TMI BlogSection 194C of the Income-tax Act, 1961--Deduction of tax at source from payment made to contractors and sub-contractors--Instruction regardingX X X X Extracts X X X X X X X X Extracts X X X X ..... of labour for carrying out any work) in pursuance of a contract between the contractor and the bodies specified therein shall, at the time of credit of such sum to the account of the contractor or payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to 2% of such sum as income-tax on income comprised therein. The bodie are: (a) the Central Government or any State Government, or (b) any local authority, or (c) any corporation established by or under a Central, State or Provincial Act; or (d) any company; or (e) any co-operative society, or (f) any authority, constituted in India by or under any law, engaged either for the purpose of dealing with a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lower rate or no deduction of income-tax, the Assessing Officer can give to him such certificate as may be appropriate. For this, an application has to be made to the Assessing Officer in Form No.13C. During the validity of this certificate, deduction of tax at source will be made in accordance with the direction given in the certificate. 6. The responsibilities, obligations, etc., under the Income-tax Act, of the persons deducting tax at source under section 194C are briefly as follows: (a) According to the provisions of section 200, any person deducting any sum in accordance with the provisions of section 194C is required to pay, within the prescribed time, the sum so deducted to the credit of the Central Government in the prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therein the amount so deducted and certain other particulars. The certificate has to be furnished in Form No.16B within the prescribed period of one month and fourteen days to the person to whose account credit is given or to whom payment is made, by any mode, as the case may be. Form No.16B is printed by the Central Government and can be procured from the Income-tax Department on payment of a nominal consideration. If a person fails to furnish a certificate as required under section 203, he shall be liable to pay by way of penalty under section 272A, a sum which shall not be less than Rs.100 but which may extend to Rs.200 for every day during which the failure continues. (c) According to the provisions of section 203A, it is obligatory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilure continues. The maximum penalty will, however, not exceed the amount of tax which was deductible at source. 7. These instructions are not exhaustive and are issued only with a view to helping the persons responsible for making deduction of tax at source under section 194C. For further details, the provisions of the Income-tax Act, 1961, and the Income-tax Rules, 1962, have to be consulted. In case, any assistance is required, the Assessing Officer concerned or the local Public Relations Officer of the Income-tax Department may be approached. 8. The contents of this Circular may please be brought to the notice of all concerned. 9. Copies of this Circular will be available with the Directorate of Inspection (RSP PR), 6th Floor, M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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