×

New to site? Create an Account


Login

Lost password? (close)

Already have an account? Login


Signup

(close)

TDS on security services – Section 194C of Income Tax Act

|

February 11, 2022

|

5 mins read

TDS on security services is required to be deducted under Section 194C of Income Tax Act 1961.

Rate and Amount for deduction of TDS

The rate of TDS is as under: –

  • TDS shall be deducted @ following rates under section 194C depending on whether the payee is an Individual/ HUF or other than Individual/ HUF:
    • Credit/ Payment is made to an Individual/ HUF – 1%
    • Credit/Payment is made to a person other than an Individual/ HUF – 2%
  • No Surcharge and Higher Education Cess (“HEC”) shall be added to the above-mentioned rates.
  •  TDS @ 20% shall be deducted where the payee does not provide the PAN number to the deductor.

TDS on security services shall be deducted on invoice value, excluding the value of GST (if such value is mentioned separately in the invoice) – Circular No. 23/ 2017. However, TDS shall be deducted on whole of the invoice value (if value of GST is not mentioned separately in the invoice) – Circular No. 23/ 2017

Exemption from tax deduction under section 194C of Income Tax Act

  • Where the amount credited/ paid does not exceed Rs. 30,000 in a single transaction. Further, no TDS shall be deducted, where the amount or aggregate of amounts credited/ paid during the FY does not exceed Rs. 1,00,000.
  • Where consideration paid by an individual or HUF is on account of personal purpose.
  • Payment made to Non-Resident contractor shall not attract TDS under section 194C of Income Tax Act. However, it shall be governed by provisions of Section 195

Time of deducting TDS on security services

The time when TDS is required to be deducted is earlier of the following two events –

  • Credit of such sum to the account of payee; or
  • Payment in cash or by way of issue of cheque/ draft/ any other mode

Illustrations: – 

For Full text of Section 194C of Income Tax Act, please refer this link

Explore our Full detailed Article on TDS.

TDS on security services is required to be deducted under Section 194C of Income Tax Act 1961 at the rate of 1% or 2% (as the case may be) for payments to residents.

Related Articles

Arinjay Jain

Bio of author

Arinjay is a Chartered Accountant with more than 20 years of post-qualification experience. He worked as Director, in the M&A Tax Division at KPMG in India. Presently, he is advising several MNCs in UAE on Economic Substance Regulations and impact of the UAE Corporate Tax Law on their business and clients across globe on International Tax issues . He is a well recognised Trainer of International Tax and UAE Corporate Tax. The areas of service include the following : - Advise and Compliance relating to International Tax Issues; Advise relating to UAE Corporate Tax Issues; Advise and Compliance relating to UAE Economic Substance Regulations; Advise and Compliance relating to Indian Income Tax Issues; Other connected matters from a Regulatory perspective.

LATEST ARTICLES

Section 194M of Income Tax Act

Section 194M of Income Tax Act - TDS from Payment

Tax Deduction at Source (TDS) | TDS Rate FY 2022-23 | Dates

Chapter XVII-B of the Income Tax Act, 1961, (hereinafter referred

Deductions under UAE Corporate Tax Law

Introduction - Deductions under UAE Corporate Tax Law A Taxable

Cabinet Resolution on Tax Residency in the UAE

Cabinet Resolution on Tax Residency in the UAE Introduction The

Leave a Reply

Your email address will not be published. Required fields are marked *

Have query and need a consultation with
tax expert?

Arinjay Jain

M&A | International Tax | Direct Tax

We provide consultation to resolve your queries in the Area of International Tax, Merger, Demerger and Foreign Investment, though call with our Tax Expert Mr. Arinjay Jain for a 15 minutes session.