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TMI BlogSection 194C of the Income-tax Act, 1961--Deduction of tax at source from payments made to contractors and sub-contractors--Instructions regardingX X X X Extracts X X X X X X X X Extracts X X X X ..... ce of a contract between the contractor and the bodies specified therein shall, at the time of credit of such sum to the account of the contractor, or, payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to 2 per cent. of such sum as income-tax on income comprised therein. It is clarified that carrying out any work includes service contracts and transport contracts. The said bodies are : (a) The Central Government or any State Government, or (b) any local authority, or (c) any Corporation established by or under a Central, State or Provincial Act ; or (d) any company ; or (e) any co-operative society ; or (f) any authority, constituted in India by or under any law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the total income of a contractor or a sub-contractor justifies the deduction of income-tax at a lower rate or no deduction of income-tax, the Assessing Officer can give to him such certificate as may be appropriate. For this, an application has to be made to the Assessing Officer on Form No. 13C. During the validity of this certificate, deduction of tax at source will be made in accordance with the direction given in the certificate. 5.3 It is clarified that the term "any work" in section 194C has to be understood in its natural meaning, i.e., any work means "any and not only a works contract" which has a special connotation in the tax law. This has been clearly enunciated by the Supreme Court of India in its judgment dated 23rd Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pay by way of penalty, a sum equal to the amount of tax not deducted by him. In this regard, attention is also invited to the provisions of section 276B, which lays down that if a person fails to pay to the credit of the Central Government within the prescribed time the tax deducted at source by him, he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine. (b) According to the provisions of section 203, read with rule 31, every person deducting tax at source is required to furnish a certificate to the effect that the tax has been deducted and to specify therein the amount so deducted and certain other particulars. In the case of deduction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the prescribed person in the case of every local authority or other public body or association, every private employer and every other person responsible for deducting tax at source under the various provisions of the Act, shall prepare and deliver by the prescribed date, the annual return of tax deducted at source under those provisions. In the case of deduction of tax under section 194C, this return is to be furnished in Form No. 26C to the designated/concerned Assessing Officer by 30th June, following the financial year in which deduction is made. It may be noted that a copy of each TDS certificate issued during the financial year should be enclosed with the annual return. If a person fails to furnish in due time the annual return, he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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