# TDS on contractor payments: New rules under Income Tax Act 2025 2026-10-04T17:51:33+00:00 | Governance | Indian Opinion Desk Corroboration: 1 independent outlet Payments made to contractors for construction, repair or renovation work from 1 April 2026 are subject to TDS under Section 393(1) of the Income-tax Act, 2025. For a company, firm or government body paying a resident contractor, TDS is 1% if the contractor is an individual or HUF, and 2% for other entities. TDS must be deducted when the payment is booked or made, whichever comes first. An individual or HUF making such payments must deduct TDS at 2% if the total payment in a financial year exceeds Rs 50 lakh. No TDS applies to a single payment of Rs 30,000 or less for designated persons, but the requirement kicks in if aggregate payments to a contractor cross Rs 1 lakh in a year. ## Indian Opinion Analysis The rules create two different thresholds depending on who is paying: designated persons such as companies and government bodies face a Rs 1 lakh annual aggregate trigger, while individuals and HUFs have a higher Rs 50 lakh limit before TDS applies. The distinction means a householder building a home can pay up to Rs 50 lakh to a contractor without TDS, but a company paying the same contractor for an identical job must deduct TDS once annual payments exceed Rs 1 lakh. The source leaves open how a payer should treat mixed payments that cross both thresholds, or what documentation the contractor must provide to claim the TDS credit. ## Coverage - livemint.com Straight explanatory guide with no slant, purely informational This brief was synthesised by AI from the source linked above. Tags: income tax department, Income-tax Act, 2025, Livemint, Sheetal Goel, TDS Canonical: https://indianopinion.org/tds-on-contractor-payments-new-rules-under-income-tax-act-2025/ License: Summary and commentary (c) Indian Opinion, reusable with attribution. Facts belong to the linked sources. Cite: https://indianopinion.org/tds-on-contractor-payments-new-rules-under-income-tax-act-2025/#story-in-brief How this brief was made: an AI model read the report linked above and wrote this summary and analysis, which were published automatically. Published briefs are sampled every hour by an automated quality check; the editor verifies its findings and approves corrections, and corrected briefs carry a dated correction line. We do no original reporting. Methodology: https://indianopinion.org/ai-use-policy/