TDS Section 194C
Definition
The Indian income-tax provision requiring tax to be deducted at source on payments to contractors and sub-contractors for carrying out work, including supply of labour. Different rates apply to individuals/HUF and to other entities, and small single and annual aggregate payments are outside its scope.
Why it matters
Contractor payments are among the most common TDS triggers for businesses. Deducting under the wrong section or missing the threshold leads to disallowed expenses and interest on short deduction.
Common questions
Does 194C apply to all contractor payments?
It applies to payments for work under a contract above the prescribed single-payment and annual-aggregate thresholds. The current limits and rates should be confirmed for the year of payment.
Related Terms in India GST
TDS Section 194J
The provision for deducting tax at source on fees for professional or technical services, royalty and certain other payments in India. A lower rate typically applies to technical-service fees than to professional fees, subject to the prescribed threshold.
TDS Section 194H
The provision for deducting tax at source on commission or brokerage payments in India, other than insurance commission. A threshold applies below which no deduction is required.
TDS Section 194I
The provision for deducting tax at source on rent paid in India above a prescribed annual threshold. Separate rates apply to rent for plant and machinery and to rent for land, buildings or furniture.
TDS Section 194Q
The provision requiring a buyer with turnover above a prescribed limit to deduct tax at source on purchases of goods from a resident seller beyond an annual value threshold. It interacts with the seller's TCS obligation under 206C(1H), with rules on which applies.
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