Section 194C - TDS on Contractor Payments
Payments to contractors and sub-contractors
IT Act 2025→Section 393, Chapter X (TDS, consolidated)full mapper →
Rate (Individual / HUF)
1%
Rate (Company / Firm)
2%
Threshold limit
₹30,000 per contract / ₹1,00,000 aggregate in a FY
Key rules
- 1% for individual/HUF contractors, 2% for companies
- Applies to: advertising, broadcasting, transport, catering, labour supply
- Transport contracts: Nil TDS if contractor furnishes valid PAN
- TDS is on the net amount (excluding GST if separately billed)
Frequently asked questions
Is TDS on contractor applicable to GST amount?▾
No. If the contractor raises a separate GST invoice or shows GST as a separate line item, TDS under 194C is only on the base amount, not on GST.
What is the TDS rate for a transport contractor with PAN?▾
Nil. Section 194C(6) exempts transport contractors who furnish their PAN and own not more than 10 goods carriages.
When does the aggregate ₹1 lakh threshold apply?▾
When multiple contracts with the same contractor total ₹1 lakh or more in a FY, TDS must be deducted on all payments, even if individual payments are below ₹30,000.
Related TDS sections
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