Many housing societies assume that because they operate on a 'mutual benefit, non-profit' principle, income tax rules do not apply to them. That is a dangerous misconception. When an RWA pays vendors without deducting statutory TDS, the committee faces personal tax penalties and interest.
Mandatory Tax Deduction Account Number (TAN)
Every registered housing society or apartment association that contracts security, housekeeping, lift maintenance, or legal services exceeding statutory thresholds must obtain a Tax Deduction Account Number (TAN) from the Income Tax Department.
Using the society’s general PAN card for tax deductions is illegal; TDS returns (Form 26Q) require an active TAN.
Key TDS Sections Applicable to Housing Societies
Section 194C (Payments to Contractors): Applicable to security guard agencies, housekeeping contracts, elevator AMC, painting contractors, and civil repairs.
Deduct 1% TDS if the contractor is an individual/HUF, or 2% for corporate entities, whenever a single bill exceeds ₹30,000 or annual cumulative payments exceed ₹1,00,000.
- Section 194J (Professional Fees): 10% (or 2% for technical services) on payments to chartered accountants, legal counsels, and engineering consultants exceeding ₹30,000 annually.
- Section 194I (Rent Payments / Mobile Towers): Applicable when the society receives terrace rent from telecom towers or pays lease rents.
- Filing Deadlines: Deducted TDS must be deposited by the 7th of the subsequent month; quarterly returns (26Q) must be submitted on time to avoid ₹200/day late fees.
Common questions
Does an RWA have to deduct TDS on payments to individual plumbers or electricians?
If cumulative annual payments to an ad-hoc individual contractor stay below ₹1,00,000 and single bills stay below ₹30,000, Section 194C does not trigger.
Related DGate resources for society management
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- RWA management software for managing committees
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