TaxTMI 
TaxTMI 
Section 194C - TDS on payment to contractors
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....(A) does not fall under any of the preceding sub-clauses (i.e. any firm); and * (B) has total sales, gross receipts or turnover from business or profession carried on by him exceeding Rs. 1 crore in case of business or Rs. 50 lakh in case of profession during the financial year immediately preceding the financial year in which such sum is credited or paid to the account of the contractor; [ w.e.f. 01.04.2020 ] * TDS deduction is not required if recipient is engaged in the business of transport i.e. plying, hiring or leasing good carriages "goods carriage" shall have the meaning assigned to it in the Explanation to section 44AE(7); * Recipient owns 10 or less goods carriages at any time during the financial year. * Recipient furnishes a declaration to this effect along with PAN. [ Section 194C(6) ] * manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer or associate of such customer; or * any sum referred to in section 194J(1). TDS Deduction in case manufacturing or supplying a product according to the requirement or specification of a....
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.... by any mode of transport other than by railways; (d) catering; (e) manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer or its associate, being a person placed similarly in relation to such customer as is the person placed in relation to the assessee under the provisions contained in section 40A(2)(b); Where any sum is paid or credited for carrying out any work, tax shall be deducted at source- (i) on the invoice value excluding the value of material, if such value is mentioned separately in the invoice; or (ii) on the whole of the invoice value, if the value of material is not mentioned separately in the invoice. but does not include (A) manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer or associate of such customer; or (B) any sum referred to in section 194J(1). (c) Meaning of Contract - "contract" shall include sub-contract; Provision of payment and tax deducted at source to transporters * No deduction shall be made from the sum credited to the ac....
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....Account Number (PAN) is ..........I hereby enclose a self-attested photocopy of my PAN Card. ................................. Signature of the person making declaration Place:" 43.8 It may be mentioned here that the person responsible for paying to transporter is required to report the particulars of payment made to transporters without deduction of tax in compliance to the provision of section 194C(6) of the Income-tax Act in the statement of deduction of tax (Form 26Q) as per the provision of rule 31A(4)(vi) of the Income-tax Rules, 1962. Non-furnishing or incomplete furnishing of this information shall make the deductor liable for penalty as per the provision of section 271H of the Income-tax Act. Important case laws * whether outsourcing the manufacture of goods, is a contract or purchase of goods transaction? [ DCIT Vs Reebok India Company, 2005 (11) TMI 202 - ITAT DELHI ] * Applicability of TDS provisions on payments by the transporter to truck operator or owners for hiring the vehicles. [ Shree Choudhary Transport Co. Vs ITO 2020 (8) TMI 23 - SC ] Important Circulars and notifications * TDS on Goods and ser....
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....ll as transports the gas to the purchaser till the point of delivery, where the ownership of gas to the purchaser is simultaneously transferred, the manner of raising the sale bill (whether the transportation charges are embedded in the cost of gas or shown separately) does not alter the basic nature of such contract which remains essentially a 'contract for sale' and not a 'works contract' as envisaged in section 194C of the Act. Hence in such circumstances, provisions of Chapter XVII-B of the Act are not applicable on the component of Gas Transportation Charges paid by the purchaser to the Owner/Seller of the gas. The use of different modes of transportation of gas by Owner/Seller will not alter the position. * However, transportation charges paid to a third party transporter of gas, either by the Owner/Seller of the gas or purchaser of the gas or any other person, shall continue to be governed by the appropriate provisions of the Act and TDS shall be deductible on such payment to the third party at the applicable rates. * Clarification on applicability of provisions of Section 194C or 194I to payments made by the customers on ac....
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....e principal. Accordingly, the provisions of section 172 shall apply and those of sections 194C and 195 will not apply. * It has been pointed out that the sums paid for carrying out work of advertising are being subjected to deduction of tax at source under section 194C as payment for work contract as also under section 194J as payments of fees for professional services. [ Circular no. 720 dated 30.08.1995 ] * It is hereby clarified that each section, regarding TDS under Chapter XVII, deals with a particular kind of payment to the exclusion of all other sections in this Chapter. Thus, payment of any sum shall be liable for deduction of tax only under one section. Therefore, a payment is liable for tax deduction only under one section. * Clarification on various provisions relating to tax deduction at source such doubts clarify by issuing a public circular in the form of question answer. [ Circular no. 715 dated 08.08.1995 ] * The expression "work" has been defined, inter alia, to also include (a) advertising; (b) broadcasting and telecasting including production of programmes for such broadcasting and telecasting. According to the amended pro....
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....stion No.5 in Board's Circular No.98, dated September 26, 1972, stand modified. * Deduction from payments to contractors and sub-contractors in bidi manufacturing industry. [ Circular no. 487 dated 08.06.1987 ] * Provisions of section 194C would apply in respect of payments made to Munshis and that would apply to payments under oral contracts also. The payments to Munshis which would be hit by the provisions of section 194C covered not only the payments to them for raw material but also the payments to the workers. * Whether the provisions of section 194C of the Income-tax Act, 1961, to the payments made in respect of the works executed under the National Rural Employment Programme (NREP) and Rural Landless Employment Guarantee Programme (RLEGP). [ Circular No. 502 dated 27.01.1988 ] * The programmes under the National Rural Employment Programme (NREP) and Rural Landless Employment Guarantee Programme (RLEGP) are implemented with active participation from local communities and Panchayati Raj institutions, under the direct supervision of the State Governments, in accordance with the guidelines set by the Central Government. There is no contractual relationship between th....