‘Capital Grant Subsidy’ Provided to Contractor for Economic Shortfall in Revenue Not Subject to TDS Deduction: Delhi High Court

In a significant ruling, the Delhi High Court has held that the capital grant subsidy extended by the National Highways Authority of India (NHAI) to its contractors is not subject to Tax Deduction at Source (TDS) under Section 194C of the Income Tax Act. The Court concluded that such subsidies cannot be construed as payment for "work," as defined under the provisions of Section 194C, which mandates TDS on payments…