What are the rates under 194C, 194J and 194H?

194C: 1% if the payee is an individual or HUF, 2% otherwise. 194J: 10% for professional fees, 2% for technical services. 194H: 2% on commission or brokerage. No valid PAN makes the rate 20% in all three.

What are the thresholds?

194C: Rs 30,000 per single bill or Rs 1,00,000 in aggregate for the year. 194J: Rs 50,000 in the year. 194H: Rs 20,000 in the year.

Is a payment a contract (194C) or commission (194H)?

194H applies where someone is paid for acting on your behalf to procure business — a commission or brokerage agent. 194C applies where the payee carries out work or a service contract for you. The substance of the arrangement decides it.

Which return are these reported in?

All three are non-salary resident deductions reported in Form 140 (the old Form 26Q), filed quarterly.

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194C vs 194J vs 194H: Contract, Professional or Commission?

2026-06-30 · 6 min read · by a CA firm

These three sections cover the everyday payments most businesses make — to contractors, to professionals, and to agents — and they carry very different rates and thresholds. Picking the wrong one is the single most common TDS error. All three now sit within Section 393 of the Income-tax Act 2025 and are reported in Form 140.

Side by side

	194C	194J	194H
Covers	Contractor / works-contract payments	Professional & technical fees, royalty	Commission or brokerage
Rate (with PAN)	1% (individual/HUF), 2% (others)	10% professional, 2% technical	2% (reduced from 5%)
No-PAN rate	20%	20%	20%
Threshold	₹30,000 single bill, or ₹1,00,000 a year	₹50,000 a year	₹20,000 a year
Payment code	1023 / 1024	1019 / 1020	1006

How to classify the payment

194C — a contract for work. The payee does a job for you: civil works, fabrication, job-work, AMC, transport, catering, advertising production. If the payee is an individual or HUF the rate is 1%, otherwise 2%. Watch the dual threshold: ₹30,000 on any single bill, or ₹1,00,000 in aggregate for the year — either one triggers TDS.

194J — professional or technical. Fees to a CA, lawyer, doctor, architect, consultant (professional, 10%) versus technical services such as software development, IT support and call-centre work (2%). The threshold is ₹50,000 for the year. The 10%-vs-2% split is itself a frequent trap — see our dedicated note on 194J: 10% or 2%.

194H — commission or brokerage. Where you pay someone for acting on your behalf to procure business — a selling agent, broker, or commission earner — deduct 2% (reduced from the earlier 5%) once payments cross ₹20,000 in the year.

The classification traps

Contract or commission? If the payee carries out work, it is 194C; if they are rewarded for bringing you a customer or order, it is 194H. Contract or technical service? A pure manpower or works contract is 194C, but a service requiring technical expertise can fall under 194J at 2% — read the nature of the work, not the vendor’s label. Professional or technical? Designation does not decide it; the nature of the service does — most software and IT-support work is technical (2%), not professional (10%).

Worked example

You pay ₹1,00,000 each to three vendors. A company doing fabrication work → 194C at 2% = ₹2,000. A CA firm for audit → 194J professional at 10% = ₹10,000. A selling agent’s commission → 194H at 2% = ₹2,000. Same amount, three different deductions.

Frequently asked questions

Rates? 194C 1%/2%; 194J 10% (professional) / 2% (technical); 194H 2%. No PAN → 20%.

Thresholds? 194C ₹30k/bill or ₹1L/year; 194J ₹50k/year; 194H ₹20k/year.

Contract or commission? Work done → 194C; procuring business for you → 194H.

Which return? All three → Form 140, quarterly.

Section guides for the at-a-glance numbers: 194C, 194J, 194H. Related: 194C deep-dive, 194J 10% vs 2%, TDS glossary.

General information for FY 2026-27 under the Income-tax Act 2025, not advice on your specific case. Verify against the latest law or talk to a CA.