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Updated for Income-tax Act, 2025 | Tax Year 2026-27
TDS on Manpower Supply Services Contract Under Section 393
Paying a staffing agency or contractor for manpower? From 1 April 2026, TDS on such payments falls under Section 393(1), Table Sl. No. 6(i) of the Income-tax Act, 2025, at 1% or 2%. This guide explains the rates, limits, due dates, and forms, and our team can handle your TDS deduction, deposit, return, and certificate for you.
- Section 393(1), Sl. No. 6(i)
- 1% / 2% TDS rates
- Trusted by 50,000+ customers
Fee for TDS on Manpower Supply Compliance
One simple fee covers the TDS computation, challan, quarterly statement, and the certificate for your supplier. The TDS amount itself is paid separately to the government.
TDS Challan | Form 140 | Form 131
₹1000
/ certificate
- TDS computation at 1% or 2%
- Challan of TDS payment
- Quarterly TDS statement (Form 140)
- TDS Certificate (Form 131)
Quick Answer: TDS on Manpower Supply Under Section 393
Payments to a resident contractor for supplying manpower or labour are subject to TDS under Section 393(1), Table Sl. No. 6(i) of the Income-tax Act, 2025, which replaced Section 194C. The rate is 1% for an individual or HUF supplier and 2% for others, when a single payment exceeds ₹30,000 or total payments in the year exceed ₹1,00,000. TDS is deposited by the 7th of the next month, reported in Form 140 every quarter, and certified by Form 131.
What Is TDS on Manpower Supply Services Contracts?
When a business hires a staffing agency or contractor to supply workers such as security guards, housekeeping staff, drivers, technicians, or office helpers, the workers stay on the supplier's payroll but work for the client. The client pays the supplier an invoice, and TDS must be deducted from that payment.
The Income-tax Act, 2025 came into force on 1 April 2026. From that date, the law expressly treats supply of manpower as "work" under the contractor provision of Section 393, so it is taxed at the lower contractor rates, not at professional fee rates.
Transition note: Payments credited or made up to 31 March 2026 follow Section 194C of the Income-tax Act, 1961. Payments on or after 1 April 2026 follow Section 393. Quote the new table item in your records, not the old section number.
Section 194C vs Section 393: What Changed for Manpower Supply
| Particulars | Earlier (Income-tax Act, 1961) | Now (Income-tax Act, 2025) |
|---|---|---|
| Governing provision | Section 194C | Section 393(1), Table Sl. No. 6(i) |
| Manpower supply | Covered, but often debated | Expressly treated as work |
| Quarterly TDS statement | Form 26Q | Form 140 |
| TDS certificate to supplier | Form 16A | Form 131 |
| Rates | 1% individual/HUF, 2% others | 1% individual/HUF, 2% others (unchanged) |
| Limits | ₹30,000 single, ₹1,00,000 yearly | ₹30,000 single, ₹1,00,000 yearly (unchanged) |
TDS Rates and Threshold Limits on Manpower Supply
| Supplier Type | TDS Rate | Threshold |
|---|---|---|
| Individual or HUF | 1% | ₹30,000 single payment or ₹1,00,000 in the year |
| Company, firm, LLP, AOP, or other entity | 2% | ₹30,000 single payment or ₹1,00,000 in the year |
| Supplier without valid PAN | Generally 20% | Applies on each deduction |
Example: A company pays a staffing firm an invoice of ₹5,00,000 plus GST of ₹90,000, with GST shown separately. TDS at 2% is deducted on ₹5,00,000, which is ₹10,000. If the supplier were an individual proprietor, TDS at 1% would be ₹5,000.
Who Must Deduct TDS on Manpower Supply Payments?
Deductor (the payer)
- Companies, firms, LLPs, and other businesses paying a manpower supplier
- Individuals and HUFs whose accounts are subject to tax audit
- Government bodies and local authorities
- A contractor paying a sub-contractor for part of the work
Payee (the supplier)
- Staffing agencies and manpower supply companies
- Security and housekeeping service providers
- Contract labour suppliers and facility management firms
- Individual contractors who supply workers
Individuals and HUFs who do not need a tax audit and pay for personal purposes are generally not required to deduct under this entry. Separate provisions apply to large payments by such individuals, so check your case.
Which Payments Are Covered and Which Are Not
Covered: Manpower Supply
Fees paid to a contractor who supplies workers under your supervision, including service charges in the invoice.
Covered: Work Contracts
Contracts for housekeeping, security, catering, transport, or job work, taxed at the same 1% or 2% rates.
Not Covered: Your Own Employees
Salary paid to employees on your payroll follows the separate TDS provision for salary, not this entry.
Different Rules: Professional Fees
Payments for professional or technical services fall under a different entry with different rates, so classify the contract correctly.
How to Deduct and Deposit TDS on Manpower Supply Payments
Check that TDS applies
Confirm the supplier is a resident, the payment is for manpower or labour supplied under a contract, and the payment crosses ₹30,000 for a single payment or ₹1,00,000 in the year.
Collect the supplier's PAN and status
Take the supplier's PAN and confirm whether it is an individual or HUF (1%) or another entity such as a company, firm, or LLP (2%).
Deduct TDS at the time of credit or payment
Deduct at the earlier of crediting the invoice to the supplier's account or making the payment. Where GST is shown separately in the invoice, TDS is generally deducted on the amount without GST.
Deposit the TDS by the 7th of the next month
Pay the TDS online with the correct payment code under Section 393(1), Table Sl. No. 6(i), for individual or HUF suppliers or for other suppliers.
File Form 140 every quarter
File the quarterly TDS statement in Form 140 by 31 July, 31 October, 31 January, and 31 May.
Issue Form 131 to the supplier
After Form 140 is processed, download Form 131 from TRACES and issue it to the supplier within 15 days from the due date of the statement.
Due Dates for TDS Deposit, Form 140 and Form 131
| Quarter | Period | Form 140 Due | Form 131 Due |
|---|---|---|---|
| Q1 | April to June | 31 July | 15 August |
| Q2 | July to September | 31 October | 15 November |
| Q3 | October to December | 31 January | 15 February |
| Q4 | January to March | 31 May | 15 June |
TDS deducted in a month is generally deposited by the 7th of the following month. Example: If you deduct TDS in October 2026, deposit it by 7 November 2026, report it in the Q3 Form 140 due 31 January 2027, and issue Form 131 by 15 February 2027.
Interest, Late Fee and Other Consequences
| Default | Consequence |
|---|---|
| TDS not deducted on time | Interest at 1% per month or part of a month |
| TDS deducted but not deposited on time | Interest at 1.5% per month or part of a month |
| Late filing of Form 140 | Late fee of ₹200 per day, capped at the TDS amount |
| TDS not deducted or deposited | A part of the expense may be disallowed in your income tax computation |
GST and TDS on Manpower Supply: What to Check on the Invoice
Manpower supply is a taxable service, so the supplier must be gst registered if their turnover crosses the limit. See our guide to GST registration process for service providers. Ask the supplier to show GST separately on the invoice, because TDS is then generally deducted on the amount without GST. Also match your TDS records with the supplier's invoices before filing GST returns with transparent pricing.
Need Help With TDS on Manpower Supply?
Chat with our tax expert on WhatsApp for help with TDS rates, challan payment, Form 140 filing, and Form 131 certificates.
Chat on WhatsApp: +91 98182 09246Frequently Asked Questions on TDS on Manpower Supply
Is TDS applicable on manpower supply services?
Yes. From 1 April 2026, payments to a resident contractor for supplying manpower or labour under a contract are treated as payments for work and attract TDS under Section 393(1) of the Income-tax Act, 2025.
Which section applies to TDS on manpower supply under the Income-tax Act, 2025?
Section 393(1), Table Sl. No. 6(i) applies. It replaces Section 194C of the Income-tax Act, 1961, which covered TDS on contractors.
What is the TDS rate on manpower supply payments?
The rate is 1% when the supplier is an individual or HUF and 2% when the supplier is a company, firm, LLP, or any other entity.
What is the threshold limit for TDS on manpower supply?
TDS applies when a single payment exceeds ₹30,000 or when total payments to the same supplier in the year exceed ₹1,00,000.
Is TDS deducted on the GST amount in a manpower supply invoice?
Where GST is shown separately in the invoice, TDS is generally deducted on the amount excluding GST. If GST is included in the amount without being shown separately, TDS applies on the full amount.
Does TDS apply to salary paid to my own employees under this section?
No. Salary paid to your own employees is covered by the separate provision for TDS on salary. Section 393(1), Table Sl. No. 6(i) applies to payments to an outside contractor who supplies manpower.
Which forms are used for TDS return and certificate on manpower supply?
The quarterly TDS statement is Form 140, which replaces Form 26Q. The TDS certificate given to the supplier is Form 131, which replaces Form 16A.
What is the due date to deposit TDS on manpower supply?
TDS deducted in a month is generally deposited by the 7th of the following month. The quarterly statement in Form 140 is due on 31 July, 31 October, 31 January, and 31 May.
What if the manpower supplier does not give a PAN?
If the supplier does not provide a valid PAN, TDS is deducted at a higher rate, generally 20%, instead of 1% or 2%. Always collect the PAN before the first payment.
How is TDS on manpower supply different from TDS on professional fees?
Manpower supply is treated as work and taxed at 1% or 2%. Professional or technical fees are covered by a different entry at higher rates, so classify the contract correctly before deducting.
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Apply NowThis page is for general information based on the Income-tax Act, 2025 and current guidance. Please confirm your specific case with a tax professional.