TDS Rate Chart Section 194C — TDS on Payments to Contractors
Section 194C — TDS on Payments to Contractors
Income Tax Act 1961 — s.194C · ITA 2025 — s.393 + 402
Rate and threshold
| Condition | Rate |
|---|---|
| Payee is individual or HUF | 1% |
| Payee is any other person | 2% |
- Threshold
- ₹30,000 per single contract payment, or ₹1,00,000 aggregate in the FY
- Timing of deduction
- At credit or payment, whichever is earlier. Deposit by the 7th of the following month (30 Apr for March).
- Who deducts
- Specified persons (companies, firms, trusts, government, etc.); individuals/HUF if turnover exceeded ₹1 crore (₹50 lakh profession) in the preceding FY
- Payee
- Resident contractor or sub-contractor
What this section covers
Any 'work' — advertising, broadcasting, carriage of goods/passengers, catering, job-work with material supplied by the customer
Worked example
Company pays ₹45,000 to a proprietor for office interior job-work
Single payment > ₹30,000 → TDS applies. Payee is individual → 1%. TDS = ₹450.
If the year's aggregate later crosses ₹1,00,000, earlier sub-threshold payments also become deductible.
Under the Income Tax Act 2025
From 1 April 2026, s.194C of the 1961 Act maps to s.393 + 402 of the Income Tax Act 2025 (split mapping, per the official CBDT concordance). Consolidated into the s.393 TDS table under the ITA 2025.
Full 1961 → 2025 mapping for s.194C →Frequently asked questions
Does 194C apply to pure purchase of goods?
No. A contract of sale is outside 194C. Manufacture per customer spec using material purchased FROM that customer is 'work'; using the vendor's own material is a sale (see the s.194C Explanation).
Transporter exemption?
No TDS for payee in goods-carriage business owning ≤10 vehicles who furnishes a declaration with PAN — s.194C(6).
Confirm Finance Act 2025 left both 194C thresholds (₹30,000 single / ₹1,00,000 aggregate) unchanged for FY 2026-27.