Tds for contract employees

This query is : Resolved

Dhanashekhar K V (Querist)
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29 April 2014 Dear Seniors,

Please provide the guidelines for contract employees tds calculation methods.

1. Need to know 1 % or 10% TDS is applicable for contract employees.

2. Hope 3% cess is also applicable on Tax

Please clarify the above.

Thank you...

Nikhil Kaushik

Nikhil Kaushik (Expert)
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29 April 2014 depends.

if the contracted employee is providing professional services like, engineering, accountancy etc, deduct under 194J at 10%. other employees providing activities like unskilled labor etc, deduct under 194c.

2. no cess is not applied.

Dhanashekhar K V

Dhanashekhar K V (Querist)
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29 April 2014 Thank you Mr. Nikhil Kaushik.

Small doubt on your above reply. Hope the same 10% tds is applicable for 194C as well.

Also I have couple of doubts:
1. as per the income tax slab rates upto 2 Lac tax is nil. The same logic will apply for contract employees.

2. If contract employees earns less than 2 Lac per Annam, still need to deduct 10% tax

3. If yes, why and what is the reason for same.

Thank you.

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CA Devanand Jethanandani

CA Devanand Jethanandani (Expert)
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29 April 2014 Hi Dhanashekhar,

First the rate of TDS u/s. 194C is 1% if payee is individual or HUF and 2% for other payees.

The exemption limit of Rs.2 lac p.a. is to be considered only while deducting tax u/s. 192B (i.e. salary payment)

Hope your all doubts will be clear now.

Regards,
Devanand

Nikhil Kaushik

Nikhil Kaushik (Expert)
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29 April 2014 Devanand had covered your follow up queries...if you have further doubt, shoot it right away..

Dhanashekhar K V

Dhanashekhar K V (Querist)
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30 April 2014 Thanks Mr. Devanand for your clarifications.

Believe below is not applicable for 194J
PT & LWF

Dhanashekhar K V

Dhanashekhar K V (Querist)
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30 April 2014 Also It would be grateful if you could share the guidelines or document. Or pls let me know where could I get this guidelines

ie.,
1. Sec 194C - Engineering, Accounting - 10% Tds
2. Sec 194J - others, unskilled labour - 1% Tds

3...
4...

Thanks in advance.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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30 April 2014 reverse

others are unskilled (194C)

engineers etc 194J 10%

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Dhanashekhar K V

Dhanashekhar K V (Querist)
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30 April 2014 Ok Thanks Mr. Nikhil Noted.

Nikhil, I noticed from website is below.

194J - Professional Charges, amount limit Rs.30000/- Per Annuam, TDS rate for Individual or HUF is 10%.

My Query : If the amount exceeds more than 30K then what is the TDS percentage? why they given limit for the same.

CA Devanand Jethanandani

CA Devanand Jethanandani (Expert)
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30 April 2014 Hi Dhanashekhar,

If professional charges are upto Rs.30,000/- p.a., then there will be TDS.

TDS is to be deducted only professional charges exceeds Rs.30,000/- p.a.

Regards,
Devanand

Dhanashekhar K V

Dhanashekhar K V (Querist)
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30 April 2014 Understood Mr. Devanand and thank you soo much for your patience in responding to my queries.

Once again thanks to you and Mr.Nikhil.