According to amendment made by CBDT to the provisions related to deduction of tax at source (TDS), TDS @ 20% shall be deducted by the deductor if PAN is not provided by the deductee to the deductor.
However, according to section 194C i.e. deduction of TDS on paymnet made to contractor, if amount does not exceed Rs. 20,000 then Tax is not required to be deducted at source.
Query: Pls clarify, if payment to a contractor is less than 20000 & PAN is not provided to the deductor then is deductor required to deduct tax at source @ 20%?
03 May 2010
Payment to contractor's (for tax deduction) is covered under section 194C. But sub-section (5) says no deduction shall be made ...... if such sum does not exceed Rs. 20,000/- (now proposed to increase in the Finance Bill,2010 to Rs.35,000/-). So in the query raised, the payment is less than the threshold limit meaning thereby no TDS is required. If there is no tax deduction no need to get PAN of the deductee.
CAclubindia
