What is the limit for 194C?

Question

Accepted Answer

The limit for 194C is Rs. 30,000 for a single payment and Rs. 1,00,000 in aggregate during a financial year.

The limit for 194C is applicable for payments made to contractors and sub-contractors for carrying out any work.
If the payment to a single contractor or sub-contractor exceeds Rs. 30,000 in a single transaction, TDS (Tax Deducted at Source) needs to be deducted at the rate of 1%.
If the total payments made to a contractor or sub-contractor exceed Rs. 1,00,000 in a financial year, TDS needs to be deducted on the entire amount at the rate of 1%.
For example, if a company makes a payment of Rs. 25,000 to a contractor for a single transaction, no TDS is required. However, if the payment is Rs. 35,000, TDS of Rs. 350 needs to be deducted.
Similarly, if a company makes multiple payments to a contractor totaling Rs. 90,000 in a financial year, no TDS is required. But if the total payments exceed Rs. 1,00,000, TDS needs to be deducted on the entire amount.

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