The Statutory Brief

IT Act 1961 → 2025 / Section 194C

TDS

Section 194C → Section 393

TDS on payments to contractors and sub-contractors

Section 194C of the old Income-tax Act, 1961 · new section 393 under the Income-tax Act, 2025

New reference Section 393(1), Table Sl. No. 6(i); exclusions in 393(4), Sl. No. 8

Income-tax Act, 1961Section 194C

  • 1% where payee is individual/HUF, 2% for others
  • Threshold: ₹30,000 single payment or ₹1,00,000 aggregate in the year
  • Transporter exemption with PAN declaration (up to 10 goods carriages)

Applies to FY 2025-26 (AY 2026-27) and earlier years.

Income-tax Act, 2025Section 393(1), Table Sl. No. 6(i); exclusions in 393(4), Sl. No. 8

  • Covered by section 393(1), Table Sl. No. 6(i)
  • Rates and thresholds carried over
  • No-deduction cases in 393(4), Table Sl. No. 8: transporters owning ten or fewer goods carriages (with PAN declaration) and payments by individuals/HUFs for personal purposes

Applies from tax year 2026-27 (from 1 April 2026).

What changed

Consolidated into section 393. The express inclusion of manpower supply in 'work' removes a long-running ambiguity over whether 194C or 194J applies.

Practice notes

  • The Income Tax Department's own guidance uses this example: a contractor payment after 1 April 2026 should cite section 393(1), Table Sl. No. 6(i), not section 194C.
  • Payment date decides the Act: 25 March 2026 → 194C; 5 April 2026 → section 393.

These are summaries, not the statutory text. Read the bare Act for both sections on the Income Tax Department's official site, which also has a side-by-side comparison utility.

Frequently asked

What is the TDS rate on contractor payments under the new Income Tax Act 2025?

1% where the contractor is an individual or HUF and 2% for others, under section 393(1), Table Sl. No. 6(i). Threshold: ₹30,000 for a single payment or ₹1,00,000 in aggregate during the year.

What is section 194C called in the new Income-tax Act, 2025?

Section 194C of the Income-tax Act, 1961 corresponds to Section 393(1), Table Sl. No. 6(i); exclusions in 393(4), Sl. No. 8 of the Income-tax Act, 2025, which applies from 1 April 2026 (tax year 2026-27).

What changed in section 194C under the new Income Tax Act?

Consolidated into section 393. The express inclusion of manpower supply in 'work' removes a long-running ambiguity over whether 194C or 194J applies.

Is section 194C still applicable for FY 2025-26?

Yes. Income of FY 2025-26 (AY 2026-27) and earlier years is governed by section 194C of the 1961 Act. Section 393(1), Table Sl. No. 6(i); exclusions in 393(4), Sl. No. 8 of the 2025 Act applies from tax year 2026-27.

Related sections

194J→393TDS on fees for professional or technical services, royalty and director's fees194A→393TDS on interest other than interest on securities (FD, RD, loans)