which the deduction was made. The TDS amount can be deposited either through online banking or by visiting authorized banks.
Apart from TDS deduction and deposit, the person making the payment is also required to file a quarterly TDS return in Form 26Q. The due date for filing the TDS return is the 31st of the following month in which the quarter ends.
Applicability of Section 19
4CThe provisions of section 194C are applicable to various types of contractors and subcontractors such as advertising contractors, catering contractors, transporters, courier agencies, and event managers, to name a few.
Penalties and Interest for Non-Compliance
In case of non-compliance with the provisions of this section, penalties and interest may be levied on the taxpayer. It is important for taxpayers to keep track of their TDS deduction and deposit, as well as their TDS returns, to avoid any penalties or interest.
Correct PAN and Other Details of Contractors and Subcontractors
Taxpayers should ensure that they have the correct PAN and other details of the contractors and subcontractors to avoid any errors or discrepancies. They should also maintain proper records of TDS deducted and deposited, as well as TDS returns filed.
Conclusion
Section 194C of the Income Tax Act, 1961 is an important provision for taxpayers who make payments to contractors and subcontractors. The TDS deduction and deposit, as well as the filing of TDS returns, need to be done diligently and accurately to avoid any legal consequences. Therefore, taxpayers should be aware of the provisions of this section and comply with them to avoid any penalties or interest.
Read more useful content:
- section 145 of income tax act
- section 10e of income tax act
- section 9 of the income tax act
- section 94b of income tax act
- section 206aa of income tax act
Frequently Asked Questions (FAQs)
Who is liable to deduct TDS under section 194C?
Any person who makes payment to a contractor or a subcontractor for carrying out any work or for providing any services is liable to deduct TDS under section 194C.
What is the TDS rate under section 194C?
The TDS rate under section 194C is 1% if the payment made to the contractor or subcontractor exceeds Rs. 30,000. However, if the contractor or subcontractor is a transport operator and owns less than ten goods carriage, the TDS rate would be 2%.
What is the due date for depositing TDS under section 194C?
The TDS deducted under section 194C needs to be deposited to the government by the 7th of the following month in which the deduction was made.
What is the due date for filing TDS return under section 194C?
The due date for filing the TDS return in Form 26Q under section 194C is the 31st of the following month in which the quarter ends.
What types of contractors and subcontractors are covered under section 194C?
The provisions of section 194C are applicable to various types of contractors and subcontractors such as advertising contractors, catering contractors, transporters, courier agencies, and event managers, to name a few.
What happens if the taxpayer fails to comply with the provisions of section 194C?
In case of non-compliance with the provisions of section 194C, penalties and interest may be levied on the taxpayer.
Is it necessary to maintain records of TDS deducted and deposited under section 194C?
Yes, taxpayers should maintain proper records of TDS deducted and deposited, as well as TDS returns filed under section 194C.
Is it important to have the correct PAN and other details of contractors and subcontractors under section 194C?
Yes, taxpayers should ensure that they have the correct PAN and other details of the contractors and subcontractors to avoid any errors or discrepancies under section 194C.
