TDS under Section 194C - Works Contract - Substantial Change in the provisions and coverage of Tax Deduction at Source to an activity which is sale cum job work

Sr. No.

Particular

Existing Provisions

New Provisions

Comments

1

What is liable to TDS

Any work (including supply of labour for carrying out any work) in pursuance of a contract

any work (including supply of labour for carrying out any work) in pursuance of a contract

No change

2.

Rates of TDS:

manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer, but does not include 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.

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(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.

New entry

For other contracts

(i) one per cent, in case of advertising,

(ii) in any other case two per cent,

For Sub Contract - one percent

(i) one per cent. where the payment is being made or credit is being given to an individual or a Hindu undivided family;

(ii) two per cent. where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family, of such sum as income-tax on income comprised therein.

Substantial Change

3

Exempted amount

No deduction shall be made under sub-section (1) or sub-section (2) from—

the amount of any sum credited or paid or likely to be credited or paid to the account of, or to, the contractor or sub-contractor, if such sum does not exceed twenty thousand rupees:

Provided that where the aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year exceeds fifty thousand rupees, the person responsible for paying such sums referred to in sub-section (1) or, as the case may be, sub-section (2) shall be liable to deduct income-tax under this section:

No deduction shall be made from the amount of any sum credited or paid or likely to be credited or paid to the account of, or to, the contractor, if such sum does not exceed twenty thousand rupees:

Provided that where the aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year exceeds fifty thousand rupees, the person responsible for paying such sums referred to in sub-section (1) shall be liable to deduct income-tax under this section.