Who Deducts TDS under Section 194C?
Any person responsible for paying a resident contractor or sub-contractor for carrying out any work including supply of labour must deduct TDS under Section 194C. This includes companies, firms, individuals (if their accounts are audited u/s 44AB), HUFs, trusts and AOP/BOI.
TDS Rates under Section 194C
| Payee Type | TDS Rate | No PAN Rate |
|---|---|---|
| Individual / HUF | 1% of payment | 20% |
| Company / Firm / AOP | 2% of payment | 20% |
| Transport contractor (own vehicle) | Nil (if PAN given) | 20% |
When to Deduct — Threshold
TDS is deducted when payment or credit to the contractor's account exceeds ₹30,000 in a single payment or ₹1,00,000 in aggregate during the financial year — whichever is crossed first.
Filing Form 26Q
TDS under Section 194C is reported in Form 26Q — the quarterly return for TDS on non-salary payments. Due dates: Q1: July 31, Q2: October 31, Q3: January 31, Q4: May 31.
Late filing fee under Section 234E is ₹200/day up to the amount of TDS. Late filing penalty under Section 271H can be ₹10,000 to ₹1,00,000.
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