First identify the date on which the contractor payment was credited or paid—whichever happened earlier. An event on or before 31 March 2026 is governed by the Income-tax Act, 1961; an event on or after 1 April 2026 is governed by the Income-tax Act, 2025. That choice determines the section or table entry, challan and statement route. Generally deposit the tax by the seventh day of the following month; non-government deductors must deposit tax deducted in March by 30 April. Most businesses with a TAN report resident-contractor TDS quarterly in Form 140 (the successor to Form 26Q). An eligible Individual or HUF making a payment covered by section 393(1), table serial 6(ii), of the 2025 Act uses Schedule C of Form 141 instead, with payment and filing due within 30 days after the deduction month. The rate is not universal, so verify the transaction, payer status, contractor status, applicable table entry and any certificate before calculating the amount.
Start with the event date, not the date you send the money
The first decision is which Act governs the deduction. The Income-tax Department uses the earlier of the date on which you credit the contractor’s account and the date on which you actually pay the contractor. A later bank transfer does not move an earlier credit into a different tax regime.
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| Earlier credit or payment event | Governing law and reporting reference | Practical implication |
|---|---|---|
| On or before 31 March 2026 | Income-tax Act, 1961 | Use the applicable old-law section, challan and statement route. An old-law challan remains applicable even when you remit the amount after 1 April 2026. |
| On or after 1 April 2026 | Income-tax Act, 2025 | Use the new Act’s section and table serial. Do not automatically carry section 194C into the new-period reporting. |
How the rule works for a contract crossing March and April
Suppose work continues through March and April but you credited the contractor on 31 March. That credit is the earlier event, so the 1961 Act governs that deduction even if the cash leaves your bank account in April. A credit first made on 2 April is a post-transition event and is tested under the 2025 Act. If there are several credits or payments, determine the governing period for each deduction rather than assigning one regime to the entire contract.
Example: a firm paying in April 2026
For a firm whose relevant credit or payment occurs in April 2026, the Department directs the payer to quote section 393(1), table serial 6(i), rather than old section 194C. The exact treatment still depends on the payment facts and the firm’s category. Keep the statutory reference tied to the event date shown in your books.
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Confirm that this guide fits your payment
This process addresses TDS on payments to a resident contractor. It does not establish that every contractor invoice requires deduction, and it does not provide the rules for a non-resident payee, salary, rent or another payment category. Before deducting, verify all of the following:
- the contractor’s residential status for the relevant payment;
- the payer category—company, firm, government body, Individual or HUF;
- the nature of the work and payment classification;
- the date of the earlier credit or payment;
- the contractor’s PAN and any lower- or nil-deduction certificate; and
- the applicable statutory threshold, table entry and rate for that date.
The reviewed official instructions establish the filing routes and deadlines but do not provide a complete rate-and-threshold table for every contractor situation. Do not insert a familiar percentage merely because it was used under the old law.
Choose the correct reporting route
After fixing the governing Act, identify whether you are making an ordinary TAN-based quarterly statement or an Individual/HUF challan-cum-statement.
| Question | Ordinary TAN-based route | Individual/HUF challan-cum-statement route |
|---|---|---|
| Who normally uses it? | Business and other deductors required to hold and use a TAN. | Only an Individual or HUF eligible to use Schedule C of Form 141 for a new-Act section 393(1), table serial 6(ii), payment. |
| Form | Form 140, formerly Form 26Q, for TDS on non-salary payments to residents. | Form 141, Schedule C. |
| Payment timing | Generally by the seventh day of the following month; March deductions by a non-government deductor are due by 30 April. | Within 30 days from the end of the month in which deduction was made. |
| Statement timing | Quarterly deadlines: 31 July, 31 October, 31 January and 31 May of the following year. | The challan-cum-statement is filed with the payment; a separate filing is required for each distinct deduction month. |
| Portal identity | Sign in with TAN on the e-filing portal. | Sign in with PAN and use E-pay Tax. |
| Correction channel | Follow the applicable TAN statement correction process. | Corrections to Form 141 are made through TRACES, not through the e-filing portal. |
If you are not an Individual or HUF, do not use Schedule C simply because the payment is to a contractor. The Department says other payer categories must use the applicable TAN-based form or statement.
Calculate and document the deduction before paying it
Record the invoice, credit date, payment date, gross amount, amount deducted, PAN, residency evidence and the statutory provision used. The applicable rate can change with the transaction and with the contractor’s documentation. The Form 141 FAQ specifically notes that the rate depends on the transaction and applicable provisions; a higher rate may apply under section 397(2), while a certificate rate may apply under section 395.
Those references do not replace checking the complete law. Before generating a challan or return, verify the current rules for:
- the exact table serial or section for the event date;
- any threshold or exemption applicable to the payment type;
- whether the contractor is resident and has furnished a valid PAN;
- whether a certificate changes the deduction rate; and
- whether the payer is entitled to use a challan-cum-statement rather than a TAN statement.
Keep the calculation worksheet with the accounting record. The amount you deposit must equal the amount actually deducted for that event, subject to any correction made under the applicable process.
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Deposit the deducted TDS by the statutory deadline
General monthly deadline
For the general TDS deposit route, the amount is normally due by the seventh day of the month following the month in which you deducted it. For example, a deduction made in June is generally due by 7 July. A non-government deductor’s deductions made in March have a specific 30 April deadline.
| Deduction month | General due date | Qualification |
|---|---|---|
| April through February | 7th day of the following month | Applies to the general route, subject to a specific exception. |
| March | 30 April | Specific deadline stated for non-government deductors. |
| Challan-cum-statement cases under the old Act, such as old section 194M | Within 30 days after the end of the deduction month | This is an exception to the ordinary seventh-day schedule; confirm that your transaction genuinely falls in that category. |
The 2026 Rules retain these deadlines according to the Department’s payment FAQ. Always confirm the correct assessment or tax year, accounting head, statutory section or table serial and taxpayer category in the official payment screen before authorising the transaction. If the deduction was governed by the 1961 Act, use the old-law challan even when the remittance takes place after 1 April 2026.
Payment controls that prevent a mismatch
- Reconcile the deduction register to the contractor ledger for the month.
- Separate old-Act events from post-1 April 2026 events when a contract spans the transition.
- Check the payer’s legal category and TAN or PAN login before selecting a form.
- Review the section or table serial, tax year, amount and payment head on the challan preview.
- Save the challan receipt, payment reference and the underlying calculation with the invoice record.
Do not treat a successful bank debit as proof that the corresponding quarterly statement or challan-cum-statement has been accepted. Payment and reporting are related but distinct controls.
File the quarterly return in Form 140 (formerly Form 26Q)
Form 140 is the standard quarterly statement for TDS on non-salary payments to resident payees. A business that has deducted contractor TDS through its TAN-based process generally uses this route unless a specific challan-cum-statement provision applies.
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| Quarter | Months covered | Filing deadline |
|---|---|---|
| Q1 | April–June | 31 July |
| Q2 | July–September | 31 October |
| Q3 | October–December | 31 January |
| Q4 | January–March | 31 May of the following year |
These are statement deadlines; they do not extend the earlier monthly deadline for depositing the tax. A March deduction, for instance, still has the non-government 30 April deposit deadline even though the Form 140 statement for January–March is due on 31 May.
Prerequisites
- A valid TAN registered on the income-tax e-filing portal.
- The current Return Preparation Utility (RPU) downloaded from Protean.
- A completed and validated data file generated by that RPU.
- A valid File Validation Utility (FVU) file, zipped for upload.
- The FVU version matching the version displayed on the e-filing portal.
Prepare and upload the statement
- Download the current RPU and FVU versions specified for the filing period. Do not reuse an obsolete utility merely because it worked for the previous quarter.
- Enter the deductor, challan and deductee details in the RPU. Use the governing section or table reference for each event and reconcile totals to the deposit records.
- Run the RPU validation. Correct structural, PAN, challan or amount errors before generating the validation file.
- Create the FVU file, confirm that it validates successfully, and place the required files in the prescribed zip.
- Sign in to the e-filing portal with the TAN.
- Go to e-File → Income Tax Forms → File Income Tax Forms.
- Select the Form TDS/TCS category, choose Form 140, and select the tax year, quarter and upload type.
- Choose regular or correction upload as appropriate, attach the validated zip and submit it.
- Complete e-verification using the method offered for the TAN account.
- Open View Filed Forms and check whether the upload was accepted or rejected. If rejected, read the validation reason, correct the source data or utility output and submit the appropriate statement again.
Uploading a zip is not the end of the process. The filed-forms status and validation result are the evidence that the portal accepted the statement. Preserve the acknowledgement, verification record, FVU file and final data copy.
Regular versus correction statement
Use a regular upload for the first valid statement for that quarter. Use a correction upload only when the original statement has a reportable error and the correction sequence required for that statement is available. Keep a change log showing what was corrected, why it was corrected and which challan or deductee record changed.
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Use Form 141 Schedule C when an Individual or HUF qualifies
Schedule C of Form 141 is a challan-cum-statement for an Individual or HUF making a contractor or professional payment covered by the new Act’s section 393(1), table serial 6(ii). It is not a general substitute for the TAN-based Form 140 route.
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- The deductor must be an Individual or HUF.
- The payment must fall within the specified new-Act category.
- The event must be governed by the Income-tax Act, 2025; an old-Act event is not converted into a Form 141 event merely because you file after 1 April 2026.
- A company, firm or other non-Individual/HUF payer must use its applicable TAN-based form or statement.
Form 141 deadline
Both payment and Form 141 filing are due within 30 days from the end of the month in which the deduction was made. A deduction made on any day in September therefore follows a 30-day-after-September-end deadline, rather than the ordinary seventh-day deadline. Keep the month of deduction consistent across the payment record and the form.
Portal procedure
- Sign in to the e-filing portal with the deductor’s PAN.
- Open e-File → E-pay Tax.
- Select Income-tax Act, 2025.
- Choose New Payment.
- Select Form 141 and complete Schedule C with the transaction, deductee and deduction details.
- Review the applicable section or table serial, amount and deduction month before authorising payment.
- Submit the payment and form, then save the challan and acknowledgement.
- Open Payment History to confirm that the transaction is recorded.
Form 141 permits one transaction type per filing. If the same month includes different transaction types, prepare separate filings as required rather than combining unlike categories. The FAQ also requires a separate filing for each distinct deduction month, so a single filing should not be used to cover several months.
Correcting a Form 141 submission
Corrections are made through TRACES, not through the e-filing portal. Keep the original acknowledgement and challan details available when raising a correction, and confirm the corrected status after processing.
Decision checklist before you submit
- Date: Did you use the earlier credit-or-payment date to select the 1961 or 2025 Act?
- Payee: Is the contractor resident for this payment, and is the PAN recorded correctly?
- Payer: Are you a TAN-based deductor, or an Individual/HUF eligible for Schedule C?
- Provision: Does the section or table serial match the payment category and period?
- Rate: Did you verify the current rate, threshold and any certificate instead of relying on a standard percentage?
- Deposit: Did you meet the seventh-day, 30 April March, or applicable 30-day challan-cum-statement deadline?
- Statement: Did you choose Form 140 or Form 141 only after confirming eligibility?
- Validation: For Form 140, does the FVU version match the portal and does View Filed Forms show acceptance?
- Evidence: Did you save challans, acknowledgements, verification records, utility files and correction history?
Common mistakes and how to fix the process
Carrying section 194C into every 2026 payment
Why it fails: The 2025 Act applies to events on or after 1 April 2026, and the Department’s example for a firm points to section 393(1), table serial 6(i). Fix: Reclassify each deduction using the earlier credit-or-payment date and update the statutory reference in the challan and statement.
Using the cash-transfer date instead of the earlier event
Why it fails: A credit to the contractor’s account can establish the event before the bank payment. Fix: Keep ledger-credit and payment dates in the deduction register and apply the earlier one.
Filing Form 141 as a company or firm
Why it fails: Schedule C is restricted to Individual/HUF deductors. Fix: Use the TAN-based form applicable to the payer category, normally Form 140 for resident non-salary payments.
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Assuming Form 140 is due when the tax is due
Why it fails: Monthly deposit deadlines and quarterly statement deadlines are separate. Fix: Calendar both the deposit date and the quarter-end Form 140 date.
Stopping after upload
Why it fails: A portal upload can be rejected after validation. Fix: Check View Filed Forms, read the validation reason and retain proof of acceptance.
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Combining several months in one Form 141 filing
Why it fails: The Form 141 workflow requires a separate filing for each distinct deduction month. Fix: create and verify a filing for each month and preserve each payment-history entry.
Repeating an old rate without checking the transaction
Why it fails: The applicable rate may depend on the payment, section 397(2), a section 395 certificate and other facts. Fix: verify the statutory table and certificate status for the exact event before finalising the deduction.
Practical timelines
Business deductor: June 2026 payment
If a firm credits a resident contractor in June 2026, the event falls under the 2025 Act. The firm deposits the deducted amount generally by 7 July, then includes the transaction in the April–June Form 140 statement due by 31 July. It should use the new-Act section or table reference applicable to the payment, not an automatically copied 194C label.
Business deductor: March 2027 deduction
A non-government business deducting in March must deposit the amount by 30 April. The transaction belongs in the January–March Form 140 statement due by 31 May of the following year. The later statement deadline does not postpone the April deposit.
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Individual deductor: September 2026 Schedule C payment
An eligible Individual who makes a new-Act section 393(1), table serial 6(ii), contractor payment and deducts TDS in September files Form 141 Schedule C and pays within 30 days after the end of September. The Individual uses PAN login, selects Income-tax Act, 2025, and files separately for that deduction month.
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Old-law deduction paid after the transition
If the earlier credit or payment occurred on 31 March 2026, the 1961 Act governs even if the payer deposits the amount in April. The payer should use the old-law challan and the reporting route applicable to that deduction, rather than treating the remittance month as a new-Act event.
Records to retain
Keep a file for each month and quarter containing the contract and invoice, credit and payment dates, residential-status and PAN information, rate or certificate analysis, deduction calculation, challan receipt, payment reference, Form 140 or Form 141 acknowledgement, e-verification proof, FVU output and any correction correspondence. A transition-year file should clearly separate pre-1 April 2026 events from later events so that a reviewer can see why different statutory references or forms were used.
Because portal labels, utilities and statutory tables can change, check the current Income-tax Department instructions at the time of filing. The procedure above reflects the Department’s instructions reviewed through 13 October 2026; the event date remains the controlling fact for choosing the law.
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Frequently Asked Questions
Do I use Form 26Q or Form 140 for contractor TDS?
For the current TAN-based quarterly statement covering non-salary payments to resident payees, use Form 140, which the Department identifies as the successor to Form 26Q. Confirm that your payer category and transaction require the TAN route.
Can an Individual or HUF use Form 141 for every contractor payment?
No. Schedule C of Form 141 is limited to an eligible Individual or HUF making a payment covered by the new Act’s section 393(1), table serial 6(ii). Other payer categories use the applicable TAN-based statement.
Is the contractor TDS rate always the same percentage?
No. The rate depends on the transaction and applicable provisions, and may be affected by section 397(2) or a certificate under section 395. Verify the current law for the event date, payment type, PAN and certificate status.
What proves that my Form 140 return was filed successfully?
Check View Filed Forms on the e-filing portal for an accepted status and retain the acknowledgement and e-verification record. An upload alone is not proof of acceptance.
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