Payments to contractors and sub-contractors
59[Payments to contractors and sub-contractors.
194C. 60(1) Any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and—
(a) the Central Government or any State Government; or
(b) any local authority; or
(c) any corporation established by or under a Central, State or Provincial Act; or
(d) any company; 61[or]
61[(e) any co-operative society,]
shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to two per cent of such sum as income-tax on income comprised therein.
(2) Any person (being a contractor and not being an individual or a Hindu undivided family) responsible for paying any sum to any resident (hereafter in this section referred to as the sub-contractor) in pursuance of a contract with the sub-contractor for carrying out, or for the supply of labour for carrying out, the whole or any part of the work undertaken by the contractor or for supplying whether wholly or partly any labour which the contractor has undertaken to supply shall, at the time of credit of such sum to the account of the sub-contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to one per cent of such sum as income-tax on income comprised therein.
61a[Explanation - For the purposes of this section, where any sum referred to in sub-section (1) or sub-section (2) is credited to any account, whether called "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.]
(3) No deduction shall be made under sub-section (1) or sub-section (2) from—
(i) any sum credited or paid in pursuance of any contract the consideration for which does not exceed 62[ten] thousand rupees; or
(ii) any sum credited or paid before the 1st day of June, 1972; "[or]
63[(iii) any sum credited or paid before the 1st day of June, 1973, in pursuance of a contract between the contractor and a co-operative society or in pursuance of a contract between such contractor and the sub-contractor in relation to any work (including supply of labour for carrying out any work) undertaken by the contractor for the co-operative society.]
64(4) Where the 64a[Assessing] Officer is satisfied that the total income of the contractor or the sub-contractor justifies the deduction of income-tax at any lower rate or no deduction of income-tax, as the case may be, the 64a[Assessing] Officer shall, on an application made by the contractor or the sub-contractor in this behalf, give to him such certificate as may be appropriate.
(5) Where any such certificate is given, the person responsible for paying the sum-referred to in sub-section (1) or sub-section (2) shall, until such certificate is cancelled by the 64b[Assessing] Officer, deduct income-tax at the rates specified in such certificate or deduct no tax, as the case may be.]
59. Inserted by the Finance Act, 1972, w.e.f. 1-4-1972.
60. See rule 37(2C) and Form No. 26C.
61. Inserted by the Finance Act, 1973, w.e.f. 1-4-1973.
61a. Inserted by the Finance Act, 1988, w.e.f. 1-6-1988.
62. Substituted for "five" by the Finance Act, 1982, w.e.f. 1-6-1982.
63. Inserted by the Finance Act, 1973, w.e.f. 1-4-1973.
64. See rule 28(1C) and Form No. 13C.
64a. Substituted for "Income-tax" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
64b. Substituted for "Income-tax" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[AS AMENDED BY THE FINANCE ACT, 1988]