financial services

How TDS is deducted under Section 194C?

Whenever a payment is made, TDS should be deducted. The rate at which TDS is deducted depends on the nature of the payment. Here we will tell you about the how TDS is deducted under section 194C which mainly focuses on the TDS deducted on payment made to the Contractor or the Sub-contractor.


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What is Section 194C?

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Any individual who is paying any sum of amount to a resident contractor to carryout some work must deduct the required TDS amount on the payment made to the contractor under Section 194C.

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Here are the rates at which TDS is deducted under Section 194C: –

  • 1% if the payment is made to an individual or a HUF
  • 2% in all the other cases except for individuals and HUFs.

How is TDS Deducted on the Payment made to Sub-Contractor?


TDS is deducted under Section 194C


TDS is deducted under Section 194C

In case a payment is made to any resident Sub-Contractor, in order to carry out a contract with the Sub-Contractor or to carry out supply of labourers. When the whole or a part of work is being carried out by the contractor. In all these cases TDS must be deducted at the rate of 1% on the gross amount of receipt at the time of payment in cash, cheque or DD or by any other mode of payment.

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