The two TDS sections every business meets first: payments to contractors and payments to professionals. Close cousins, different rules — and mixing them up creates defaults.
Contractors vs professionals
- Contract work (job work, transport, labour contracts, event execution) follows the contractor provisions, with separate thresholds per payment and per year, and different rates for individuals vs others
- Professional services (accounting, legal, technical, design, consultancy) follow the professional-fees provisions with their own threshold and rate
The judgement calls
Is your videographer a contractor or a professional? Is annual maintenance a contract or technical service? Classification decides the rate — document your reasoning and stay consistent.
Practical hygiene
- Collect PAN before first payment — missing PAN forces deduction at the punitive rate
- Track cumulative payments per vendor; thresholds are annual, not per invoice
- Deduct on credit or payment, whichever comes first — booking the invoice triggers the duty
We map every vendor to the right section as part of TDS compliance — talk to us.
