TDS on repair and maintenance is required to be deducted under Section 194C of Income Tax Act 1961.
Rate and Amount for deduction of TDS
The rate of TDS is as under: –
- TDS shall be deducted @ following rates u/s 194C depending on whether the payee is an Individual/ HUF or other than Individual/ HUF:
- Credit/ Payment is made to an Individual/ HUF – 1%
- Credit/Payment is made to a person other than an Individual/ HUF – 2%
- No Surcharge and Higher Education Cess (“HEC”) shall be added to the above-mentioned rates.
- TDS @ 20% shall be deducted where the transporter does not provide the PAN number to the deductor.
TDS on repair and maintenance shall be deducted on invoice value, excluding the value of GST (if such value is mentioned separately in the invoice) – Circular No. 23/ 2017. However, TDS shall be deducted on whole of the invoice value (if value of GST is not mentioned separately in the invoice) – Circular No. 23/ 2017
Exemption from tax deduction u/s 194C
- Where the amount credited/ paid does not exceed Rs. 30,000 in a single transaction. Further, no TDS shall be deducted, where the amount or aggregate of amounts credited/ paid during the FY does not exceed Rs. 1,00,000.
- Where consideration paid by an individual or HUF is on account of personal purpose.
- Payment made to Non-Resident contractor shall not attract TDS u/s 194C. However, it shall be governed by provisions of Section 195
Time of deducting TDS on repair and maintenance
The time when TDS is required to be deducted is earlier of the following two events –
- Credit of such sum to the account of payee; or
- Payment in cash or by way of issue of cheque/ draft/ any other mode
For Full text of Section 194C, please refer this link
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TDS on repair and maintenance is required to be deducted under Section 194C of Income Tax Act 1961 at the rate of 1% or 2% (as the case may be) for payments to residents.