If your business pays for transport or vehicle hire, TDS under Section 194C usually applies. Getting it right avoids disallowed expenses and notices. Here is how it works in plain terms.
Section 194C covers payments to contractors, including transport and vehicle-hire contractors. Tax is deducted at source when payments cross the prescribed thresholds in a single bill or in aggregate over the year.
| Payee type | Typical TDS rate under 194C |
|---|---|
| Individual / HUF contractor | 1% |
| Other (company, firm) contractor | 2% |
A specific relief exists for small transporters: where the transporter owns limited goods carriages and furnishes the required declaration with their PAN, TDS may not be deducted. Collect and retain this declaration correctly, or you lose the exemption.
Corporate and government clients deduct TDS on your bills; you deduct TDS on your vendor and sub-contractor payments. Mismatches show up in Form 26AS reconciliation and delay settlements. Track TDS per bill from the start.
ZeniaFleets records TDS on transporter and vendor payments alongside GST, so your settlements and returns reconcile. See our transport billing software and the GST on cab and taxi services guide.
Generally 1% for individual/HUF contractors and 2% for others, subject to thresholds. A declaration-based exemption exists for small transporters. Confirm current rates and thresholds with your CA.
Small transporters owning limited goods carriages can furnish a declaration with their PAN so that TDS is not deducted on their payments. The payer must collect and retain it correctly.
Yes. ZeniaFleets records TDS on transporter and vendor payments alongside GST so settlements and returns reconcile cleanly.
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