- Section 393(1) replaced the old sections 194C and 194J from 1 April 2026.
- TDS on professional fees is 10%, once payments to one contractor cross ₹50,000.
- TDS on contract work is 1% for individuals and 2% for others, above ₹30,000 a payment or ₹1,00,000 a year.
- Resident non-salary TDS is reported quarterly in Form 140, formerly Form 26Q.
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How does a contractor of record work?
The COR sits between you and the contractor. You sign one agreement with it, and it signs another with each independent contractor.
The contractor invoices the COR. The COR pays the invoice in rupees, withholds TDS, deposits it by the 7th of the next month and issues a Form 131 certificate each quarter. You receive a single consolidated bill.
That’s the mechanics. The value sits in two further jobs: a written scope of work that reads like a service, and a periodic check that the engagement has not drifted into employment.
What does a COR payment look like after TDS?
Let’s say a Bengaluru consultant bills ₹1,50,000 a month in professional fees.
| Line | Amount |
|---|---|
| Monthly professional fee invoiced | ₹1,50,000 |
| TDS at 10% under section 393(1) | ₹15,000 |
| Paid to the consultant, before any GST | ₹1,35,000 |
| TDS credit the consultant sees in Form 168 | ₹15,000 |
The rates come from the Income Tax Department’s section 393 page. Technical services and call-centre work carry 2% instead. Get the category right. A wrong rate means short deduction, interest and a disallowed expense for the payer.
Where does a contractor of record stop protecting you?
At the facts of the role. A contract label never beats daily reality.
If you set the hours, approve leave, supply the laptop and fold the person into your org chart, a labour inspector or tax officer can treat them as an employee. That is employee misclassification, and the bill arrives as back PF, gratuity and penalties. The COR’s paperwork helps you defend a genuine engagement. It does not convert a full-time team member into a vendor.
So use a COR for project work, fixed deliverables and specialists who serve several clients. Use an employer of record for anyone who works like staff. Our contractor of record vs employer of record comparison sets out the test in more depth, and the contractor of record guide covers set-up.
How does Remunance support contractor engagement in India?
Remunance offers independent contractor engagement and compliance for India: contract review, TDS handling and a check on whether each role should move to employment. More than 150 international clients from 22 countries use us for India hiring, and queries get answers within 2 working days. To test your current contractor set-up, request a contractor compliance review.
What else do people ask about contractors of record?
What does COR mean in hiring?
COR stands for contractor of record. It is the company that contracts with and pays independent contractors for a client, and keeps the tax and contract records.
Is a contractor of record the same as an agent of record?
No. A COR becomes the contracting party, while an agent of record only manages the paperwork for a contract you hold directly.
Do contractors in India get PF or gratuity through a COR?
No. Genuine contractors fall outside EPF, ESI and gratuity. If the role starts to need those benefits, it probably needs an employment contract.
Planning a hire in India?
Our founding team has run payroll and hiring in India for 22+ years, first as Remunance Systems, which was later acquired by ADP.