Guide to .. Tax Management ,Tax Planning and Tax Saving

Payment To Contractor And Sub-Contractor [Section 194C]

Section 194C : Payment To Contractor And Sub-Contractor

1.         Who is require deduct Tax at source ( Tax Deductor) :        Any person responsible for paying any sum to any resident contractor for carrying out any work (including supply of labor for carrying out any work) in pursuance of a contract between the contractor and following specified person.

Meaning of Specified Person

  1. The Central Government or any State Government or any local authority ; or

  2. Any PSU or any company or any co-operative society or any society and any trust ; or

  3. Any authority, constituted in India by or under any law, engaged either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning ,development or improvement of cities, towns and villages, or for both ; or

  4. Any University including a deemed university.

  5. Any Firm

Meaning of Work :    

The work shall also include ---

  1. Advertising ;

  2. Broadcasting and telecasting including production of programmes for such broadcasting or telecasting ;

  3. Carriage of goods and passengers by any mode of transport other than by railways ;

  4. Catering.

2.   When to deduct tax at source :At the time of payment or at the time of credit, whichever is earlier.

3.   What is the Rate of TDS :         Where a sum is payable to a resident contractor for –

  1. 1% where payment/credit is to an individual/HUF

  2. 2 % where recipient is any other person

# No cess and surcharge on Basic TDS rates given above on payment made to Residents .

TDS without PAN : If Pan has not been provided by the deductee, then TDS must be deducted @ 20% u/s 206AA

4.   When Tax is not required to be deducted at source :      (Cut off amount) :If the credit or the payment in pursuance of the contract does not exceed Rs.30,000/-, no deduction has to be made at source. However , if the aggregate of all amounts paid/credited or likely to be paid/credited exceeds Rs. 75,000/- then tax at source is to be deducted.

5.         Due date of Deposit: Before 7th of Next month , However if deposit by Book Adjustment by Govt department then on same day.Tax deducted in the Month of March due date is April 30th.

6.         Exemption -

    • Individual /HUF personal Purpose :No TDS to be done by an Individual or an HUF on a contractual payment of work which is for personal purposes of the individual or the HUF .
    • No TDS on Transporter :No deduction is to be made for sum credited/paid to a contractor during the course of business of plying/hiring/leasing of good/carriages on furnishing Pan to the payer/ deductor .

7.         No TDS by Individual /HUF in First year of Operation of business in any case:A sole proprietor or an individual is supposed to deduct tax under sections 194A, 194C and 194J if his books of account are required to be audited under section 44AB in the immediately preceding financial year. 

So no TDS is required to be deducted in First year of Business by Individual /HUF as there is no preceding year and books of account are not required to be audited under section 44AB in immediately preceding year.

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Application Of Seized Or Requisitioned Assets [Section132(B)]
Power Of Survey [ Section 133a ]
Provision Relating To Power To Collect Certain Information [Section 133b]
Disclosure Of Information Regarding Assessees To Certain Authorities [ Section 138 ]
Payment of Tax
Modes of recovery of Tax
Introduction- Deduction of Tax at Source (TDS)
Deduction of Tax from the “Salary” [ Sec-192]
Deduction Of Tax From Interest On Securities [ Section-193]
Deduction Of Tax From Deemed Dividend [ Section-194]
Deduction Of Tax From Interest Other Than Interest On Securities [ Section 194A]
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Winning From Horse Race [ Section 194BB]
Payment To Contractor And Sub-Contractor [ Section 194C]
Tax Deducted At Source From Insurance Commission [ Section 194D]
Payments To Non-Resident Sportsmen Or Sports Associations [ Section 194E]
Commission, Etc., On The Sale Of Lottery Tickets [Section 194G]
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Payment Of Rent [ Section 194 I ]
Fees For Professional Or Technical Services [ Section 194J]
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When Return Of Loss Should Be Filed [ Section 139(3)]
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What Is A Defective Or Incomplete Return [ Section 139(9)]
Who Should  Sign The Return Of Income [ Section 140]
Permanent Account Number (PAN)
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Methods Of Tax Planning
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The Difference Between ‘Tax Planning’ And ‘Tax Management’
The Difference Between ‘Tax Avoidance’ And ‘Tax Evasion’.
Procedure for imposing Penalty [ Sec. 274]
Various Types Of Penalties In The Event Of Default.
Salient Features Of FBT
Important Points Relating To Fringe Benefit Tax
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Classification Of Employer For FBT
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Abetment in False Return (Section 278)
Punishment of Second and Subsequent Offences (Section 278 A)
Punishment not to be imposed in certain cases (Section 278 AA)
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Transfer Of Cases [Section 245 BC]
Decision To Be Majority [Section 245 BD]
Application For Settlement Of Cases [Section 245 C]
Calculation Of Additional Income-Tax [Section 245C (1A)]
Bar On Making Application [Section 245C (1E)]
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