TDS will attract on Bonus payment to labor contractor

[Guest]

Dear Sir,

Our labor contracts are raised bill for payment of bonus for financial year 14-15.

In this bill should we deduct TDS or not.

If yes on which ground please clarify.

Regards

Swapneswar Muduli

[Ganeshan Kalyani]

Tds is deductible under 94C @1% if contractor is individual/Huf and 2% in case other than individual/Huf.

[vikram agarwal]

u/s 194C of Income Tax Act 1961 said that any person responsible for paying any sum to any resident for carring out any work in pursuance of a contract, at the time of credit such sum to the account of th contract or at the time of payment by cash /cheque / any other mode, whichever is eariler, deduct an amount equal to - 1% in case of payment to Individual or HUF and 2% other than an individual or HUF

as explained above there is clear say if your credit such any amount we have to deducted TDS except reimbursement of expenses subject to proof of document like train and air ticket.

AI Summary

TDS Deduction on Contractor Bonuses Explained: Section 194C Requires 1% for Individuals, 2% for Others, Excludes Reimbursements. A labor contractor raised a bill for bonus payment for the financial year 2014-15, prompting a query about whether Tax Deducted at Source (TDS) should be applied. Responses clarified that under Section 194C of the Income Tax Act 1961, TDS is deductible at 1% if the contractor is an individual or Hindu Undivided Family (HUF), and at 2% for others. TDS should be deducted at the time of credit or payment, except for documented expense reimbursements like train or air tickets.