Section 194M: TDS on contract, commission or professional fees paid by individuals/HUF
Section 194M of the Income-tax Act, 1961 covers TDS on contract, commission or professional fees paid by individuals/HUF. From 1 April 2026 the same deduction sits in Section 393(1), Table Sl. No. 6(ii), Income-tax Act, 2025. The rate, threshold and conditions below were read from incometaxindia.gov.in on 13 October 2026.
Section 194M at a glance
| Nature of payment | Sums for contract work (incl. supply of labour), fees for professional services, or commission (not insurance commission) or brokerage |
|---|---|
| Who deducts | Individual or HUF not required to deduct under Sl. 6(i), 6(iii) or 1(ii) (i.e. not a specified person/not covered by contractor/194J/194H equivalents) |
| Threshold | Rs 50 lakh |
| Income-tax Act, 2025 | Section 393(1), Table Sl. No. 6(ii), Income-tax Act, 2025 |
| Payee without PAN | Highest of the rate below, the rates in force, or 20% |
TDS rate
| Payee | Rate |
|---|---|
| Resident | 2% |
Rates exclude surcharge and health and education cess.
Conditions and exceptions
- The primary table states the threshold as 'Fifty lakh rupees'; it does not expressly say whether this is per year aggregate in the cell itself.
- No-PAN: s.397 of IT Act 2025 requires deduction at the highest of the provision rate, rates in force, or 20% (5% only for s.393(1) Sl. 8(ii) and 8(v)) - per incometaxindia.gov.in/w/section-397-5.
Which Act applies to your payment
The 1961 Act governs a payment if it was credited or paid on or before 31 March 2026, whichever happened first. If both happen on or after 1 April 2026, the 2025 Act applies.
Source and verification
Income Tax Department: Section 393(1), Table Sl. No. 6(ii), Income-tax Act, 2025 →
Last verified on 13 October 2026. Finance Acts change TDS rates and thresholds; check the source before you deduct. This is general information, not advice for your situation.
Related
Frequently asked questions
What is the TDS rate under section 194M?
2% for resident. Rates exclude surcharge and cess.
What is the threshold for TDS under section 194M?
Rs 50 lakh. Below this, no tax is deducted.
What is section 194M called under the new Income-tax Act?
From 1 April 2026 it is Section 393(1), Table Sl. No. 6(ii), Income-tax Act, 2025. The e-filing portal's TDS FAQ says the rates and thresholds were carried over; the section number is what changed.
What if the payee has no PAN?
Section 397 of the 2025 Act requires deduction at the highest of the rate above, the rates in force, or 20%.
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