India TDS Sections and Rates Reference
Choosing the right TDS section on a vendor invoice decides whether your return is clean or ends up with a notice. This lookup table lists the sections most Indian manufacturers use, with the nature of payment and the general rate.
| Section | Nature of payment | General rate | Typical use in a manufacturer |
|---|---|---|---|
192 | Salary | Slab rates of the employee | Monthly payroll |
194A | Interest other than interest on securities | 10% | Interest on unsecured loans from non-banks |
194C | Payment to contractors and sub-contractors | 1% individual or HUF, 2% others | Job work, transport, labour contractors |
194H | Commission or brokerage | 2% | Sales agent commission |
194I(a) | Rent of plant, machinery or equipment | 2% | Hired machinery or equipment |
194I(b) | Rent of land, building or furniture | 10% | Factory, godown or office rent |
194J | Fees for professional services | 10% | CA, legal, consulting fees |
194J | Fees for technical services | 2% | Technical service providers |
194Q | Purchase of goods above the threshold | 0.1% | Buyers with turnover above the notified limit |
194O | Payment by e-commerce operator to participant | 0.1% | Sales through e-commerce platforms |
194R | Benefit or perquisite in business | 10% | Free gifts or incentives to dealers |
194N | Cash withdrawal above the threshold | 2% | Applied by banks |
194M | Payment to resident contractors or professionals by individuals and HUF not under audit | 2% | Non-business payments |
194IA | Transfer of immovable property other than agricultural land | 1% | Land or building purchase |
194B | Winnings from lottery or game | 30% | Rare for manufacturers |
206AA | Higher rate where PAN is not furnished | 20% or the section rate, whichever is higher | Vendor master with missing PAN |
Rates and thresholds change with each Finance Act and some sections have lower-deduction or exemption certificates. Treat this as a first lookup and verify on the Income Tax portal or with your tax advisor.
Vendor master exception report
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How to use it
Search by section number or by words from the invoice, such as rent, commission or professional. Match the nature of payment to the vendor's service, then set the same section on the ledger or stock item in your accounting system. In Tally Prime the TDS nature of payment is configured on the party ledger and in the voucher, so a wrong master leads to wrong deduction on every bill.
194C or 194J for job work and services
Job work and labour contracts normally fall under 194C. Professional and technical service fees fall under 194J, with a lower rate for technical services. The split depends on the contract wording, so use the agreement and the invoice description. Keep a vendor-wise note so purchase staff do not change the nature of payment from bill to bill.
- Contractor transport and labour: usually 194C.
- CA, lawyer, consultant: 194J at the professional rate.
- Rent: 194I split between machinery and land or building.
Deposit and return timing
TDS deducted in a month is generally deposited by the 7th of the next month, with the March deduction deposited by 30 April. Quarterly statements such as Form 26Q are due by the end of the month following the quarter, and the TDS certificate is issued after filing. Build these dates into the compliance calendar next to your GST dates.
Common mistakes
Frequent errors are missing PANs on the vendor master, which triggers a higher rate, deducting on the invoice value including GST when GST is shown separately, and applying 194Q without checking turnover. Review the vendor master once a year against PAN and the latest rates.
Frequently Asked Questions
Is TDS deducted on the GST amount?
Where GST is shown separately on the invoice, TDS is generally deducted on the value excluding GST. For rent under 194I, the CBDT has clarified this too. Confirm with your tax advisor for your specific case.
Which TDS section applies to job work?
Job work normally falls under section 194C at 1% for individuals and HUF and 2% for others. If the job worker is a professional or technical service provider, other sections may apply.
What if the vendor has no PAN?
Section 206AA requires deduction at the higher of the section rate, the rate in force, or 20 percent. Collect the PAN at vendor onboarding to avoid this.
Does 194Q apply to every buyer?
No. It applies to buyers whose turnover in the preceding year exceeded the notified limit and to purchases above the annual threshold from one seller. Check the current limits before applying it.
We can help you build a read-only exception report over your vendor master and payables that flags missing PANs and mismatched TDS sections, working with your accounting partner.
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