What is the difference between Section 194C and 194J?

Section 194C applies to payments for 'carrying out any work' (like labor, catering, manufacturing) and attracts a 1% or 2% TDS rate. Section 194J applies to professional or technical services and typically attracts a 10% or 2% TDS rate.

Do I need to deduct TDS if I pay a freelancer?

It depends on the nature of their work and the amount. Section 194J applies if you pay them more than ₹30,000 in a financial year for professional services.

What happens if I don't deduct TDS when required?

Non-compliance carries penalties: 30% expense disallowance, interest at 1% per month for late deduction and 1.5% for late deposit, plus penalty under Section 271C.

Is TDS deducted on the GST amount?

No. TDS is only deducted on the base invoice amount, excluding the GST component.

When do I deposit TDS to the government?

TDS must be deposited by the 7th of the following month via Challan ITNS 281. March deductions can be deposited up to April 30th.

What if the payee doesn't have a PAN?

If the payee fails to furnish a valid PAN, the TDS rate automatically doubles from the applicable rate, or becomes 20%, whichever is higher.

What is Form 26AS and how does TDS credit work?

When you deduct TDS and file quarterly returns, the deduction reflects in the payee's Form 26AS. They can claim this as a tax credit in their ITR.

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