TDS 194C (Contractor) Calculator

When this applies

• You are paying a contractor or sub-contractor and need the deduction.
• You are checking a 194C deduction on a statement.
• You are preparing a payment run for contract labour or job work.
• You are deciding the net payable to a contractor under a work contract.

2% TDS on a contract payment of INR 2,00,000

1. 1Contract payment: INR 2,00,000. Rate: 2% (payee other than individual or HUF).
2. 2TDS = 2,00,000 x 2 / 100 = INR 4,000.
3. 3Net payable = 2,00,000 - 4,000 = INR 1,96,000.

Deduct INR 4,000 and pay the contractor INR 1,96,000.

What this calculator does

Work out TDS on payments to contractors and sub-contractors under section 194C, and the net amount payable. The rate differs between individual or HUF payees and other payees, so it is an input rather than a fixed number.

How this is calculated

Section 194C applies to payments for carrying out work, including labour and certain transport contracts. The rate is commonly 1% where the payee is an individual or HUF and 2% for other payees, applied to the payment: TDS = amount x rate / 100. The deduction is required only once the payment crosses the section's threshold, which applies per contract and in aggregate over the year.

The formula

TDS = amount × rate/100

Common mistakes to avoid

• Using 2% for an individual contractor

  The individual or HUF rate is commonly 1%. Applying 2% over-deducts.

• Deducting below the threshold

  The threshold applies per contract and in aggregate over the year. Deducting from the first payment can be premature.

• Ignoring the higher no-PAN rate

  Where the contractor has not furnished PAN, a higher rate applies.

Frequently asked

What are the 194C rates?

Commonly 1% where the payee is an individual or HUF and 2% for other payees, applied to the payment. Enter the rate for your payee.

When does 194C apply?

Once the payment crosses the section's threshold - which applies to a single contract and in aggregate over the financial year - for work carried out, including labour and certain transport contracts.

Does it apply to a one-off contractor?

Yes. 194C turns on the nature and value of the payment, not on whether the contractor is regular. A one-off payment above the threshold is within the section.

Is the deduction on the gross or the net?

On the payment for the work. Where the contract separately reimburses actual expenses, the treatment of those can differ, so check the terms against the section.

What if the contractor has not given PAN?

A higher rate applies where PAN is not furnished. Enter that rate rather than the normal one.