BooksIQTDS applies at 1% where the payee is an individual or HUF and 2% in any other case on payments to contractors and sub-contractors for work or services, once a single payment exceeds ₹30,000 or the aggregate in an FY crosses ₹1,00,000.
Key points
- The deductor is any person liable to tax audit, together with the government, any company, firm, co-operative society, or trust.
- The rate is 1% where the payee is an individual or HUF and 2% in any other case, with the no-PAN rate stepping up to 20%.
- The deduction trigger is any single payment of ₹30,000 or more, OR aggregate payments in the FY reaching ₹1,00,000.
- 'Work' includes advertising, broadcasting, carriage of goods or passengers (other than by railways), catering, and the manufacture or supply of products to the customer's specifications using customer-supplied material.
- A specific carve-out exempts payments to small transport operators (owning ≤ 10 goods carriages) who furnish their PAN — NIL TDS applies in that case.
Reference: §194C, ITA 1961 — under ITA 2025 (FY 26-27 onwards), this is §393(1) Sl.6(i)
This page is general information for Indian businesses, current as of the
financial year shown above — not legal or tax advice. Tax law changes,
and how a provision applies depends on your specific facts. Confirm the
current position with a qualified professional before you act.
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