In short
| Item | What applies | Since | Good to know |
|---|---|---|---|
| TDS on cab hire with driver | 1% (individual or HUF), 2% (others) | Before 2017 | Section 194C, now section 393(1) S.No. 6(i). Cut to 0.75% / 1.5% from 14 May 2020 to 31 Mar 2021. |
| When TDS starts | Bill over ₹30,000, or year's bills over ₹1,00,000 | Before 2017 | Worked out on the amount before GST. |
| No PAN | 20% | Before 2017 | Or the normal rate, if higher. |
| Commission to booking agents | 2% | 1 Oct 2024 | Was 5%. Yearly limit ₹20,000. |
| Car hire without driver | Usually 2% as rent of equipment | Before 2017 | Depends on the contract. Limit ₹50,000 a month since 1 Apr 2025. |
| PAN not linked with Aadhaar | Treated as no PAN: generally 20% | 1 Jul 2023 | Check your partners' PAN status. |
| Payments through an app or portal | 0.1% | 1 Oct 2024 | Was 1%. |
| Section numbers, return codes and forms | Income-tax Act 2025 | 1 Apr 2026 | 26Q is Form 140; 16A is Form 131; 26AS is Form 168. |
Current, upcoming and expired rules
Current is what applies today. Upcoming is notified and starts later. Expired shows what applied before, from which date to which date, for when an old invoice or a notice asks.
Rules as on 31 Oct 2026 (India time). A rule moves between the tabs on its own when its start or end date passes.
| Rule | Rate | Dates | Law and source |
|---|---|---|---|
| TDS under the Income-tax Act 2025Salary TDS is in section 392, all other TDS in section 393 (tables with serial numbers), and TCS in section 394. Each payment type has a 4-digit code used in challans and returns. 'Tax year' replaces previous year and assessment year. Payments up to 31 Mar 2026 stay under the old Act. | — | Since 1 Apr 2026 | Income-tax Act 2025 s.392-394; Income-tax Rules 2026 Matched across published copiesMemorandum to Finance Bill 2026Section 393 guide (India Briefing) |
| TDS and TCS forms renumberedQuarterly returns: Form 140 (was 26Q), Form 138 (was 24Q, salary), Form 144 (was 27Q) and Form 143 (was 27EQ, TCS). Certificates: Form 131 (was 16A), Form 130 (was Form 16), Form 133 (was 27D). The annual tax statement Form 26AS is now Form 168. | — | Since 1 Apr 2026 | Income-tax Rules 2026 Matched across published copiesNew income tax forms (ClearTax) |
| Cab hire with driver: contractor TDS under the new ActSame 1% and 2% rates and the same limits, now under section 393(1) Table S.No. 6(i), with return codes 1023 (individual or HUF) and 1024 (others). Supply of manpower now also counts as 'work'.Limit: ₹30,000 a bill; ₹1,00,000 a year | 1% / 2% | Since 1 Apr 2026 | Income-tax Act 2025 s.393(1) Table S.No. 6(i); Finance Act 2026 Matched across published copiesMemorandum to Finance Bill 2026TDS master sheet, 2025 Act (TaxGuru)Form 140 section codes (TaxHeal) |
| Commission under the new Act2% above ₹20,000 a year, now section 393(1) Table S.No. 1(ii), return code 1006.Limit: ₹20,000 a year | 2% | Since 1 Apr 2026 | Income-tax Act 2025 s.393(1) Table S.No. 1(ii) Matched across published copiesTDS master sheet, 2025 Act (TaxGuru)Form 140 section codes (TaxHeal) |
| Rent under the new Act2% for plant, machinery or equipment (code 1008) and 10% for land, building or furniture (code 1009), above ₹50,000 a month, under section 393(1) Table S.No. 2(ii).Limit: ₹50,000 a monthOur reading: Hiring a vehicle without a driver is often treated as rent of equipment, but it can also be contract work depending on the agreement. Check the contract with your CA before choosing the section. | 2% / 10% | Since 1 Apr 2026 | Income-tax Act 2025 s.393(1) Table S.No. 2(ii) Matched across published copiesTDS master sheet, 2025 Act (TaxGuru)Form 140 section codes (TaxHeal) |
| Fees under the new Act2% for technical services (code 1026) and 10% for professional fees (code 1027), above ₹50,000 a year, under section 393(1) Table S.No. 6(iii).Limit: ₹50,000 a year | 2% / 10% | Since 1 Apr 2026 | Income-tax Act 2025 s.393(1) Table S.No. 6(iii) Matched across published copiesMemorandum to Finance Bill 2026TDS master sheet, 2025 Act (TaxGuru) |
| E-commerce TDS under the new Act0.1% under section 393(1) Table S.No. 8(v), return code 1035. | 0.1% | Since 1 Apr 2026 | Income-tax Act 2025 s.393(1) Table S.No. 8(v) Matched across published copiesTDS master sheet, 2025 Act (TaxGuru)Form 140 section codes (TaxHeal) |
| Business benefits under the new Act10% above ₹20,000 a year, under section 393(1) Table S.No. 8(iv), codes 1033 and 1034.Limit: ₹20,000 a year | 10% | Since 1 Apr 2026 | Income-tax Act 2025 s.393(1) Table S.No. 8(iv) Matched across published copiesTDS master sheet, 2025 Act (TaxGuru) |
| TDS interest under the Income-tax Act 2025: the same 1% and 1.5%From 1 April 2026 the same interest applies under s.398(3)(a) of the Income-tax Act 2025: 1% for every month or part of a month from when tax was deductible to when it is deducted, and 1.5% for every month or part of a month from deduction to payment. It must be paid before the TDS statement is filed.Our reading: We read section 398 in the Bill as passed, because the department's site blocks automated reading; the enacted text was not seen. | 1% / 1.5% per month or part of a month | Since 1 Apr 2026 | Income-tax Act 2025 s.398(3)(a)(i)-(ii) and (b) Checked against the textIncome-tax Bill 2025 as passed by Lok Sabha (Bill 104-C of 2025; copy hosted by PRS)Income Tax Department - Income-tax Act 2025 s.398 (refused automated access)TDSMAN - Section 398 of the Income-tax Act 2025 (secondary) |
| Late TDS statement under the 2025 Act: ₹200 a day (s.427)From 1 April 2026 a person who does not deliver a TDS/TCS statement under s.397(3)(b) on time pays ₹200 for every day the failure continues, capped at the tax deductible or collectible. The fee is paid before the statement is delivered.Our reading: We read section 427 in the Bill as passed and the Finance Bill 2026, because the department's site blocks automated reading; the enacted text was not seen. | ₹200/day; max = the TDS/TCS amount | Since 1 Apr 2026 | Income-tax Act 2025 s.427(1)-(2), as substituted by the Finance Act 2026 (clause 83 of the Bill) with effect from 01-04-2026 Checked against the textIncome-tax Bill 2025 as passed by Lok Sabha (Bill 104-C of 2025; copy hosted by PRS)Finance Bill 2026 as introduced, clauses 83, 137-138 and notes on clauses (Ministry of Finance) |
| Salary, interest and commission to partners (194T)A partnership firm deducts 10% TDS on salary, remuneration, commission, bonus or interest paid to its partners above ₹20,000 a year.Limit: ₹20,000 a year | 10% | Since 1 Apr 2025 | Income-tax Act 1961 s.194T (Finance (No. 2) Act 2024); continued in the 2025 Act (code 1067) Checked against the textMemorandum to Finance (No. 2) Bill 2024 |
| PAN not linked with Aadhaar counts as no PANA PAN not linked with Aadhaar became inoperative, and TDS on payments to that person is taken at the higher no-PAN rate, generally 20%. Linking it, with a fee, makes it work again.For a cab operator: Check that the PANs of your partner operators are linked with Aadhaar before paying them. | Generally 20% | Since 1 Jul 2023 | Income-tax Act 1961 s.139AA; CBDT Circular 3/2023 Matched across published copiesPAN inoperative: TDS/TCS impact (Protean)Higher TDS after missed PAN-Aadhaar deadline (ClearTax News) |
| When TDS is deposited and reportedDeposit TDS by the 7th of the next month (30 April for March). File the quarterly return by 31 July, 31 October, 31 January and 31 May. Give certificates within 15 days of the return due date. | — | Since 1 Jul 2017 | 1961 Rules: Rules 30, 31A; Income-tax Rules 2026 Matched across published copiesTDS/TCS calendar 2026-27 (TDSMAN) |
Checked against the government text Official copy not yet online; matched across published copies The law is unclear; this is our reading
On a timeline
Each line is one rule; each bar is one period. Grey has ended, green applies today, amber starts later.
What courts and rulings have said
Judgments and advance rulings that explain a rule, including ones that pull in different directions. Weigh them by who gave them: a Supreme Court judgment binds every court in India; a High Court’s is followed by courts and tax officers in its State and is persuasive elsewhere; an advance ruling (AAR or AAAR) binds only the business that asked for it and its tax officer (section 103 of the CGST Act).
| Ruling | Question and answer | Weight |
|---|---|---|
| High CourtCommissioner of Income Tax-XII v. Gurpreet Singh (proprietor, Harmony Travels)Delhi High Court, 9 Oct 2013ITA 463/2013 | Must a travel operator who hires cars and taxis from owners, but pays the drivers and fuel itself, deduct TDS under s.194C(2) on the hire paid?No. Section 194C(2) needs a contract for work with labour, such as carriage of passengers; taking a vehicle without driver and fuel is not covered. The Revenue's appeal was dismissed at the threshold because the Tribunal had found as a fact that the operator paid fuel and drivers.“Taking a vehicle/taxi, without driver and fuel is not covered.”Income-tax Act 1961 s.194C(2) and Explanation (work includes carriage of passengers), s.40(a)(ia); s.194-IDelhi High Court order | Turns on its factsIncome-tax authorities and the Tribunal in Delhi; persuasive elsewhereNone known. Decided under the 1961 Act on section 194C only; it does not say whether section 194-I applies instead. |
| High CourtCommissioner of Income Tax v. BMR & AssociatesDelhi High Court, 12 Apr 2010ITA 619/2010 (2010:DHC:1979-DB) | Are car lease rentals paid to a leasing company that supplies no driver and no maintenance a transport contract needing TDS under s.194C?No. The lessor neither provided drivers, nor maintained the cars, nor carried passengers, so it was a lease of vehicles for a fixed period, not a contract for carriage under s.194C. The Revenue's appeal was dismissed.“the contract was not a transport contract, but merely entailed the taking of vehicles on lease and the payments were in the nature of lease rentals simplicitor”Income-tax Act 1961 s.194C (Explanation III(c), carriage of passengers), s.194-I, s.40(a)(ia)Delhi High Court judgment | Turns on its factsIncome-tax authorities and the Tribunal in Delhi; persuasive elsewhereNone known. Decided under the 1961 Act on section 194C only; it does not say whether section 194-I applies instead. |
Cab hire is contract work
Carrying passengers counts as “work”, so TDS on cab hire with a driver falls under the contractor provision: section 194C until 31 March 2026, and section 393(1), table serial 6(i), from 1 April 2026. The rate is 1% when the operator is an individual or HUF and 2% otherwise. The customer deducts once a single bill is over ₹30,000 or the year’s bills go over ₹1,00,000. Without a PAN the rate is 20%.
When your invoice shows GST separately, TDS is worked out on the amount before GST (CBDT Circular 23/2017).
You are a private limited company and bill ₹1,00,000 plus 5% GST.
| Invoice total | ₹1,05,000 |
| TDS at 2% on ₹1,00,000 | ₹2,000 |
| Paid into your bank | ₹1,03,000 |
The ₹2,000 is your tax paid in advance. It reaches you once the customer files its quarterly TDS return and it shows in your annual tax statement against your PAN.
The transporter exemption, which lets a payer skip TDS for a transporter owning ten or fewer vehicles, is only for goods carriages. Cab and bus operators cannot use it.
Deducting from operators you hire
When you hire a partner operator’s car and driver, you are the payer. Both limits run on the supplier’s bills for the year, and once the yearly limit is crossed the TDS covers the earlier bills too.
A proprietor supplier (1% rate) bills you ₹25,000 in April, ₹25,000 in June, ₹25,000 in August and ₹40,000 in October.
| Bill | Year so far | TDS | |
|---|---|---|---|
| April | ₹25,000 | ₹25,000 | ₹0 |
| June | ₹25,000 | ₹50,000 | ₹0 |
| August | ₹25,000 | ₹75,000 | ₹0 |
| October | ₹40,000 | ₹1,15,000 | ₹1,150 |
In October the bill is over ₹30,000 and the year’s total is over ₹1,00,000, so you deduct 1% on the whole ₹1,15,000 from the October payment. Deposit it by the 7th of November and report it in that quarter’s return.
Other payments in a travel business
- Commission to booking agents (old section 194H): 2% since 1 October 2024, 5% before that. The yearly limit rose from ₹15,000 to ₹20,000 on 1 April 2025.
- Hiring a car without a driver is usually treated as rent of equipment (old 194-I(a)), at 2%, though some contracts make it contract work instead; check yours with your CA. Rent TDS applies once rent passes ₹50,000 in a month (from 1 April 2025; before that ₹2,40,000 a year).
- Professional and technical fees (old 194J): 10% for professional fees, 2% for technical services. The yearly limit rose from ₹30,000 to ₹50,000 on 1 April 2025.
- Bookings paid through an app or portal (old 194-O): the platform deducts on what it pays you: 0.75% from 1 October 2020 (under the COVID cut), 1% from 1 April 2021 and 0.1% from 1 October 2024.
- Incentive trips and gifts a company gives to its dealers or agents: the company ensures 10% TDS on their value above ₹20,000 a year (old 194R, from 1 July 2022). If you only run the trip for the company, this is the company’s job, not yours.
- Drivers’ salaries: TDS under section 192, which is section 392 from 1 April 2026.
- A PAN not linked with Aadhaar counts as no PAN since 1 July 2023, so TDS is taken at the higher no-PAN rate, generally 20%.
You pay an agent ₹40,000 of commission in the year.
| FY 2023-24 | FY 2026-27 | |
|---|---|---|
| Rate | 5% | 2% |
| TDS | ₹2,000 | ₹800 |
Interest and late fees on TDS
- Not deducted on time: 1% for every month or part of a month, from when it should have been deducted until it is.
- Deducted but deposited late: 1.5% for every month or part of a month, from deduction until deposit, paid before you file the TDS return.
- TDS return filed late: ₹200 a day, but never more than the TDS in that return, paid before filing. A return with ₹3,000 of TDS filed 20 days late costs ₹3,000, not ₹4,000.
The rates are the same under the Income-tax Act 2025 (section 398(3) for interest, section 427 for the fee) as under the 1961 Act (sections 201(1A) and 234E).
You deduct ₹2,000 TDS on 1 May and deposit it on 20 June instead of by 7 June.
| Months or part months, 1 May to 20 June | 2 |
| Interest at 1.5% a month | ₹60 |
A part of a month counts as a whole month.
1 April 2026: section numbers, codes and forms
The Income-tax Act 2025 replaced the 1961 Act for anything from 1 April 2026. Rates and limits for these payments did not change. What changed is how you cite and file them:
| Payment | Until 31 Mar 2026 | From 1 Apr 2026 | Return code |
|---|---|---|---|
| Cab hire, contractor | 194C | 393(1) S.No. 6(i) | 1023 / 1024 |
| Commission | 194H | 393(1) S.No. 1(ii) | 1006 |
| Rent of machinery or equipment | 194-I(a) | 393(1) S.No. 2(ii) | 1008 |
| Rent of land or building | 194-I(b) | 393(1) S.No. 2(ii) | 1009 |
| Technical / professional fees | 194J | 393(1) S.No. 6(iii) | 1026 / 1027 |
| E-commerce operator | 194-O | 393(1) S.No. 8(v) | 1035 |
| Salary | 192 | 392 | — |
The quarterly return for payments to residents, Form 26Q, is Form 140; the salary return 24Q is Form 138; the certificate 16A is Form 131; and Form 26AS becomes Form 168. Codes come from the Form 140 schedule, and published lists still differ on a few lines, so check them in the return utility before you file.
The March–April trap. A customer that credited your March 2026 invoice in its books deducted under 194C in FY 2025-26, even if the payment advice it sends in April prints “393(1)”. In law, TDS credit belongs to the year in which the income is taxed (rule 37BA of the 1961 Rules). The annual tax statement is what the department matches your return against, so keep your books in step with it, or be ready to explain the difference.
Common questions
What happens if I deposit TDS late?
Interest at 1.5% for every month or part of a month from the date you deducted it to the date you deposit it, paid before you file the TDS return. If you did not deduct at all on time, it is 1% a month until you deduct.
Do customers deduct TDS on the GST part of my invoice?
Not when the GST is shown separately on the invoice. CBDT Circular 23/2017 says TDS is worked out on the amount before GST in that case.
What is the TDS rate on cab hire after April 2026?
The same 1% for individuals and HUFs and 2% for others. It is now cited as section 393(1), table serial 6(i), with payment codes 1023 and 1024 in the return.
Can a cab operator give the transporter declaration to avoid TDS?
No. That exemption is only for transporters plying, hiring or leasing goods carriages, with ten or fewer of them. Passenger vehicles do not qualify.
My supplier has no PAN. What do I deduct?
20%, or the normal rate if that is higher. Ask for the PAN before the first payment that crosses a limit.
Is the higher TDS for people who did not file returns still applied?
No. Section 206AB, which doubled TDS for non-filers, applied from 1 July 2021 and was removed from 1 April 2025.
Words used on this page
- GST option (5% or 18%)
- For cab hire with driver and fuel you choose 5% with almost no input credit, or 18% with full input credit. Until 21 Sep 2025 the second option was 12%.
- ITC (input tax credit)
- GST you paid on business purchases that you subtract from the GST you collect.
- Same line of business
- Buying the same kind of service you sell, such as cab hire bought from another operator.
- RCM (reverse charge)
- The customer pays the GST to the government instead of the supplier.
- Body corporate
- A company or an LLP. Proprietors, HUFs and partnership firms are not body corporates.
- SAC / HSN
- The code printed on an invoice for a service (SAC) or for goods (HSN).
- Place of supply
- The state whose GST applies. It decides whether you charge IGST or CGST plus SGST.
- E-invoice / IRN
- Reporting an invoice to the government portal, which returns an Invoice Reference Number and a QR code.
- Pure agent
- Someone who pays an expense on the customer's behalf, with its authority, and recovers it at actual cost.
- TDS
- Tax your customer cuts from a payment to you and deposits against your PAN. You claim it in your income tax return.
- TCS
- Tax a seller collects from the buyer on top of the price, such as on overseas tour packages.