Deduction of income-tax at source from works and labour contract payments, with specified withholding, timing and compliance rules. Section 194C requires persons making payments for carrying out work or supplying labour under contracts with the Central or State Governments, local authorities, statutory corporations or companies to deduct tax at source: two percent from payments by a specified person to resident contractors, and one percent where a contractor (other than an individual or HUF) pays a resident sub-contractor. Deduction is made at credit or payment (earlier), relates to gross or net payment as determined by contract terms, and is subject to threshold, rounding, deposit and certificate procedures prescribed by the rules.