XYZ Ltd. makes the following payments to Rahim, a contractor, for contract work during the P.Y. 2021-22: ₹20,000 on 1.05.2021 ₹25,000 on 1.08.2021 ₹28,000 on 1.12.2021 On 1.03.2022, a payment of ₹30,000 is due to Rahim o

As per section 194C of the Income tax Act, 1961, the tax will be required to be deducted at source where the amount credited or paid to a contractor or sub-contractor exceeds ₹30,000 at one time or ₹1,00,000 in aggregate during the financial year. In the given case, the individual contract payments made to Mr. Rahim does not exceed ₹30,000. However, the aggregate amount paid / credited to Mr. Rahim during the P.Y. 2021-22 exceeds ₹1,00,000 (on account of the last payment of ₹30,000 due on 1.3.2022, taking the total from ₹73,000 to ₹1,03,000), the TDS provisions under section 194C would get attracted and TDS is required to be deducted @ 1% on the entire amount of ₹1,03,000 from the last payment of ₹30,000 and the balance of ₹28,970 (i.e. ₹30,000 - ₹1,030) is to be paid to Mr. Rahim.