Check sibling questions

As per section 194C

TDS is to be deducted on Contractors at 1% in case of (Individual / HUF) and Single Contract at 2% on (Partnership / Companies)

However, No TDS is to be deducted if annual expense is upto 100000 p.a. or upto 30000 single Contract per annum. If annual expense is 100001 p.a. or 30001 single Contract per annum then TDS is deducted.

From 1.6.2016



Cut off

  Rate of TDS

Section 194C

Payment to Contractors

100000 p.a. or

30000 single Contract

1 % (Individual / HUF)

or 2% (Partnership / Companies)



Changes in 194C Due to Lockdown

However,Due to Lockdown,Government has temporarily reduced Rate by 25%

hence,TDS Rate on Payment to Contractors is Changed as follows

    Current Rate New Rate (Temporary)
TDS on Payment to Contractors Individual/HUF 1% 1%*75%=0.75%
Partnership/Companies 2% 2%*75%=1.5%


Note - This New Rate is Temporary only if TDS Deducted form 14 May 2020 to 31 Mar 2021

After this old Rate will be applicable



What services are covered in 194C?

Services covered in 194C

Services normally not covered in 194C

Those services which are not falling in any section taxable under 194C


(1) Taxi services

(2) Security guard

(3) House keeping

(4) Printing

(5) Employers on contract

(blue collared)

(6) Advertisement Service

(1) Freight Service

Refer Note Below

(2) Utility bills

[Telephone / electricity / water]

If paid direct to agency no TDS

Section 194C TDS on Contractors - Rates of TDS

What is the Rate of TDS under 194C?

Rate of TDS under 194C

1% = Individual / HUF
2% = All others like
(a) Companies (Pvt. Ltd.)
(b) Companies (Ltd Co.'s)
(c) Partnership
4th digit of pan to be checked

194C Bill.jpg

pan no. format.png


Fourth Digit


Rate of TDS in 194C









[Both private & Limited co.’s]


Security Guard bill received of Rs. 10000 pm. for April.
Since amount paid during year = 10000 ×12
= 120000
Since amount paid is more than 75000 p.a.
TDS under 194 C applicable

What is the rate of TDS in Q1 If Security guard bill is paid to

Party name

Pan no



Rajesh Private Limited


Rajesh Limited


Rajesh & Co.



Rajesh Associates



View Answer

What is TDS Rate on Transport charges like Freight and Taxi?

TDS on Transport Charges

Transport is of 2 types

1,Passenger Transport (Cab Charges)

2 Goods Transport (Freight Charges/Truck Charges)


1,Passenger Transport (Cab Charges)

In this case,Section 194 C is applicable

TDS is to be deducted @ 1% if Cab Operator is Individual/Proprietorship

And 2%  if Cab Operator is Partnership/Company


Goods Transport (Freight Charges/Truck Charges)

 In this case,Section 194 C is applicable as follows


                   Rate of TDS

If Pan Number Provided


No of trucks upto 10-


No of trucks > 10

TDS @ 1%/2% under Section 194C


If Pan not provided

TDS is to be deducted @ 20%


No of trucks not relevant)

  How to determine number of trucks?

The truck operator will give declaration in writing that he has x.number of trucks

If truck operator does not give declaration,then assume he has more than 10 trucks and deduct 1%/2% TDS


Whether Employees on contract are covered in 194C or 194J?

Section 194C @ 1% covers Blue collared Employees like like peon, guard, driver, delivery boy etc

Section 194J @ 10% covers White collared Employees like Accountant,Sales Executive,HR, Admin etc


Let's learn the Employees on contract covered in 194C and 194J in detail- Click Here







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CA Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 13 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.