Amendments in section 194C from 01.10.

2009:

As per amendment through Finance Act(2) ,2009,new Section 194C has been substituted for old section
194C .New Section is applicable from the 01.10.2009.The main changes in the new section is given as
under

1. Separate rates for contractor and subcontractor has been removed.Now the tax rate has been
categorised according the status of deductee and new TDS rates for contractors are as under

* For payment made to Individual & Hindu undivided family=1 %

* For payment to others =2%

2. Concessional rate of 1 % for advertisement Contracts has been removed and now rates as defined
under (1) above is applicable on all type of contractor including Advertisement contracts.

3. No TDS on payment to transport operator (i.e in the business of playing,hiring or leasing goods
carriage),if he/it furnishes his PAN to payer.

4. No surcharge and cess applicable on basic TDS rate in FY 2009-10 on payments made to resident
except salary

5. Basic limit of 20000 and 50000 per annum remains unchanged.

6. No tds in case of payment of Job work ,if raw material has not been supplied by the payer.

NEW TDS RATE ALL SECTION CHARTS FY 09-10 BEFORE/AFTER 01.10.09 AVBL HERE

In this post we are discussing the last point .

TDS in case of JOB work according to specification(brief):In case of work contract being manufacturing
or supplying product according to specification(by using material from such customer),tds shall be
deducted on the invoice value excluding the value of material purchased from such customer,if such value
is mentioned separately in the invoice.where the material component has not been separately mentioned
in the invoice,tds shall be deducted on the whole value of the invoice.

Relevant clause of new section :is reproduced hereunder

EXPLANATION TO SECTION 194 C

(iv) work shall include

(a).......

(b).......
(e) manufacturing or supplying a product according to the requirement or specification of a customer by
using material purchased from such customer,but does not 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.

subsection (3) Where any sum is paid or credited for carrying out any work mentioned in sub-clause (e)
of clause (iv) of the Explanation, tax shall be deducted at source

(i) on the invoice value excluding the value of material, if such value is mentioned separately in the
invoice; or

(ii) on the whole of the invoice value, if the value of material is not mentioned separately in the invoice.

Read more: http://www.simpletaxindia.org/2009/11/tds-on-job-work-us-194c-amended-

from.html#ixzz0XTHWv1BW

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