TDS on repair and maintenance services is applicable under Section 194C of the Income Tax Act, 1961, where payments to contractors for such services require tax deduction at source.
Section 194C: This section states that any person making payments to a resident contractor for carrying out work, including repair and maintenance, must deduct TDS at the prescribed rate. The threshold for TDS deduction is set at ₹30,000 for a single transaction and ₹1,00,000 for the aggregate amount in a financial year. If the payment exceeds these limits, TDS must be deducted at the rate of 1% for individuals and HUFs and 2% for others.
Nature of Services: The type of repair and maintenance services determines the applicability of TDS. Routine and normal maintenance services, which do not require technical expertise, fall under Section 194C. However, if the services involve technical skills, they may be classified under Section 194J, which pertains to fees for technical services.
Specified Persons: TDS under Section 194C applies to specified persons, which include individuals, Hindu Undivided Families (HUFs), Association of Persons (AOP), and Body of Individuals (BOI) with total sales or gross receipts exceeding ₹1 crore for businesses or ₹50 lakh for professions.
In summary, TDS on repair and maintenance services is primarily governed by Section 194C of the Income Tax Act. It is essential to determine whether the services are routine or technical to apply the correct TDS provisions. For routine maintenance, TDS is deducted under Section 194C, while technical services may fall under Section 194J, necessitating careful evaluation of the nature of the services provided.