TDS on contractor payment rate rules limit provisions 2012-2013 :- SECTION 194C -Deduction of tax at source – Payment to contractors. This is post I like to cover most of the important concepts about TDS on contractor payment, rate , TDS Rules , limit and TDS provisions under income tax act 1961. You can claim TDS on contractors and sub-contractors u/s 194C .Section substituted w.e.f. 01.10.2009, by the Finance (No.2) Act, 2009
If a person is appointed as contractual basis instead of direct employment, TDS will be deducted u/s 194C. Payments to resident contractors and subcontractors (section 194C): According to income tax Act, If any contract value exceeds Rs 30,000 or Rs. 50,000 in the aggregate during the financial year , you must deduct TDS at 2.06% of the payment if payment to contractor (for contracts other than advertising contracts) and 1.03% for the advertising contracts and 1.03% for sub-contractor. (Exception: Individuals and HUF whose sales/gross receipts in business is less than Rs 40 lacs or professional receipts is less than Rs 10 lac are not required to deduct the TDS). Surcharge rate is 0.2% for contractor (other than advertising contracts) and 0.1% for sub-contractor and advertising.
TDS ON CONTRACTORS – SECTION 194C
Nature: Payment of any sum to resident contractor ( In any respect of any work including supply of labour for carrying out of any work).
Rate of TDS: In case of Individuals or HUF -1% other than Individual and HUF-2%.