Content authored by practitioners with experience at Amazon India, Intuit QuickBooks, and the Tata Group. Meet the team →
A finance manager at a mid-market manufacturer processes a Rs 42,000 invoice from a small contractor for facility maintenance work. The single-payment ceiling under Section 194C is Rs 30,000; the FY-aggregate ceiling is Rs 1,00,000 per contractor. The single invoice looks marginally below the FY-aggregate ceiling in the AP officer's mental model. TDS is not deducted at payment. Three months later, a Section 200A intimation from the Centralised Processing Centre for TDS lands on the deductor's TRACES login demanding Rs 3,140 in short-deducted TDS on the vendor and Section 201(1A) interest running from the payment date of each contributing invoice. The apparent under-threshold payment surfaces as a full retroactive demand because the earlier three invoices to the same PAN in the same FY — each Rs 24,000 to Rs 25,000, individually under the single-payment ceiling — had accumulated to Rs 73,000, and the current Rs 42,000 invoice took the FY aggregate to Rs 1,15,000. Once the aggregate cliff is crossed, Section 194C reads the trigger back across the full base.
Every TDS section that carries an aggregation threshold operates on the same core mechanic: the threshold is measured on the running FY total per PAN, not the single payment; the threshold resets on 1 April every year; and crossing the threshold at any point during the FY triggers a retroactive deduction obligation back to the first invoice of the FY, not just the invoice that crosses. Section 194C runs the two-limb design: Rs 30,000 single payment OR Rs 1,00,000 FY aggregate, either breach is the trigger, and the base becomes the full aggregate once the trigger fires. Section 194J runs the single-limb design: Rs 30,000 FY aggregate only, no single-payment safe harbour. Section 194Q runs a marginal-deduction design: 0.1 per cent on the excess above Rs 50 lakh aggregate per seller (buyer with over Rs 10 crore preceding-FY turnover), not on the full base. Section 194O runs the operator-side aggregation: Rs 5 lakh per e-commerce participant per FY for the operator's deduction obligation, irrespective of the participant's independent thresholds. Section 201(1A) interest at 1 per cent per month accrues on the non-deducted portion from the deduction-due date to actual deduction, and at 1.5 per cent per month from deduction to deposit. From 1 April 2026, the Section 393(1) successor codes — 1002 (194C), 1005 (194J), 1011 (194O), 1031 (194Q) — carry the same aggregation semantics.
A vendor master with a per-PAN running-FY TDS aggregate column refreshed on every AP posting. A threshold-classification rule per section — Rs 30,000 single OR Rs 1,00,000 aggregate for 194C, Rs 30,000 aggregate for 194J, Rs 50 lakh excess-only for 194Q, Rs 5 lakh for 194O — applied at the invoice-entry stage rather than at the payment stage. An FY-reset job that zeros the running aggregate on 1 April and stamps the reset date on every vendor record. A retroactive-liability calculation that on the FY-aggregate breach event walks back across the prior invoices to the same PAN, computes the deferred TDS obligation, and produces a single consolidated challan deposit for the crossing month rather than a per-invoice back-computation. A Section 201(1A) interest schedule that runs 1 per cent monthly on the non-deducted portion for the period between the payment date and the retroactive-deduction date, and a controller sign-off gate on any vendor whose running-FY aggregate has crossed 75 per cent of the applicable threshold in any of the four sections.
Every Section 194C, 194J, 194Q, or 194O deduction is triggered at the FY-aggregate crossing point rather than surfacing as a Section 200A intimation two months after the crossing. The TDS challan deposit for the crossing month carries the retroactive base for the accumulated invoices in a single line item with the correct Section 393(1) payment code. Section 201(1A) interest is deposited alongside the base tax rather than accruing until the intimation lands. The vendor master reflects the running-FY aggregate every business day, and the controller sign-off on any vendor crossing 75 per cent of the section threshold catches the retroactive-liability crystallisation before the fourth invoice enters AP. Form 26Q for the quarter reports the deduction under the correct section code with the retroactive base flagged in the correction workflow if the crossing event was identified after the original filing.
You processed a Rs 42,000 invoice from a small contractor last month. The single-payment ceiling under Section 194C is Rs 30,000; the FY-aggregate ceiling is Rs 1,00,000. The invoice was under the aggregate ceiling. TDS was not deducted at payment because the AP officer read the single figure against the aggregate figure and cleared it.
Then a Section 200A intimation from the Centralised Processing Centre for TDS lands on the TRACES login. It demands Rs 3,140 in short-deducted TDS on the vendor plus Section 201(1A) interest. The single payment was well under Rs 1,00,000. Why is there a demand?
The quick answer
The Rs 1,00,000 threshold under Section 194C is a financial-year aggregate ceiling per contractor, not a per-payment ceiling. The department calculates the aggregate across every payment to the same PAN during the same FY. Your earlier three invoices to the same contractor — Rs 24,000 in April, Rs 25,000 in July, Rs 24,000 in September, each individually under the single-payment ceiling of Rs 30,000 — had accumulated to Rs 73,000 before the fourth invoice landed. The fourth Rs 42,000 invoice took the running FY aggregate to Rs 1,15,000. Once the FY-aggregate ceiling is breached, Section 194C reads the trigger back across the full accumulated base — TDS applies on the full Rs 1,15,000, not just the Rs 42,000 crossing invoice.
At the 2 per cent rate (contractor other than individual or HUF), Rs 2,300 in TDS on the prior three plus Rs 840 on the crossing invoice equals Rs 3,140 on the base — the exact figure on the intimation, before Section 201(1A) interest.
Rule 1 — The FY-aggregate ceiling is retroactive to invoice one
Section 194C carries two thresholds joined by an “or” — a single-payment ceiling of Rs 30,000, and an FY-aggregate ceiling of Rs 1,00,000 per contractor. Either breach is the trigger. Once the FY aggregate crosses Rs 1,00,000 at any point during the year, the deduction obligation crystallises retroactively across every earlier payment to the same PAN in the same FY — not just prospectively on the crossing invoice.
This is the trap most mid-market AP officers walk into. Every one of the earlier invoices looked safely below both ceilings when it was processed. Only the crossing event surfaces the earlier ones as retroactively deductible. The Section 194C contractor payments walkthrough is the pillar-level treatment of the two-limb design.
Illustrative arithmetic. Four invoices to Contractor A (LLP, not individual/HUF), FY 2026-27: Rs 24,000 in April, Rs 25,000 in July, Rs 24,000 in September, Rs 42,000 in November. Aggregate after the fourth invoice = Rs 1,15,000. Trigger: FY-aggregate ceiling breached in November. Retroactive base: Rs 1,15,000. TDS at 2 per cent: Rs 2,300 (on the first three cumulatively) plus Rs 840 (on the fourth) = Rs 3,140 base tax demand.
Rule 2 — Section 194J has no single-payment safe harbour at all
Section 194J is single-limb — Rs 30,000 FY aggregate per professional, no separate single-payment ceiling. Every professional-fee invoice from the first rupee counts toward the Rs 30,000 aggregate.
A CA firm that raises a Rs 12,000 audit-support invoice in April, a Rs 14,000 GST-advisory invoice in July, and a Rs 8,000 quarterly-review invoice in October has already breached the Rs 30,000 aggregate at the third invoice. The buyer’s TDS obligation crystallises on the full Rs 34,000 aggregate at 10 per cent — Rs 3,400 base tax. If the deduction did not happen at each invoice, the notice will read the Rs 3,400 with Section 201(1A) interest running from the payment date of each of the three invoices.
The Section 194J design catches mid-market finance teams more often than Section 194C because there is no Rs 30,000 single-payment safe harbour to hide behind. The Rs 30,000 aggregate arrives quickly on any recurring professional engagement — three months of a monthly retainer typically breach it — and the retroactive base then extends back to the first month.
Rule 3 — Section 194Q is different in structure
Not every threshold rule triggers retroactive-back-to-invoice-one. Section 194Q — the buyer-side purchase-of-goods TDS at 0.1 per cent — operates as a marginal deduction on the excess above Rs 50 lakh aggregate per seller in the FY, not on the full aggregate. The buyer with turnover above Rs 10 crore in the preceding FY who purchases goods aggregating above Rs 50 lakh from a seller in the current FY deducts 0.1 per cent only on the incremental amount above the Rs 50 lakh threshold.
On a Rs 62 lakh aggregate purchase from one seller, the Section 194Q base is Rs 12 lakh (Rs 62L minus Rs 50L) at 0.1 per cent = Rs 1,200 TDS — not Rs 6,200 on the full aggregate. The sibling walkthrough on Section 194Q deduction obligations covers the buyer-side aggregation and the seller-side Section 206C(1H) TCS overlap, and the Section 194Q purchase reconciliation article is the operational treatment.
Rule 4 — Section 194O operates on the operator, not on the seller
The Section 194O aggregation lives on the e-commerce operator’s side, not on the participating seller’s side. The operator (an Amazon, a Flipkart, a Meesho) deducts 1 per cent on the gross sales facilitated to any e-commerce participant once the participant’s gross sales through the operator’s platform cross Rs 5 lakh in the FY. The Rs 5 lakh threshold applies per participant per FY, and the deduction obligation is the operator’s whether or not the participant independently exceeded any Section 194C, 194J, or 194Q threshold on the operator’s own transactions.
For a manufacturer selling on Amazon Business as an individual proprietor with a valid PAN, the first Rs 5 lakh of gross sales in the FY is exempt; the operator’s Section 194O deduction crystallises on gross sales above Rs 5 lakh from the moment the aggregate crosses. If the manufacturer is a non-individual (LLP, private limited), the Rs 5 lakh safe harbour does not apply and the operator deducts from the first rupee.
Rule 5 — Every threshold resets on 1 April
The Rs 87,000 aggregate paid to a contractor in FY 2025-26 does not carry into FY 2026-27. The FY 2026-27 counter starts at zero on 1 April 2026 and the next Rs 1,00,000 (for Section 194C) or Rs 30,000 (for Section 194J) has to accumulate afresh before the deduction obligation triggers. A vendor who was above the aggregate threshold every FY for the past five years is still evaluated on a fresh counter every 1 April.
The one cross-year reference the department uses is under Section 194Q for the buyer’s turnover test — the Rs 10 crore threshold is measured against the immediately preceding FY, not the current FY. The seller-side Rs 50 lakh purchase aggregate however still resets FY-by-FY.
The FY reset is the reason the July invoice can look small in isolation but roll into a September crossing event that a June aggregate would have blocked entirely if the counter carried over. An AP officer who processes the July invoice off a mental model of the vendor’s prior-year pattern rather than the current-FY running aggregate is walking straight into the retroactive-liability cliff.
Rule 6 — Section 201(1A) interest runs alongside the base demand
The Section 200A intimation typically lists two components. The first is the retroactive TDS base (Rs 3,140 on our Rs 1,15,000 illustration). The second is Section 201(1A) interest at 1 per cent per month or part of a month on the non-deducted portion, computed from the date each earlier invoice was paid to the current date.
On the illustrative April invoice of Rs 24,000 (contribution to the Rs 1,15,000 aggregate), the retroactive Rs 480 TDS at 2 per cent crystallised in November — seven months after payment. Section 201(1A) interest at 1 per cent per month on the Rs 480 for seven months = Rs 33.60. The July invoice’s tail is four months of interest at 1 per cent on Rs 500 = Rs 20. The September invoice’s tail is two months on Rs 480 = Rs 9.60. The November crossing invoice itself carries no non-deduction interest if the retroactive deposit lands within the same month, though the 1.5 per cent per month deducted-to-deposited tail begins from the deduction date.
The sibling walkthrough on why interest shows on a TDS challan is the deeper treatment of the Section 201(1A) calculation and the TDS interest and penalty impact calculator models the running exposure across a delayed-deduction timeline.
Which situation to escalate first
The retroactive-back-to-invoice-one design of Section 194C and Section 194J is the highest-severity of the four aggregation surfaces because the retroactive base often runs several multiples of the crossing invoice — Rs 1,15,000 versus Rs 42,000 on the walked example — and the Section 201(1A) interest tail on the earlier invoices can double the exposure if the crossing event is only surfaced by the intimation two months after the fact.
Section 194Q is lower severity because the deduction is marginal (only on the excess above Rs 50 lakh) rather than retroactive to invoice one; the interest tail is short and the base is bounded. Section 194O is lower severity because the operator, not the seller, carries the deduction obligation and the seller’s exposure is limited to a Form 26AS mismatch that surfaces at year-end.
For the finance controller reviewing the Section 200A intimation, the first triage question is which section is invoked. A Section 194C or Section 194J retroactive-aggregate demand needs a same-week challan deposit to freeze the Section 201(1A) counter. A Section 194Q marginal demand can absorb a two-week response cycle without materially changing the interest exposure.
The Section 393 code migration from 1 April 2026
The Income-tax Act 2025, effective 1 April 2026, consolidates the TDS provisions of the 1961 Act into Section 393. Every deduction leg reported in Form 26Q from Q1 FY 2026-27 onwards must carry the Section 393(1) payment code — code 1002 for the Section 194C contractor aggregate, code 1005 for Section 194J professional fees, code 1011 for Section 194O e-commerce operator, and code 1031 for Section 194Q purchase of goods. The substantive aggregation obligation is unchanged; the code carries the same aggregation mechanic, the same FY-reset semantics, and the same retroactive-to-invoice-one liability once the ceiling is breached. The TDS payment codes 1001 to 1092 reference is the full cross-era mapping, and the Section 393 payment code finder tool resolves the correct code for a specific vendor payment fact pattern.
Mis-coding on a retroactive-aggregate challan — depositing the retroactive Section 194C base under a code that no longer resolves under Section 393(1) — surfaces as a Section 200A intimation from the CPC-TDS on the correction workflow. The correction is a C2 challan re-tag on the TRACES portal.
When the manual per-vendor threshold tracker outgrows itself
A finance team with 50 to 100 active contractors and 20 to 30 recurring professional vendors can hold the four aggregation counters (194C, 194J, 194Q, 194O) on a monthly Excel refresh — pull the FY-to-date aggregate from the AP ledger by PAN, colour-code any vendor above 75 per cent of the applicable section threshold, and trigger deduction at the crossing invoice.
Above roughly 200 active contractor and professional vendors, the monthly refresh stops being a monthly refresh — the retroactive-liability window is a business-day window rather than a month-end window, and a vendor crossing on the third of the month cannot wait for a month-end pull. Above roughly 400 vendors, the four-section aggregation counter is a full-time discipline in its own right, and the Section 200A intimations start arriving faster than a single tax executive can absorb.
At that scale, moving the aggregation-counter and retroactive-liability computation onto continuously refreshed detection — where Terra Insight’s TDS reconciliation software treats the four section counters as first-class per-PAN outputs refreshed on every AP posting, and surfaces the retroactive-liability crystallisation at the crossing invoice rather than in the Section 200A intimation two months later — is what keeps the quarterly TDS close inside a fifteen-day cadence rather than an open-ended firefight against retroactive interest tails.
The sibling article on TDS receivable versus Form 26AS mismatches covers the deductee-side view of the same aggregation mechanic — where the buyer under-deducted and the seller’s Form 26AS therefore under-reports the credit — and the correction sequencing that closes the loop on both sides.
Go deeper
- TDS payment codes 1001 to 1092 — the Section 393(1) cross-era reference
- Section 194C contractor payments — the pillar-level treatment of the two-limb design
- Section 194Q purchase reconciliation — the marginal-deduction buyer-side aggregation
- Why is there interest showing on my TDS challan — the Section 201(1A) walkthrough
- Why am I being asked to deduct TDS under Section 194Q — the buyer-side trigger explained
- Why is my TDS receivable higher than Form 26AS — the deductee-side mirror view
- Section 393 payment code finder — the resolver tool
- TDS reconciliation software for India
Frequently Asked Questions
My single payment was Rs 42,000 — well below the Section 194C Rs 1,00,000 aggregate limit. Why is there still a TDS notice?
The Rs 1,00,000 threshold under Section 194C is not a per-payment ceiling — it is a financial-year aggregate ceiling per contractor. The department calculates the aggregate across every payment to the same PAN during the same FY. If earlier payments in the FY totalled Rs 73,000 (say three invoices of Rs 24,000, Rs 25,000, and Rs 24,000, each below the Rs 30,000 single-payment ceiling), and the fourth invoice of Rs 42,000 takes the running aggregate to Rs 1,15,000, the FY-aggregate ceiling is breached. Once breached, TDS applies on the full Rs 1,15,000 aggregate — not just the fourth invoice — because Section 194C reads the aggregate breach as the trigger for retroactive liability across the accumulated base. On the Rs 1,15,000 base at 2 per cent (contractor other than individual/HUF), the demand is Rs 2,300 on the prior three plus Rs 840 on the crossing invoice = Rs 3,140 in TDS, plus Section 201(1A) interest at 1 per cent per month on the non-deducted portion from the date each earlier payment should have been deducted.
Does Section 194J work the same way as Section 194C on aggregation?
Section 194J is stricter, not looser. Section 194C has two limbs — a single-payment ceiling of Rs 30,000 OR an FY-aggregate ceiling of Rs 1,00,000 per contractor. Section 194J has only the aggregate limb — Rs 30,000 in FY aggregate per professional. Every professional-fee invoice from the first rupee counts toward the Rs 30,000 aggregate; there is no single-payment safe harbour. A CA firm that raises a Rs 12,000 invoice in April, a Rs 14,000 invoice in July, and a Rs 8,000 invoice in October has already breached the Rs 30,000 aggregate — the buyer’s TDS obligation crystallised at the third invoice on the full Rs 34,000 aggregate at 10 per cent, and the notice will read the Rs 3,400 base with Section 201(1A) interest running from the payment date of each of the three invoices. The Section 194J single-limb design is why professional-services aggregation traps a mid-market finance team more often than Section 194C — the Rs 30,000 ceiling arrives before AP has finished re-classifying the vendor from casual to recurring.
The threshold rules mention Rs 50 lakh for Section 194Q — does the same retroactive-back-to-invoice-one rule apply?
No, Section 194Q is different in structure. Section 194Q operates as a marginal deduction on the excess above Rs 50 lakh aggregate per seller in the FY — not on the full aggregate. The buyer with turnover above Rs 10 crore in the preceding FY who purchases goods from a seller aggregating above Rs 50 lakh in the current FY deducts 0.1 per cent only on the excess above Rs 50 lakh, not on the full accumulated base. On a Rs 62 lakh aggregate purchase from one seller, the Section 194Q base is Rs 12 lakh (Rs 62L minus Rs 50L threshold) at 0.1 per cent = Rs 1,200 TDS. This is a marginal-deduction design carried over from Section 206C(1H) TCS on sale of goods — the two provisions are the mirror-image buyer-side and seller-side TDS/TCS obligations with overlap-resolution rules for cases where both cross. See the sibling walkthrough on the Section 194Q buyer-side aggregation for the operational treatment.
Does the aggregation reset every financial year or does it carry forward from the previous year?
Every TDS aggregation threshold — Section 194C Rs 1,00,000, Section 194J Rs 30,000, Section 194Q Rs 50 lakh, Section 194O Rs 5 lakh — resets on 1 April at the start of every financial year. The Rs 87,000 aggregate paid to a contractor in FY 2025-26 does not carry over into FY 2026-27; the FY 2026-27 counter starts at zero and the next Rs 1,00,000 has to accumulate afresh before Section 194C triggers. The reset applies to the aggregate base, not the vendor relationship — a vendor who was above the aggregate threshold every FY for the past five years is still evaluated on a fresh FY counter from every 1 April. The single exception where the department cross-references prior-year data is under Section 194Q where the buyer’s threshold (Rs 10 crore turnover) is measured on the immediately preceding financial year rather than the current year — the seller-side Rs 50 lakh purchase aggregate however still resets FY-by-FY.
The notice references Section 201(1A) interest alongside the TDS demand. What is that specifically?
Section 201(1A) interest applies whenever TDS is not deducted (the more common notice pattern) or is deducted but not deposited (the delayed-remittance pattern). The rate is 1 per cent per month or part of a month for the non-deduction period — from the date the TDS should have been deducted (the payment or credit date, whichever is earlier) to the date the TDS is actually deducted — plus 1.5 per cent per month or part of a month from the deduction date to the deposit date. On the illustrative Rs 3,140 aggregation demand, the Section 201(1A) interest is charged on each earlier invoice from its payment date to the current date. An April invoice of Rs 24,000 (contribution to the Rs 1,15,000 aggregate) that triggered the retroactive deduction obligation seven months later carries seven months of Section 201(1A) interest at 1 per cent per month on the Rs 480 TDS portion (2 per cent of Rs 24,000) = Rs 33.60 additional interest, and every earlier invoice carries its own interest tail. The sibling article on why interest is showing on the TDS challan walks the Section 201(1A) mechanic end-to-end.
Content authored by practitioners with experience at Amazon India, Intuit QuickBooks, and the Tata Group. Meet the team →
- ▸ Section 194C, Income-tax Act 1961 — Any person responsible for paying any sum to any resident for carrying out any work in pursuance of a contract shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof, whichever is earlier, deduct an amount equal to one per cent where the payment is being made or credit is being given to an individual or a Hindu undivided family, and two per cent where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family. No deduction shall be made from the amount of any sum credited or paid to the account of a contractor during the course of business of plying, hiring or leasing goods carriages, where such contractor owns ten or less goods carriages. The section further provides that no deduction shall be required where the amount of any single sum credited or paid does not exceed thirty thousand rupees, and further where the aggregate of the amounts of such sums credited or paid to the account of the contractor during the financial year does not exceed one lakh rupees. The two thresholds are disjunctive — either the single-payment ceiling or the FY-aggregate ceiling being breached triggers deduction on the crossing payment and, by the CBDT interpretation followed by the department, on the aggregate accumulated to date.
- ▸ Section 194J, Income-tax Act 1961 — Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of fees for professional services, or fees for technical services, or any remuneration or fees or commission by whatever name called, other than those on which tax is deductible under Section 192, shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent of such sum as income-tax on income comprised therein. No deduction shall be made where the amount of such sum or the aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year by the aforesaid person to the account of, or to, the payee does not exceed thirty thousand rupees. Section 194J is a single-limb aggregate — there is no separate single-payment ceiling, and every invoice from the first rupee counts toward the Rs 30,000 FY aggregate per payee.
- ▸ Section 194Q, Income-tax Act 1961 — Any person, being a buyer who is responsible for paying any sum to any resident (hereafter in this section referred to as the seller) for purchase of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year, shall, at the time of credit of such sum to the account of the seller or at the time of payment thereof by any mode, whichever is earlier, deduct an amount equal to 0.1 per cent of such sum exceeding fifty lakh rupees as income-tax. The provisions apply only if the buyer's total sales, gross receipts, or turnover from the business carried on by him exceed ten crore rupees during the financial year immediately preceding the financial year in which the purchase of goods is carried out. Section 194Q is deducted on the excess above Rs 50 lakh, not on the full aggregate — different from the Section 194C aggregate treatment where the full aggregate becomes the base once the FY ceiling is breached.
- ▸ Section 194O, Income-tax Act 1961 — Notwithstanding anything to the contrary contained in any of the provisions of Part B of this Chapter, where sale of goods or provision of services of an e-commerce participant is facilitated by an e-commerce operator through its digital or electronic facility or platform, such e-commerce operator shall, at the time of credit of amount of sale or services or both to the account of an e-commerce participant or at the time of payment thereof to such e-commerce participant by any mode, whichever is earlier, deduct income-tax at the rate of one per cent of the gross amount of such sales or services or both. No deduction shall be made under this section where the gross amount of such sales or services or both during the previous year does not exceed five lakh rupees and the e-commerce participant has furnished his Permanent Account Number or Aadhaar number to the e-commerce operator, and the e-commerce participant is an individual or a Hindu undivided family. Section 194O is the operator-side aggregation with its own Rs 5 lakh per-participant FY threshold — separate from Section 194C, 194J, or 194Q, and the operator is liable irrespective of whether the seller has independently exceeded any other TDS threshold.
- ▸ Section 201(1A), Income-tax Act 1961 — Without prejudice to the provisions of sub-section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest — at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and at one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid. The 1 per cent monthly counter applies for the non-deduction period, and the 1.5 per cent monthly counter applies from deduction to deposit — this is the reason a retroactive TDS demand on an aggregated base carries an interest figure alongside the base tax, and the demand notice reports the two components separately.
- ▸ Section 393(1), Income-tax Act 2025 — The Income-tax Act 2025, effective 1 April 2026, consolidates the tax deduction provisions of the Income-tax Act 1961 into Section 393. Every deduction leg reported in Form 26Q from Q1 FY 2026-27 onwards must carry the Section 393(1) payment code — code 1002 for the Section 194C contractor aggregate leg, code 1005 for Section 194J professional fees, code 1011 for Section 194O e-commerce operator, and code 1031 for Section 194Q purchase-of-goods. The substantive threshold obligation is unchanged from the 1961 Act — the code carries the same aggregation mechanic, the same FY-reset semantics, and the same retroactive-to-invoice-one liability once the ceiling is breached.