I have missed deducting TDS for one of the contractors. I have been paying him for the assignments. The money is usually in range of INR 10,000 to INR 45,000. However I have not deducted his TDS. The total I have paid him this year is around 5.8 lakhs. What can I do to resolve this? Also do I need any undertaking from contractor?
Three clarifications: 1. I have paid him INR 5.8 lakhs total in this financial year. The amount varies based on assignments. 2. The work is for Software development. 3. He is an individual and not a company.
First of all, it is important to know whether you were required to deduct TDS or not. You need to deduct TDS if you were liable to tax audit in the previous financial year.
If required as above, TDS had to be deducted @10% under section 194J. You can now deposit the TDS along with interest and file the TDS returns with late fees.
Okay. One more query. I was told that it was 1% for the contractor and 10% for salaries. Since this is a contractor wouldn't the applicable TDS be 1%? If you can please clarify. Thanks
This is considered as payment of professional fees under section 194J and not counted as a contract as per the provisions of 194C.
Also, for salaries, you need to deduct TDS in accordance with the computation of income of the employee and make deductions with regards to applicable slabs; and not at a flat rate of 10%.
You can treat the contract as salary paid and deduct the TDS as per slabs applicable to him
You have to deduct he TDS belated and deposit it. You will also have to revise your TDS return.
Hii
if you have contract then 1% applicable under section 194C, but generally in software related work TDS u/s 194J @10% is applicable due to its professional nature.
Hello,
You may deduct and pay TDS on the entire amount now with interest and revise the first two quarter returns.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, FCA, LLB, CERT. FAFP
Hi,
You may deduct now on the entire amount and pay the respective amount along with interest.
Also revise your previous TDS returns and issue him TDS certificates for every quarter to avoid further complications.
Regards,
Keerthiga Padmanabhan
M.Com., CA, LL.B
