Mr. Purushothama, who has been having a turnover of more than 4 crores during the last few years, has utilised the services of an engineer on turn key basis for construction of a factory building and a residential house

TDS from payments to engineer/mason When engineer is engaged Where the services of an engineer, who is a resident in India, is utilized for construction purposes, the provisions of section 194J of the Income Tax Act, 1961 will apply, where the payment is ₹30,000 or more. Thus for the construction of the factory building, tax has to be deducted at source @10% u/s 194J on ₹90 lakhs, i.e. ₹9 lakhs. When Head mason is engaged Where a mason is engaged, section 194C of the Income Tax Act, 1961 will come into play, where the payment made during the year is ₹1,00,000 or more. Since, the recipient is an Individual, the rate of TDS will be 1%. Thus, TDS to be deducted @ 1% on ₹90 lakhs i.e. ₹90,000 Payments made for personal use In both the situations, if the payment is made exclusively for personal purposes, then the provisions of section 194-J/194-C will not apply. Thus, where the construction is for residential purposes of the assessee, no tax is required to be deducted at source.