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IncomeTaxDepartment

Paymentstocontractors.
61194C.(1)Anypersonresponsibleforpayinganysumtoanyresident(hereafterinthissection

referredtoasthecontractor)forcarryingoutanywork(includingsupplyoflabourforcarryingout
any work) in pursuance of a contract between the contractor and a specified person shall, at the
timeofcreditofsuchsumtotheaccountofthecontractororatthetimeofpaymentthereofincash
orbyissueofachequeordraftorbyanyothermode,whicheverisearlier,deductanamountequal
to
(i)onepercentwherethepaymentisbeingmadeorcreditisbeinggiventoanindividualora
Hinduundividedfamily
(ii)twopercentwherethepaymentisbeingmadeorcreditisbeinggiventoapersonother
thananindividualoraHinduundividedfamily,
ofsuchsumasincometaxonincomecomprisedtherein.
(2) Where any sum referred to in subsection (1) is credited to any account, whether called
"Suspenseaccount"orbyanyothername,inthebooksofaccountofthepersonliabletopaysuch
income,suchcreditingshallbedeemedtobecreditofsuchincometotheaccountofthepayeeand
theprovisionsofthissectionshallapplyaccordingly.
(3) Where any sum is paid or credited for carrying out any work mentioned in subclause (e)of
clause(iv)oftheExplanation,taxshallbedeductedatsource
(i)ontheinvoicevalueexcludingthevalueofmaterial,ifsuchvalueismentionedseparately
intheinvoiceor
(ii)onthewholeoftheinvoicevalue,ifthevalueofmaterialisnotmentionedseparatelyinthe
invoice.
(4) No individual or Hindu undivided family shall be liable to deduct incometax on the sum
creditedorpaidtotheaccountofthecontractorwheresuchsumiscreditedorpaidexclusivelyfor
personalpurposesofsuchindividualoranymemberofHinduundividedfamily.
(5) No deduction shall be made from the amount of any sum credited or paid or likely to be
creditedorpaidtotheaccountof,orto,thecontractor,ifsuchsumdoesnotexceedthirtythousand
rupees:
Provided that where the aggregate of the amounts of such sums credited or paid or likely to be
credited or paid during the financial year exceeds seventyfive thousand rupees, the person
responsibleforpayingsuchsumsreferredtoinsubsection(1)shallbeliabletodeductincometax
underthissection.
(6) No deduction shall be made from any sum credited or paid or likely to be credited or paid
during the previous year to the account of a contractor during the course of business of plying,
hiring or leasing goods carriages, 62[where such contractor owns ten or less goods carriages at
any time during the previous year and furnishes a declaration to that effect along with] his
PermanentAccountNumber,tothepersonpayingorcreditingsuchsum.
(7)Thepersonresponsibleforpayingorcreditinganysumtothepersonreferredtoinsubsection
(6) shall furnish, to the prescribed incometax authority or the person authorised by it, such
particulars,insuchformandwithinsuchtimeasmaybeprescribed.
Explanation.Forthepurposesofthissection,
(i)"specifiedperson"shallmean,
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IncomeTaxDepartment

(a)theCentralGovernmentoranyStateGovernmentor
(b)anylocalauthorityor
(c)anycorporationestablishedbyorunderaCentral,StateorProvincialActor
(d)anycompanyor
(e)anycooperativesocietyor
(f)anyauthority,constitutedinIndiabyorunderanylaw,engagedeitherforthepurpose
of dealing with and satisfying the need for housing accommodation or for the
purposeofplanning,developmentorimprovementofcities,townsandvillages,or
forbothor
(g) any society registered under the Societies Registration Act, 1860 (21 of 1860) or
underanylawcorrespondingtothatActinforceinanypartofIndiaor
(h)anytrustor
(i)anyuniversityestablishedorincorporatedbyorunderaCentral,StateorProvincial
Actandaninstitutiondeclaredtobeauniversityundersection3oftheUniversity
GrantsCommissionAct,1956(3of1956)or
(j)anyGovernmentofaforeignStateoraforeignenterpriseoranyassociationorbody
establishedoutsideIndiaor
(k)anyfirmor
(l) any person, being an individual or a Hindu undivided family or an association of
personsorabodyofindividuals,ifsuchperson,
(A)doesnotfallunderanyoftheprecedingsubclausesand
(B) is liable to audit of accounts under clause (a) or clause (b) of section 44AB
duringthefinancialyearimmediatelyprecedingthefinancialyearinwhichsuch
sumiscreditedorpaidtotheaccountofthecontractor
(ii)"goodscarriage"shallhavethemeaningassignedtoitintheExplanationtosubsection(7)
ofsection44AE
(iii)"contract"shallincludesubcontract
(iv)"work"shallinclude
(a)advertising
(b) broadcasting and telecasting including production of programmes for such
broadcastingortelecasting
(c)carriageofgoodsorpassengersbyanymodeoftransportotherthanbyrailways
(d)catering
(e)manufacturingorsupplyingaproductaccordingtotherequirementorspecificationof
acustomerbyusingmaterialpurchasedfromsuchcustomer,
butdoesnotincludemanufacturingorsupplyingaproductaccordingtotherequirementor
specification of a customer by using material purchased from a person, other than such
customer.

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