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TDS u/s 194C payment to Contractors

Akanksha Srivastava (CA Final) (38 Points)

09 September 2009

Following is the series of payment to Contracyor-

02.04.2008 - Rs.10000
15.05.2008- Rs.20000
10.06.2008 - Rs 10000
25.06.2008- Rs 12000

On which Amt Tax should be deducted on aggregate Rs.52000 or Rs.12000 By the Assessee?

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21 Replies

ashish gupta ( student) (1922 Points)
Replied 09 September 2009

Tax will b deducted on aggregate Rs. 52000

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aurangzaib khan (financial consultant) (95 Points)
Replied 09 September 2009

as per U/s 194C deductor will deduct Tax either at the time of payment or at the time of due, whichever is earlier subject to threshhold limits. Threshhold limit are as follows:- 1- total payment under contract likely to exceeds Rs. 20000/- 2- total aggregate amount likely to exceeds Rs. 50000/- therfore total payment amount is more than specified limits. hence TDS will be deducted at full amount.

(Guest)

As per Section 194C:-No deduction shall be made from the amount of any sum credited or paid or likely to be credited or paid to the account of, or to, the contractor, if such sum does not exceed twenty thousand rupees :

Provided that where the aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year exceeds fifty thousand rupees, the person responsible for paying such sums referred to in sub-section (1) shall be liable to deduct income-tax under this section.

So on total amount of Rs.52000 TDS shall be done.

VARUN (PCC STUDENT) (523 Points)
Replied 09 September 2009

TDS shall be made on Rs. 52000/-

CA CS Amit Borade (Chief Accountant) (2828 Points)
Replied 09 September 2009

Hi Akankash, Tax shoud be deducted on Rs. 52000 on 25.06.2008.

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Akanksha Srivastava (CA Final) (38 Points)
Replied 09 September 2009

Thnks for the answers...

but i m nt satisfied with given answers?

my query is that why we deduct tax on back date payment wen it was not exceeding the prescribed limit Rs 50000.

aurangzaib khan (financial consultant) (95 Points)
Replied 09 September 2009

because u/s 194C when total amount likely to exceeds during that year. it means if any deductor assume total amount of contract will be more than prescribe limit, then from the begining payment is liable to deduct as TDS

Ratan Deep Saxena (Asstt Manager (Accounts & Finance)) (2998 Points)
Replied 09 September 2009

as per section 194C of the income tax act, 1961 tax to be deducted on any single payment made to the contractor of Rs. 20000 or collectively Rs. 50000 during the year. as per ur query, collectively the amt paid to contractor exceeds Rs.50000, on 25.06.08. Hence u hav to deduct tax on Rs.52000/- . Alternatively ,for compliance of tax law u may deduct tax on payment to payment basis without waiting for crossing the said limit of Rs. 20000 or Rs. 50000.

regards,

ratan