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TDS under 194/C

Harshal (Article Assistant ) (182 Points)

04 December 2009

Dear all,

I have a querry...

As per Section 194C one has to deduct TDS when Rs. 20000 exceeds in a bill or Rs. 50000 exceeds in year...

Now we have 2 bills from d party...

1. Rs. 22000, so in dis bill TDS vl b deducted...

2. Rs. 14000, Here my question is dat is it required to deduct TDS here...

There are no more transactions with d party concerned in d relevant previous year...

Pls Reply and yeah thanks in advance....

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5 Replies

(Guest)

Yes, you should be deduct TDS on both of the bills.

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Max Payne (employed) (2569 Points)
Replied 04 December 2009

Yup, TDS will be attracted....

If any credit/payment attracts TDS, then other payments/credits following also will be liable to TDS.

194C. (1) Any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a specified person shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to

(i) one per cent where the payment is being made or credit is being given to an individual or a Hindu undivided family;

(ii) two per cent where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family,

of such sum as income-tax on income comprised therein.

194C(5) - 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.

Selvakumar Selvaraj (Chartered Accountant) (1386 Points)
Replied 05 December 2009

You have to deduct tax on Rs.22000/- at the prescribed rates but for Rs.14000/- you need not to be deduct so provided during the financial year the amount to the payee shall not exceed Rs.50000/- in total, if exceeds then the entire amount is subject to TDS

Sunil (Trader) (2611 Points)
Replied 05 December 2009

If the two contracts are different, then you deduct on the one for Rs.22000 and you deduct the next TDS if another contract exceeds 20000 or aggregate in the year exceeds 50000. In the latter, you will have to ensure that all of the amount is subject to TDS excluding the payments on which TDS has been applied.