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Record TDS on Contractor Payments under Section 194C in TallyPrime

You can record TDS on payments to contractors for carrying out work, including supply of labour, under Section 194C.

The applicable Nature of Payment depends on whether the contractor is an Individual/HUF or a person other than Individual/HUF.

• 1% for individuals/HUF with a valid PAN and 20% without PAN
• 2% for other deductees with a valid PAN and 20% without PAN

Configure TDS Master (as per Section 194C)

For Section 194C, you can configure the Nature of Payment with the option to calculate tax if the purchase value exceeds Rs. 30,000 for a single bill or Rs. 1,00,000 in aggregate during the financial year.

While creating the TDS Nature of Payment,

1. Press F12 (Configure) and enable the option Allow single bill value.
2. Select the Section as 194C.
   The Payment Code and Remittance Code will be filled automatically.
3. Enter the single bill value and set the threshold limit.
   1. Set the Value limit for a single bill as 30,000.
   2. Enter the Threshold/exemption limit as 100,000.
      
4. Select the PAN rate as 1% With PAN and 20% Without PAN for individuals/HUF and other deductee types.
5. Press Ctrl+A to save the nature of payment.

To learn how to configure other masters for TDS transactions, refer to the topic How to Create TDS Masters in TallyPrime.

Record TDS Purchase above the Single Bill Value limit

If the payment amount to a supplier crosses the single bill value limit of Rs. 30,000, TDS will be calculated as per Section 194C.

1. Record a Purchase voucher crossing the purchase value of Rs.30,000.
2. Once you have entered the Amount, select the TDS ledger configured with the Nature of Payment 194C as Payment to Contractors.
   As the payment has exceeded the single bill value limit of Rs.30,000, TDS will be calculated.
3. Provide the Narration, if needed. As always, you can press Ctrl+A to save the voucher.

As the single amount criteria are crossed in the voucher, in subsequent transactions, TDS will be deducted.

Similar to the purchase above the single bill value limit, if the purchase amount crosses the threshold limit of Rs. 100,000 set in the Nature of Payment for Section 194C, TDS will be calculated.