Free online TDS on Contractor Payment Calculator. Calculate contractor TDS under Section 194C (Section 393 from FY 2026-27), verify ₹30,000/₹1,00,000 limits, applicable rates, and net payment in seconds.
Use this TDS on Contractor Payment Calculator (Section 194C) to instantly work out how much tax to deduct before paying a contractor, sub-contractor, transporter, or service vendor. The calculator applies the current 1%/2% rate structure and the ₹30,000/₹1,00,000 threshold rules so you never under-deduct or over-deduct TDS.
This tool calculates the tax you must deduct at source before paying a resident contractor for "work" — construction, manpower supply, catering, advertising, or job-work. It's built for business owners, accountants, CAs, and finance teams who process vendor and contractor payments and need to get the deduction right the first time. Freelancers and small business owners who hire contractors for projects will also find it useful before releasing any payment.
Section 194C of the old Income-tax Act, 1961 was renumbered to Section 393(1), Table 1, Sl. No. 6(i) of the Income-tax Act, 2025, effective 1 April 2026. The rates and thresholds carried over unchanged — only the section number and payment codes changed.
TDS = Payment Amount × Applicable Rate
Applicable Rate:
1% → Contractor is an Individual or HUF
2% → Contractor is any other person (firm, company, LLP, AOP/BOI)
20% → Contractor's PAN is not furnished
No TDS if:
Single payment ≤ ₹30,000 AND Aggregate payments in FY ≤ ₹1,00,000Once either limit is crossed, TDS applies on every payment to that contractor for the rest of the financial year — including the payment that crossed the limit.
Suppose you run a small manufacturing unit and hire an individual contractor for a repair job.
Step 1: Check the single-payment threshold — ₹45,000 > ₹30,000, so TDS applies. Step 2: Check the aggregate threshold too — ₹60,000 + ₹45,000 = ₹1,05,000, which also crosses ₹1,00,000. Step 3: Since the contractor is an individual with a valid PAN, the rate is 1%. Step 4: TDS = ₹45,000 × 1% = ₹450. Step 5: Net payment to contractor = ₹45,000 − ₹450 = ₹44,550.
You deduct ₹450, deposit it with the government, and pay the contractor ₹44,550.
From 1 April 2026, Section 194C of the Income-tax Act, 1961 stands replaced by Section 393(1) of the Income-tax Act, 2025. If the earlier of credit or payment falls on or after 1 April 2026, you must quote Section 393 (not 194C) on your TDS return — the Income Tax Department's e-filing portal has confirmed that quoting the old section number for such transactions can cause validation errors. Rates (1%/2%) and thresholds (₹30,000/₹1,00,000) remain exactly the same; only the section reference and payment codes have changed. Deductors should also check whether their turnover crossed the tax-audit limit in the preceding year, since that determines whether the TDS obligation applies at all — use the Section 44AB Tax Audit Applicability Checker to confirm this before assuming TDS applies.
The provision itself continues, but it's now numbered Section 393(1) under the Income-tax Act, 2025 for any payment where the earlier of credit or payment falls on or after 1 April 2026. Rates and thresholds are unchanged from the earlier Section 194C.
If the contractor doesn't furnish a valid PAN, TDS is deducted at a flat 20%, regardless of whether they're an individual, HUF, firm, or company.
Not on its own — but if the total paid to that same contractor during the financial year exceeds ₹1,00,000, TDS becomes applicable on payments going forward, even if each individual payment stays below ₹30,000.
No. TDS under this section is calculated only on the payment for work, excluding GST, provided GST is shown separately in the invoice.
Yes, by applying to the Assessing Officer using the prescribed form for a lower/nil deduction certificate under the corresponding provision of Section 393.
30% of the payment gets disallowed as a business expense under the corresponding disallowance provision, along with interest for delayed deduction or deposit.
Calculations verified by our team including CA Anita Patil. View our full accuracy policy and meet the team →
For informational purposes only. Results are estimates based on the inputs you provide and the rules in effect for the period shown, and are not tax, legal or financial advice. Verify figures against the relevant official source and consult a qualified professional before acting on them. Accuracy & limitations
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