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Tax year 2026-27

Section 393(1) Sl. No. 6(i) TDS: payments to contractors

Earlier Section 194C · Codes 1023, 1024

From 1 April 2026, TDS on payments to contractors is deducted under Section 393(1), Table Sl. No. 6(i), of the Income-tax Act, 2025. It was earlier deducted under Section 194C of the Income-tax Act, 1961.

TDS calculator: Section 393(1) Sl. No. 6(i)

Section 393(1) Sl. No. 6(i) at a glance

PaymentNew sectionCodeRateThresholdOld section
Payment to a contractor who is an individual or HUF393(1) Sl. No. 6(i).D(a)10231%₹30,000 for a single sum; ₹1,00,000 in aggregate194C
Payment to a contractor other than an individual or HUF393(1) Sl. No. 6(i).D(b)10242%₹30,000 for a single sum; ₹1,00,000 in aggregate194C

The rate depends on the contractor

The rate is 1% where the contractor is an individual or HUF, under code 1023, and 2% where the contractor is a firm, LLP, company or any other person, under code 1024.

When TDS applies

TDS applies above ₹30,000 for a single sum, or ₹1,00,000 in aggregate in the tax year. Typical contract work includes construction and civil work, electrical and plumbing work, transport, catering, manpower supply and advertising contracts.

Contracts paid by an individual or HUF

An individual or HUF that is not otherwise required to deduct TDS on contract work deducts at 2% only where such payments exceed ₹50 lakh, under Section 393(1) Sl. No. 6(ii) (earlier Section 194M), and deposits it with Form 141. See the guide to Section 393(1) Sl. No. 6(ii).

Worked example. On ₹2,00,000, TDS at 2% (code 1024) is ₹4,000, and ₹1,96,000 is paid.

Rates are before any surcharge and cess. Lower-deduction certificates, payees without a PAN and other conditions in the Act can change the TDS. This page is a general guide, not tax advice: confirm with your CA or the sources below.

FAQ

Questions, answered

Payment to a contractor who is an individual or HUF: Section 393(1) Sl. No. 6(i).D(a) (code 1023). Payment to a contractor other than an individual or HUF: Section 393(1) Sl. No. 6(i).D(b) (code 1024). It was earlier Section 194C of the Income-tax Act, 1961.

Payment to a contractor who is an individual or HUF: 1%; payment to a contractor other than an individual or HUF: 2%. Rates are before any surcharge and cess.

₹30,000 for a single sum; ₹1,00,000 in aggregate.

Both are TDS on contract work under Section 393(1) Sl. No. 6(i). Code 1023 applies where the contractor is an individual or HUF, at 1%; code 1024 applies to any other contractor, at 2%.

No. Where GST is shown separately on the invoice, TDS is worked out on the amount before GST.

Other TDS sections

Section 392Codes 1001–1004 · SalaryEarlier Section 192 Section 393(1) Sl. No. 1(i)Code 1005 · Insurance commissionEarlier Section 194D Section 393(1) Sl. No. 1(ii)Code 1006 · Commission and brokerageEarlier Section 194H Section 393(1) Sl. No. 2(i)Form 141 · Rent paid by individualsEarlier Section 194IB Section 393(1) Sl. No. 2(ii)Codes 1008, 1009 · RentEarlier Section 194I Section 393(1) Sl. No. 3(i)Form 141 · Purchase of propertyEarlier Section 194IA Section 393(1) Sl. No. 5Codes 1020–1022 · Interest other than on securitiesEarlier Section 194A Section 393(1) Sl. No. 6(ii)Form 141 · Payments by individuals and HUFsEarlier Section 194M Section 393(1) Sl. No. 6(iii)Codes 1026–1028 · Professional and technical feesEarlier Section 194J Section 393(1) Sl. No. 8(ii)Code 1031 · Purchase of goodsEarlier Section 194Q Section 393(1) Sl. No. 8(iv)Codes 1033, 1034 · Business perquisitesEarlier Section 194R Section 393(1) Sl. No. 8(v)Code 1035 · E-commerce operatorsEarlier Section 194O Section 393(3) Sl. No. 5Codes 1064, 1065 · Cash withdrawalsEarlier Section 194N Section 393(3) Sl. No. 7Code 1067 · Payments to partnersEarlier Section 194T

Complete TDS rate chart for tax year 2026-27 →

Section 393 explained →   TDS section codes list →

Sources

Taken only from the Income Tax Department's official publications, as in force on 17 October 2026:

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