The TDS sections that hit self-employed income, and the rates after the 2024 changes
Which TDS section applies depends on what you are paid for. Contract or works income is 194C (1% if you are an individual or HUF, 2% otherwise). Professional or technical fees are 194J (10% for professional fees, 2% for technical services). Commission or brokerage is 194H (2% since 1 October 2024). E-commerce payouts are 194O (0.1% since 1 October 2024). Benefits in kind, free products and trips, are 194R (10%). In every case the TDS is a prepayment of your tax, not an extra charge: it is withheld against your PAN and reclaimed through your return, provided you quote your PAN.
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Guidance, not advice. We explain the rules, we don't assess your situation. Always seek financial or tax advice from your accountant, or contact Income Tax Department. Read our editorial scope →
The TDS map by income type
Match your income to the section that applies. The rate assumes you have quoted a valid, operative PAN, without one, TDS is 20%.
Common TDS sections on self-employed income (2026-27)
Income type
Section
Rate
Contract / works payments
194C
1% (individual/HUF) or 2% (others)
Professional fees
194J
10%
Technical services / call centre
194J
2%
Commission or brokerage
194H
2%
E-commerce sale payouts
194O
0.1%
Benefits or perks in kind
194R
10%
Rent (by a business)
194I
10% (land/building), 2% (plant)
TDS is a prepayment, not an extra tax
The single most important point: TDS withheld from your income is not money lost, it is tax paid in advance against your final liability. When you file, you add up your income, compute your tax, and subtract the TDS already deducted (visible in your Form 26AS and AIS). If the TDS exceeds your liability, the difference is refunded. So a presumptive trader whose deemed profit is below the exemption can have all their TDS refunded.
tipAlways quote your PAN to anyone paying you. It keeps TDS at the right 1 to 10% rate instead of 20%, and ensures the credit lands in your 26AS so you can reclaim it.
194J does not make you a professional
A common confusion: a client deducting 194J (professional fees) does not mean you must use the 44ADA professional presumptive scheme. The TDS section the payer chooses reflects how they classify the payment, not your income-tax scheme. Many businesses (coaches, consultants, agencies) have 194J deducted but are correctly on 44AD as a business at 6 or 8%, not 44ADA at 50%. Decide your presumptive scheme on what you actually do, not on which TDS section a client used.
warningDo not let a client's choice of 194J push you onto 44ADA. Only the specified professions under Section 44AA(1) use 44ADA; most others are businesses on 44AD regardless of the TDS section.
Income-tax Act 1961 s.194C (contract) + s.194J (professional/technical) (TDS consolidated into the Income-tax Act 2025 s.393)
Income-tax Act 1961 s.194H (commission, 2% from 1 Oct 2024) + s.194O (e-commerce, 0.1% from 1 Oct 2024)
Income-tax Act 1961 s.194R (benefits in kind) + s.206AA (20% without PAN)
Frequently asked questions
What rate of TDS applies to professional fees?+
Section 194J applies at 10% on professional fees, and at 2% on technical services (and call-centre and certain royalty payments). It applies once the payment crosses the threshold. Quote your PAN, without it the rate is 20% under Section 206AA, and the credit may not reach your 26AS.
Did the commission and e-commerce TDS rates change?+
Yes. From 1 October 2024, commission and brokerage under Section 194H fell from 5% to 2%, and the e-commerce payout rate under Section 194O fell from 1% to 0.1%. Older content quoting 5% commission or 1% e-commerce TDS is out of date for payments on or after that date.
Is TDS an extra tax I have to pay?+
No. TDS is your own tax, paid in advance and withheld against your PAN. At filing you compute your total tax and subtract the TDS already deducted (shown in 26AS and AIS); any excess is refunded. A presumptive trader whose deemed profit is below the exemption can reclaim all of it.
A client deducted 194J. Does that make me a professional?+
No. The TDS section reflects how the payer classifies the payment, not your income-tax scheme. Many businesses have 194J deducted yet are correctly on Section 44AD at 6 or 8% as a business, not 44ADA at 50%. Choose your presumptive scheme on what you actually do, not on the TDS section used.