Quick Summary of TDS Code 1024

Old Section vs New TDS Code

👉 Users searching for:

• “new code for 194C”
• “contractor TDS code”
• “TDS on contractor payments”

are generally referring to TDS Code 1024.

What is TDS Code 1024?

TDS Code 1024 corresponds to:

Section 194C of the earlier Income Tax Act.

Under the new Income Tax Act code structure, TDS Code 1024 generally applies to:

• Contractor payments
• Labour contractor payments
• Work contract payments
• Service contract payments
• Sub-contractor payments

👉 In simple terms, businesses deduct TDS under Code 1024 when making specified contract-related payments exceeding prescribed threshold limits.

TDS Rate for Code 1024

👉 The 2% TDS rate generally applies when payments are made to:

• Companies
• LLPs
• Partnership firms
• Other non-individual entities

Threshold Limit for TDS Code 1024

👉 TDS becomes applicable when:

• A single contractor payment exceeds ₹30,000
  OR
• Aggregate contractor payments exceed ₹1,00,000 during the financial year.

Businesses should monitor both:

• individual invoice amounts
• yearly aggregate payments

before concluding that TDS is not applicable.

What Payments Are Covered Under 1024?

TDS Code 1024 generally applies to:

• Labour contract payments
• Construction contract payments
• Transport contract payments
• Advertising contracts
• Fabrication work
• Job work contracts
• Maintenance contracts

👉 The payment must generally relate to execution of work or supply of labour under a contract arrangement.

Common Examples of TDS Code 1024

TDS Code 1024 commonly applies in situations such as:

• Civil contractor payments
• Interior work contracts
• Factory maintenance contracts
• Labour supply contracts
• Annual maintenance agreements
• Transport contractor payments

Practical Examples of TDS Code 1024

Example 1 – Single Payment Exceeds Threshold

A company pays:

• Contractor invoice: ₹45,000

Since the single payment exceeds ₹30,000:

• TDS under Code 1024 becomes applicable.

If the contractor is a company:

• TDS Rate: 2%
• TDS Amount: ₹900

Net payment:

• ₹44,100

Example 2 – Aggregate Payments Exceed Threshold

A business makes multiple payments to a contractor:

• April: ₹25,000
• June: ₹28,000
• August: ₹35,000
• November: ₹20,000

Total payments during the year:

• ₹1,08,000

Even though some individual invoices are below ₹30,000, aggregate yearly payments exceed ₹1,00,000.

👉 TDS provisions therefore become applicable.

Common Confusion Around TDS Code 1024

Businesses often get confused between:

• Contractor payments
  and
• Professional service fees

This distinction is important because:

• different TDS rates apply
• separate TDS codes apply
• threshold limits may differ

👉 Work execution contracts generally fall under TDS Code 1024, whereas professional consultancy typically falls under separate professional fee provisions.

Difference Between Contractor Payments and Professional Fees

👉 Correct classification is important to avoid incorrect TDS deduction and notices.

Who Is Required to Deduct TDS Under 1024?

Generally, TDS under Code 1024 is deducted by:

• Companies
• LLPs
• Firms
• Businesses making contractor payments
• Other specified deductors

👉 Applicability depends on turnover limits and TDS provisions under the Income Tax Act.

Common Mistakes Businesses Make

Businesses often make mistakes such as:

• Ignoring aggregate yearly threshold calculations
• Incorrect contractor classification
• Applying wrong TDS rates
• Missing transport contractor declarations
• Incorrect PAN reporting
• Late TDS deposit and return filing

👉 Incorrect compliance may result in notices, interest, penalties, and vendor disputes.

TDS Return Reporting for Code 1024

TDS deducted under Code 1024 must be properly reported in the applicable TDS return.

Businesses should ensure:

• Correct TDS code selection
• Proper PAN reporting
• Accurate contractor classification
• Timely TDS return filing

👉 Incorrect reporting can create reconciliation issues in AIS and Form 26AS.

Frequently Asked Questions

What is TDS Code 1024?
TDS Code 1024 generally applies to contractor payments under the earlier Section 194C structure.

What is the TDS rate under 1024?
The standard TDS rate is generally:

• 2% for other than Individual/HUF contractors

What is the threshold limit for TDS Code 1024?
TDS generally becomes applicable when:

• a single payment exceeds ₹30,000
  OR
• aggregate yearly payments exceed ₹1,00,000.

What is the new code for Section 194C?
The new TDS code commonly associated with Section 194C is TDS Code 1024 for other than individuals.

Does TDS apply on labour contractor payments?
Yes, labour contractor payments generally fall under TDS Code 1024 if threshold limits are crossed.

Final Thoughts

TDS Code 1024 is one of the most commonly used TDS categories under the new Income Tax Act structure because it applies to:

• Contractor Payments
• Labour Contracts
• Work Contracts
• Service Contracts

👉 Businesses should carefully monitor:

• Single invoice values
• Aggregate yearly contractor payments

to ensure proper TDS compliance once threshold limits are crossed.

Correct classification, deduction, and reporting are critical to avoid notices and reconciliation issues.

Need Help With TDS Compliance?

If you need assistance with:

• Contractor TDS applicability
• Correct TDS deduction
• TDS return filing
• Payment classification compliance

our team can help simplify your TDS compliance process.