{"id":6115,"date":"2021-07-30T23:56:36","date_gmt":"2021-07-30T18:26:36","guid":{"rendered":"https:\/\/razorpay.com\/blog\/?p=6115"},"modified":"2025-01-03T16:07:39","modified_gmt":"2025-01-03T10:37:39","slug":"section-194c-tds-guide-contractor-payments","status":"publish","type":"post","link":"https:\/\/razorpay.com\/blog\/business-banking\/section-194c-tds-guide-contractor-payments\/","title":{"rendered":"Section 194C: A Comprehensive TDS Guide on Contractor Payments"},"content":{"rendered":"<p>Tax Deducted at Source (TDS)<span style=\"font-weight: 400;\"> is applicable on specified payments such as salary, commission, rent, interest, professional fees, etc., under the Income Tax Act, 1961. And, businesses &amp; individuals are supposed to deduct TDS under specified categories mandated by the income tax department. <\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><span style=\"font-weight: 400;\">This blog takes you through one of the most important categories for <a href=\"https:\/\/razorpay.com\/blog\/tds-payments-for-indian-businesses-automate-tax-payments\/\">monthly TDS payments for businesses<\/a> &#8211; Section 194C. Read on.<\/span><\/p>\n<h2>What is section 194C?<\/h2>\n<p><span style=\"font-weight: 400;\">Section 194C is a TDS category applicable on any contractor payment made to an Indian resident (including supplying labour). The payments can be done by the following personas under Section 194C:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Indian Government entity<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Registered Indian limited company, co-operative, trust or a firm\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">University or deemed educational institution\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">An individual or a Hindu Undivided Family (HUF) with turnover or gross receipts exceeding Rs. 1 crore (for business) or Rs. 50 lakhs (for an individual) during a particular financial year\u00a0<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Section 194C is applicable on the following contractor payments if contractors or subcontractors are Indian residents:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Catering<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Advertising, broadcasting, telecasting (including programme production for broadcasting and telecasting)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Carriage of cargo, goods &amp; passengers (except railways)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Manufacturing\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Labour supply <\/span><b style=\"font-size: 19px;\"><\/b><span style=\"font-weight: 400;\"><br \/>\n<\/span><\/li>\n<\/ul>\n<h2>What is the TDS rate under Section 194C?<\/h2>\n<p><span style=\"font-weight: 400;\">The deductor should deduct <a href=\"https:\/\/razorpay.com\/blog\/tds-rate-chart\/\">TDS rate<\/a> at 1% if payments are made to an individual \/HUF. And, at 2% in all other cases. If the deductee does not provide his PAN (Permanent Account Number) then TDS should be deducted at 20%.<\/span><\/p>\n<h2>When is TDS deducted under Section 194C?<\/h2>\n<p><span style=\"font-weight: 400;\">The deductor needs to deduct TDS when:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">the amount is credited to the deductee\u2019s account<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">the payment is made to the deductee by cash, <a href=\"https:\/\/razorpay.com\/learn\/what-is-cheque\/\">cheque<\/a>, bank draft, or through any online mode of payment<\/span><\/li>\n<\/ul>\n<h2>Exceptions under Section 194C<\/h2>\n<p><span style=\"font-weight: 400;\">Section 194C is not applicable under the following conditions:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A single contract amount is less than or equal to Rs. 30,000<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The total amount paid or payable during a financial year is less than or equal to Rs. 1,00,000<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">An individual or a HUF makes a payment to an individual\/ any other member of HUF for a personal purpose\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Contractor payments for plying, leasing or hiring of goods carriages if the contractor furnishes his PAN to the deductor<\/span><\/li>\n<\/ul>\n<h2>Due dates for depositing TDS under Section 194C<\/h2>\n<table>\n<tbody>\n<tr>\n<td rowspan=\"2\"><b>The month of payment<\/b><\/td>\n<td colspan=\"2\"><b>When the deductor is<\/b><\/td>\n<\/tr>\n<tr>\n<td><b>Government<\/b><\/td>\n<td><b>Other than the Government<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Month of March<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Same Day<\/span><\/td>\n<td><span style=\"font-weight: 400;\">On or before April 30<\/span><span style=\"font-weight: 400;\">th<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Other Months<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Same Day<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Within 7 days from the subsequent month<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><b><br \/>\n<\/b>The deductor can pay TDS<span style=\"font-weight: 400;\"> by filling <a href=\"https:\/\/razorpay.com\/blog\/online-tds-payment-due-dates-penalties\/\">Challan No. ITNS 281<\/a> (under section 94C \u2013 Payment to Contractors and Sub-Contractors) via<\/span><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">Physically visiting an authorised bank branch<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Logging on the NSDL website<\/span><\/li>\n<li aria-level=\"1\"><span style=\"font-weight: 400;\">Free TDS payment tool powered by RazorpayX<br \/>\n<\/span><\/li>\n<\/ul>\n<div style=\"text-align: center;\"><a style=\"border-radius: 3px; background: #528FF0; padding: 15px; font-weight: 600; cursor: pointer; text-decoration: none; color: white;\" href=\"https:\/\/razorpay.com\/x\/tax-payments\/?r=blog_cta_business_banking_section_194c&amp;utm_source=blog&amp;utm_medium=cta\">Pay TDS Now!<\/a><\/div>\n<h2>Filing of quarterly TDS returns<\/h2>\n<div><span style=\"font-size: 19px;\">The deductor must file a quarterly statement in Form 26Q stating \u2013<\/span><\/div>\n<ul>\n<li><span style=\"font-weight: 400;\"><a href=\"https:\/\/razorpay.com\/learn\/tan-number\/\">TAN<\/a> \/ PAN of the deductee<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Amount of payment<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Amount of tax deducted\u00a0<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Rate of tax applicable<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Date of tax deduction<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Date of payment\/credit<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Form 26Q must be filed for each quarter on or before the following due dates \u2013<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Quarter Period<\/b><\/td>\n<td><b>Due Date<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Apr-Jun<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Jul 31<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Jul-Sep<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Oct 31<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Oct-Dec<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Jan 31<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Jan-Mar<\/span><\/td>\n<td><span style=\"font-weight: 400;\">May 31 *<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><b>TDS Certificates<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Every deductor is required to provide a tax deduction certificate (Form 16A) to the payee within 15 days of furnishing the quarterly statement, except for salary payments. Form 16A can be <\/span><span style=\"font-weight: 400;\">generated &amp; download through the <a href=\"https:\/\/www.tin-nsdl.com\/\" rel=\"nofollow noopener\" target=\"_blank\">TIN central system<\/a>.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The due dates for furnishing Form 16A are as follows:<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td rowspan=\"2\"><b>Quarter Period<\/b><\/td>\n<td colspan=\"2\"><b>Due Date<\/b><\/td>\n<\/tr>\n<tr>\n<td><b>Government Deductor<\/b><\/td>\n<td><b>Others<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Apr-Jun<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Jul 30<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Aug 15<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Jul-Sep<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Oct 30<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Nov 15<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Oct-Dec<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Jan 30<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Feb 15<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Jan-Mar<\/span><\/td>\n<td><span style=\"font-weight: 400;\">May 30<\/span><\/td>\n<td><span style=\"font-weight: 400;\">June 15 *<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p>We hope this guide helped you understand TDS payments under Section 194C.<\/p>\n<p>If you struggle to manually calculate and pay monthly TDS for your business, click the link below to know how you can put an end to that struggle, today!<\/p>\n<div style=\"text-align: center;\"><a style=\"border-radius: 3px; background: #528FF0; padding: 15px; font-weight: 600; cursor: pointer; text-decoration: none; color: white;\" href=\"https:\/\/razorpay.com\/x\/tax-payments\/?r=blog_cta_business_banking_section_194c&amp;utm_source=blog&amp;utm_medium=cta\"> Automate TDS payments for your Business <\/a><\/div>\n<p>&nbsp;<\/p>\n<h2><strong>Frequently Asked Questions (FAQs)<\/strong><\/h2>\n<h3><span style=\"font-weight: 400;\">Who is a TDS deductor under section 194C?<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">A deductor is any person who is responsible for making a payment against a contract.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Who is a deductee under section 194C?<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">A deductee is an Indian resident to whom the payment is made.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">What is the Interest on late payment or non-payment of TDS under section 194C?<\/span><\/h3>\n<ol>\n<li><span style=\"font-weight: 400;\">An interest of 1% per month is applicable if a deductor fails to deposit TDS. The interest will apply from the due date of deduction to the actual date of deduction<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Late payment of TDS attracts an interest of 1.5% per month from the actual date of deduction to the date of final payment<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Delay in filing the TDS return attracts a penalty of Rs. 200 per day<\/span><\/li>\n<\/ol>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Section 194C is a TDS category applicable on any contractor payment made to an Indian resident (including supplying labour). Read on to know more.<\/p>\n","protected":false},"author":59,"featured_media":6116,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[27],"tags":[],"class_list":{"0":"post-6115","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business-banking"},"_links":{"self":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/6115","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/comments?post=6115"}],"version-history":[{"count":1,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/6115\/revisions"}],"predecessor-version":[{"id":19904,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/6115\/revisions\/19904"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/media\/6116"}],"wp:attachment":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/media?parent=6115"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/categories?post=6115"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/tags?post=6115"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}