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- Section 194C of Income Tax Act | Inclusion and Exclusion from Work | CA Arinjay Jain
APPLICABILITY ON INDIVIDUALS/ HUF
Payor is an Individual/ HUF - Yes
Whether for business Purpose - No
Sum paid/credited exclusively for personal purposes of individual / member of HUF - Yes
GENERAL PROVISIONS
Rate of TDS will be 20% in all the cases, if PAN is not quoted by the deductee – Section 206AA
No surcharge, Health or education cess shall be added if the applicable rate of TDS is 20% u/s 206AA*
MEANING OF WORK
Work includes
Advertising
Broadcasting and telecasting (including production of programmes for such broadcasting or telecasting)
Carriage of goods or passengers by any mode of transport other than by railways
Catering
Manufacturing or supplying a products (article or thing) according to the requirement or specification of a customer by using material purchased from such customer
Supply of labour for carrying out any work
Work doesn’t 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. However, it will not apply to a contract, which doesn’t entail manufacture or supply of an article of thing (e.g. construction contracts)
MEANING OF Work contracts
Work contract includes : -
Contracts for construction, repair, renovation or alteration of buildings or laying of roads, and airfields or railway lines
Erection or installation of plant and machinery
Contracts granted for processing of goods supplied by the payer, where the ownership of such goods remains at all times with such payer
Contract for fabrication of any article or thing where material are supplied by payer and the fabrication work is done by a contractor
Contract for supply of labour for carrying out any work
Section 194C applies only to contractors (including sub-contractors) who are resident of India. Payment made to non- resident contractor shall be covered u/s 195
Exclusion from Work contracts
Contracts for sale of goods
Contractor undertakes to supply any article or thing fabricated according to the specification given by the payer, and the property in such article or thing passes to such payer only after such article or thing is delivered
Contracts for rendering professional service by lawyers, physicians surgeons, engineers, accountants, architects, consultants, etc. are not covered under work contract u/s 194C and accordingly no deduction of income-tax shall be made u/s 194C. It will be covered u/s 194J
