Section 194C of the Income Tax Act states that any person making payment to a resident person, who is carrying out any ‘work’ in terms of the contract between the ‘specified person’ and the resident contractor, is required to deduct TDS.
The ‘specified person’ mentioned above means the following –
· The Central or State Government;
· The local authority;
· The Corporation established by the Central, State or Provincial Act;
· The Company;
· The Trust;
· The Co-operative Society;
· The registered Society;
· The authority engaged either for the purpose of dealing with and satisfying the need for the housing accommodation or for planning, improvement or development of cities, town and village;
· The university established / incorporated by Central, State or Provincial Act;
The individual or HUF liable to audit under section 44AB [Clause (a) or Clause (b)] during the financial year immediately preceding the financial year in which the sum is credited or paid to the account of the contractor.
Further, it is mention here that the term ‘contract’ includes ‘sub-contract’.