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of <h1>Tax Deduction Rules for Contractors: Section 194C Details 2% Rate, Exceptions, and Compliance Obligations.</h1> The circular provides instructions on the deduction of tax at source under Section 194C of the Income-tax Act, 1961, applicable to payments made to contractors and sub-contractors. It mandates a 2% tax deduction for contractors and 1% for sub-contractors, with additional surcharges for non-corporate residents and domestic companies. No deduction is required for contracts under Rs. 10,000. It outlines the responsibilities for timely tax payment, issuance of TDS certificates, obtaining TAN, and filing annual returns. Penalties apply for non-compliance. The circular emphasizes the natural interpretation of 'any work' and provides guidance for obtaining lower tax deduction certificates.
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