Section 194C

Tax Glossary Definition

Section 194C

TDS on Payments to Contractors and Sub-contractors: Any person responsible for paying a contractor or sub-contractor for carrying out work—whether involving labor, materials, or both—must deduct tax at source. The applicable rate of deduction varies based on the recipient’s status, such as individual, HUF, or company.

Example: If a business pays ₹2,00,000 to an individual contractor for a construction project, TDS is deducted at 1%, resulting in a deduction of ₹2,000.

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