194C limit

194C Limit for deduction of TDS , is the minimum amount, upto which no TDS is required to be deducted by the Payor.

are as under : – 

When is TDS required to be deducted  – 194C Limit for non deduction of TDS : – 

TDS is required to be deducted at applicable rates if : –

  • Single payment /credit is made by the deductor and such payment exceeds Rs. 30,000 . In such a case it does not matter , as to what is the total amount of contract during the relevant previous year
  • Single Payment/credit  made by the deductor is less than or equal to Rs. 30,000,  but the aggregate  payment /credit made  during the year exceeds INR 1,00,000

TDS Rates when 194C Limit  is crossed  – 

If the cases covered under either of the two options , TDS is required to be deducted as under : –

  • Recipient is an Individual or a HUF – TDS shall be deducted by payor @ 1% of amount
  • Recipient is Other than an individual or a HUF – TDS shall be deducted by Payor @ 2% of amount
If the  above-mentioned limits are not crossed, no TDS is required to be deducted.
For ease of reference, the provision of Section 194C are given as under : –

Any specified person responsible for paying any sum to any resident contractor for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and the specified person , shall, at the time of credit of such sum to the account of the contractor or at the time of 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 –

  • 1% where the payment is being made or credit is being given to an individual or HUF
  • 2% where the payment is being made or credit is being given to a person other than an individual or HUF
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