TDS on Contractor (194C)
Check if TDS applies, the correct 1% / 2% rate, the no-PAN 20% rule, the TDS amount and net payable — all live as you type.
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TDS breakdown
Get your 194C TDS deducted & return filed by a CA
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Disclaimer: Indicative estimate for TDS on resident contractors under Section 194C. Actual liability may vary with lower/nil deduction certificates, transporter exemptions and other facts. Rates per the Income-tax Act, 1961.
Section 194C essentials
Section 194C requires any person (a company, firm, or an individual/HUF above the tax-audit limit) paying a resident contractor for carrying out any work — construction, catering, advertising, transport, labour supply, manufacturing per specification — to deduct TDS at source. It is deducted at credit or payment, whichever is earlier.
The two thresholds — ₹30,000 single / ₹1,00,000 aggregate
TDS under 194C is triggered when either limit is crossed. If a single payment exceeds ₹30,000 you must deduct on that payment. Even if every individual payment stays at or below ₹30,000, once the aggregate of all payments to the same contractor in the financial year crosses ₹1,00,000, TDS becomes applicable — including on the earlier payments.
Rates, no-PAN 20% & key terms
1% vs 2% rate
The rate depends on the status of the payee, not the payer. Deduct 1% if the contractor is an Individual or HUF, and 2% if the contractor is a company, firm, LLP or any other person.
No PAN → 20% (Section 206AA)
If the contractor does not furnish a valid PAN, Section 206AA overrides 194C and TDS must be deducted at the higher of 20% or the normal rate — so a no-PAN contractor is deducted at a flat 20%.
What counts as "work"
Work includes advertising, broadcasting, carriage of goods/passengers, catering and manufacturing/supplying a product to a customer's specification using its material. Buying a standard product off the shelf is not covered.
Deposit & return
TDS deducted must be deposited by the 7th of the next month (30 April for March) and reported quarterly in Form 26Q. Late deduction or deposit attracts interest of 1% / 1.5% per month plus fees.
Questions people ask
Short answers on TDS on Contractor (194C). Tap a question to open it.
01At what rate is TDS deducted under section 194C?
1% where the payee is an individual or HUF, and 2% for any other payee. The rate depends on the status of the contractor, not on the size of the contract.
02What are the thresholds?
₹30,000 for a single payment, or ₹1,00,000 in aggregate during the financial year. TDS applies once either limit is crossed, and then on the whole amount paid.
03Is TDS deducted on the material component?
Where a works contract involves supply of material and the invoice shows the material value separately, TDS is deducted only on the labour and service component. Where it is not separated, tax is deducted on the whole invoice value.
04Is there any exemption for transporters?
Yes. No TDS is deducted from a goods transport contractor who owns not more than ten goods carriages at any time during the year, provided they furnish a declaration to that effect along with their PAN.
05Does 194C cover advertising and catering?
Yes. "Work" under section 194C expressly includes advertising, broadcasting and telecasting, carriage of goods and passengers, catering, and manufacturing to a customer's specification using material supplied by the customer.
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Disclaimer: This tool gives indicative results for general guidance only and is not professional advice. Please verify with a qualified CA before acting on the numbers.