TL;DR for CAs
- 194C covers payments to contractors/sub-contractors.
- Single and aggregate thresholds determine applicability.
- Rates differ for individuals/HUFs vs others.
What it is
Section 194C requires TDS on payments for carrying out any work including supply of labour.
Who it applies to
Specified persons making contractor payments above thresholds.
Key provisions
- Single payment and aggregate annual thresholds
- 1%/2% rate structure
- Definition of work and exclusions
Practical tips for CAs
Classify AMC, transport, and job-work contracts correctly. Maintain PAN and lower deduction certificates.
Common mistakes
Treating pure goods supply as 194C; missing aggregate threshold; wrong section vs 194J.
For general guidance only. Verify with the latest Finance Act, GST notifications, and ICAI guidance notes before advising clients.