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of <h1>New Section 194C: 2% Tax Deduction on Contractor Payments, Excludes Goods/Services Contracts, Effective June 1, 1972.</h1> The circular issued by the Government of India outlines the introduction of Section 194C in the Income-tax Act, 1961, effective from June 1, 1972. It mandates a 2% income tax deduction at source from payments made to resident contractors by specified entities, including government bodies and corporations, for work or labor contracts. Contractors must also deduct 1% from payments to sub-contractors. The circular clarifies that these provisions do not apply to contracts for the sale of goods or professional services. The deduction is based on the gross payment unless specified otherwise in the contract. Contractors and sub-contractors can apply for a lower deduction rate.
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