TDS on All Payments — Section 393
INCOME TAX ACT 2025 · CHAPTER XIX · SECTION 393
TDS on All Payments — Section 393
The complete consolidated TDS reference — rates, thresholds, payers, and exemptions for all three tables: payments to Residents, Non-Residents, and Any Person. Section 393 replaces 30+ separate TDS sections of the 1961 Act.
📘 Section: 393 — Tax to be deducted at source
📖 Chapter: XIX — Collection and Recovery of Tax
🔄 Replaces: Sections 193, 194, 194A–194S, 194E, 194LB, 194LC, 194LD, 194LBA, 194LBB, 194LBC, 195, 196B, 196C, 196D of the Income Tax Act 1961
📅 Effective: 1st April 2026 (Tax Year 2026-27 onwards)
📖 Chapter: XIX — Collection and Recovery of Tax
🔄 Replaces: Sections 193, 194, 194A–194S, 194E, 194LB, 194LC, 194LD, 194LBA, 194LBB, 194LBC, 195, 196B, 196C, 196D of the Income Tax Act 1961
📅 Effective: 1st April 2026 (Tax Year 2026-27 onwards)
🔄 Key Structural Change from 1961 Act
The 1961 Act had 30+ individual TDS sections — one per payment type. The 2025 Act consolidates everything into Section 393 alone with three tables based on payee category:
393(1)
Payments to Residents
8 categories, Sl. 1–8
Payments to Residents
8 categories, Sl. 1–8
393(2)
Payments to Non-Residents
17 entries, Sl. 1–17
Payments to Non-Residents
17 entries, Sl. 1–17
393(3)
Payments to Any Person
7 categories, Sl. 1–7
Payments to Any Person
7 categories, Sl. 1–7
⚡ Jump to Section:
When Does TDS Apply Under Section 393?
TDS under Section 393 is triggered when all four conditions are satisfied simultaneously:
① Nature of Payment
Must be of a type specified in column B of the applicable table (resident/non-resident/any person).
② Threshold Exceeded
Amount or aggregate must exceed the threshold in column D. Once crossed, TDS applies on the entire amount, not just the excess.
③ Timing
At the time of credit to payee's account or actual payment — whichever is earlier.
④ No Exemption Applies
Check Section 393(4) and (5) — if the payment falls under an exemption category, TDS is not required despite meeting conditions ①–③.
Section 393(1) — Payments to Residents
All entries from the official Table under Section 393(1). Applies when the payee is a resident of India.
Sl. 1 — Commission or Brokerage
| Sub-category | Payer | Rate | Threshold | Old Section |
|---|---|---|---|---|
| Insurance commission [Sl. 1(i)] | Any person | Rates in force | ₹20,000 | 194D |
| Other commission/brokerage [Sl. 1(ii)] | Specified person | 2% | ₹20,000 | 194H |
Sl. 2 — Rent
| Sub-category | Payer | Rate | Threshold | Old Section |
|---|---|---|---|---|
| Any rent [Sl. 2(i)] | Other than specified person | 2% | ₹50,000/month | 194IB |
| Rent — machinery/plant/equipment [Sl. 2(ii)(a)] | Specified person | 2% | ₹50,000/month | 194I(a) |
| Rent — land/building/furniture/fittings [Sl. 2(ii)(b)] | Specified person | 10% | ₹50,000/month | 194I(b) |
Note [Sl. 2(i)]: For non-specified persons, TDS is deducted for the last month of the tax year or last month of tenancy — not monthly.
Sl. 3 — Transfer of Immovable Property (Other than Agricultural Land)
| Sub-category | Payer | Rate | Threshold | Old Section |
|---|---|---|---|---|
| Property transfer consideration [Sl. 3(i)] | Buyer (other than Sl. 3(iii)) | 1% | ₹50 lakh | 194IA |
| Joint development agreement [Sl. 3(ii)] | Any person | 10% | Nil | 194IC |
| Compulsory acquisition compensation [Sl. 3(iii)] | Any person | 10% | ₹5,00,000 | 194LA |
Note [Sl. 3(i)]: 1% on higher of consideration or stamp duty value. Where both Sl. 3(i) and 3(ii) apply, TDS under Sl. 3(ii) only.
Sl. 4 — Income from Capital Market
| Sub-category | Payer | Rate | Threshold | Old Section |
|---|---|---|---|---|
| Mutual fund/UTI/specified company units [Sl. 4(i)] | Any person | 10% | ₹10,000 | 194K |
| Business trust distributed income [Sl. 4(ii)] | Business Trust | 10% | Nil | 194LBA |
| Investment fund income [Sl. 4(iii)] | Investment fund [Sec 224] | 10% | Nil | 194LBB |
| Securitisation trust income [Sl. 4(iv)] | Securitisation trust [Sec 221] | 10% | Nil | 194LBC |
Sl. 5 — Interest Income
| Sub-category | Payer | Rate | Threshold | Old Section |
|---|---|---|---|---|
| Interest on securities [Sl. 5(i)] | Any person | Rates in force | ₹10,000 | 193 |
| Bank/co-op/post office interest — Senior Citizen [Sl. 5(ii)] | Bank / co-op / post office | Rates in force | ₹1,00,000 | 194A |
| Bank/co-op/post office interest — Others [Sl. 5(ii)] | Bank / co-op / post office | Rates in force | ₹50,000 | 194A |
| Other interest — specified person [Sl. 5(iii)] | Specified person (other than bank) | Rates in force | ₹10,000 | 194A |
Note: For entities without core banking solutions, threshold computed branch-wise. Deductor may adjust TDS during the year for prior excess/deficiency.
Sl. 6 — Contractors, Professional Fees, Technical Services, Royalty
| Sub-category | Payer | Rate | Threshold | Old Section |
|---|---|---|---|---|
| Work contract — Individual/HUF contractor [Sl. 6(i)(a)] | Designated person | 1% | ₹30,000 per payment OR ₹1,00,000 aggregate | 194C |
| Work contract — Other contractor [Sl. 6(i)(b)] | Designated person | 2% | ₹30,000 per payment OR ₹1,00,000 aggregate | 194C |
| Work/prof fees/commission — Individual/HUF payer [Sl. 6(ii)] | Individual/HUF (not designated/specified person) | 2% | ₹50 lakh | 194M |
| Professional fees [Sl. 6(iii)(a)] | Specified person | 10% | ₹50,000 | 194J |
| Technical services (not professional) / Call centre / Film royalty [Sl. 6(iii)(a)(i-iii)] | Specified person | 2% | ₹50,000 | 194J |
| Director remuneration/fees/commission (not salary) [Sl. 6(iii)(c)] | Specified person | 10% | Nil | 194J |
| Royalty (other than film) [Sl. 6(iii)(d)] | Specified person | 10% | ₹50,000 | 194J |
Note [Sl. 6(i)]: For work involving material supply, TDS on invoice value excluding material (if separately stated) or entire invoice. "Designated person" = Govt, local authority, company, firm, co-op, trust, university, and Individual/HUF with turnover > ₹1 crore/₹50 lakh [Section 402(11)].
Sl. 7 — Dividend
| Category | Payer | Rate | Threshold | Old Section |
|---|---|---|---|---|
| Dividend incl. preference shares [Sl. 7] | Domestic company | 10% | Nil | 194 |
Note: TDS before distribution — no threshold. Exception: no TDS if dividend ≤ ₹10,000 to individual, paid by non-cash mode [Section 393(4), Sl. 10(f)].
Sl. 8 — Other Cases
| Sub-category | Payer | Rate | Threshold | Old Section |
|---|---|---|---|---|
| Life insurance policy payout (income portion) [Sl. 8(i)] | Any person | 2% | ₹1,00,000 | 194DA |
| Purchase of goods [Sl. 8(ii)] | Buyer (turnover > ₹10 cr) | 0.1% | ₹50 lakh (on amount exceeding) | 194Q |
| Specified senior citizen total income [Sl. 8(iii)] | Specified bank | Rates in force | As applicable | 194P |
| Business/profession benefit or perquisite [Sl. 8(iv)] | Specified person | 10% | ₹20,000 | 194R |
| E-commerce operator to participant [Sl. 8(v)] | E-commerce operator | 0.1% | Nil | 194O |
| Virtual digital asset (VDA) [Sl. 8(vi)] | Any person | 1% | Nil | 194S |
Notes: [Sl. 8(ii)] Does not apply where TDS/TCS already applicable on same transaction. [Sl. 8(iii)] Covers senior citizens aged 75+ with only pension + bank interest. [Sl. 8(iv) & (vi)] Where benefit is in kind, payer must ensure tax paid before releasing it. [Sl. 8(v)] Takes precedence over other TDS provisions; if both Sl. 8(v) and 8(vi) apply, only Sl. 8(vi) governs.
Section 393(2) — Payments to Non-Residents
⚖️ Always Check DTAA First. The statutory rates below may be reduced by a Double Taxation Avoidance Agreement (DTAA) between India and the payee's country. If the treaty rate is lower and the non-resident furnishes a Tax Residency Certificate + Form 10F declaration, deduct at the lower treaty rate [Section 159]. If no DTAA or documents not furnished — deduct at full statutory rate.
| Sl. | Nature of Income / Sum | Payee (Non-Resident) | Payer | Rate | Old Section |
|---|---|---|---|---|---|
| 1 | Income under Section 211 — non-resident sportsman (incl. athlete) or entertainer (not Indian citizen); OR non-resident sports association/institution | Non-resident sportsman, athlete, entertainer (not citizen of India) or sports association | Any person | 20% | 194E |
| 2 | Interest on money borrowed in foreign currency — loan agreement or long-term infrastructure bond (on/after 1 Jul 2012, before 1 Jul 2023) or long-term bond (on/after 1 Oct 2014, before 1 Jul 2023), approved by Govt | Non-resident (not company) or foreign company | Indian company or business trust | 5% | 194LB |
| 3 | Interest on rupee-denominated bond borrowed from outside India, issued before 1 Jul 2023 | Non-resident (not company) or foreign company | Indian company or business trust | 5% | 194LC |
| 4 | Interest on long-term bond or rupee-denominated bond listed only on recognised stock exchange in an IFSC: — Issued 1 Apr 2020 – 30 Jun 2023 → 4% — Issued on/after 1 Jul 2023 → 9% | Non-resident (not company) or foreign company | Indian company or business trust | 4% / 9% | 194LC |
| 5 | Any income by way of interest (not covered by Sl. 2–4) | Non-resident (not company) or foreign company | Infrastructure Debt Fund [Sch VII, Sl. 46] | 5% | 194LB |
| 6 | Distributed income from Business Trust [Sec 223, Sch V Sl. 3]: (a) Interest from SPV → 5% (b) Dividend from SPV → 10% | Non-resident unitholder (not company) or foreign company | Business Trust | 5% / 10% | 194LBA |
| 7 | Distributed income from Business Trust [Sec 223, Sch V Sl. 4 — other income] | Non-resident unitholder (not company) or foreign company | Business Trust | Rates in force | 194LBA |
| 8 | Income from units of Investment Fund [Sec 224], other than exempt portion [Sch V, Sl. 2] | Non-resident unitholder (not company) or foreign company | Investment Fund [Sec 224] | Rates in force | 194LBB |
| 9 | Income from investment in Securitisation Trust [Sec 221] | Non-resident investor (not company) or foreign company | Securitisation Trust [Sec 221] | Rates in force | 194LBC |
| 10 | Income from Mutual Fund units [Sch VII, Sl. 20/21] or from specified company | Non-resident (not company) or foreign company | Any person | 20%* | 196B |
| 11 | Income from units of offshore fund [Sec 208] | Offshore fund | Any person | 10% | 196B |
| 12 | Long-term capital gains on transfer of offshore fund units [Sec 208] | Offshore fund | Any person | 12.5% | 196B |
| 13 | Interest or dividends on GDR bonds [Sec 209] | Any non-resident | Any person | 10% | 196C |
| 14 | Long-term capital gains on transfer of GDR bonds [Sec 209] | Any non-resident | Any person | 12.5% | 196C |
| 15 | Income from securities [Sec 210(1), Sl. 1] — held by Foreign Institutional Investor | Foreign Institutional Investor (FII) | Any person | 20%* | 196D |
| 16 | Income from securities [Sec 210(1), Sl. 1] — held by Specified Fund [Sch VI, Note 1(g)] | Specified Fund | Any person | 10% | 196D |
| 17 | Any other interest or any other sum chargeable to tax in India — NOT being salary (residual provision — equivalent of old Section 195) | Non-resident (not company) or foreign company | Any person | Rates in force | 195 |
*Note [Sl. 10 & 15]: Rate is 20% OR the lower DTAA rate if treaty applies and payee furnishes certificate under Section 159(8).
Note [Sl. 2, 3 & 4]: Interest income is limited to the extent it does not exceed the rate approved by the Central Government.
Note [Sl. 17 — Critical]: (a) Covers all payments to non-residents chargeable to tax — technical services, royalties, management fees, business income, etc. (b) If the payer believes the sum is not fully taxable, apply to AO under Section 395(2) to determine the taxable proportion. (c) Obligation extends to ALL persons — regardless of whether the non-resident payer has any presence in India. (d) For Govt/PSB interest — TDS only at time of actual payment, not credit.
Note [Sl. 2, 3 & 4]: Interest income is limited to the extent it does not exceed the rate approved by the Central Government.
Note [Sl. 17 — Critical]: (a) Covers all payments to non-residents chargeable to tax — technical services, royalties, management fees, business income, etc. (b) If the payer believes the sum is not fully taxable, apply to AO under Section 395(2) to determine the taxable proportion. (c) Obligation extends to ALL persons — regardless of whether the non-resident payer has any presence in India. (d) For Govt/PSB interest — TDS only at time of actual payment, not credit.
Section 393(3) — Payments to Any Person (Resident or Non-Resident)
These 7 categories apply regardless of whether the payee is resident or non-resident. TDS is deducted at the time of actual payment (not credit).
| Sl. | Nature of Payment | Payer | Rate | Threshold | Old Section |
|---|---|---|---|---|---|
| 1 | Lottery / crossword / card game / gambling winnings | Any person | Rates in force | ₹10,000 per transaction | 194B |
| 2 | Online game winnings (net winnings) | Any person | Rates in force | Net winnings in account (see note) | 194BA |
| 3 | Horse race winnings | Licensed bookmaker | Rates in force | ₹10,000 per transaction | 194BB |
| 4 | Lottery ticket commission / prize to stockists, distributors, buyers, sellers | Any person | 2% | ₹20,000 | 194G |
| 5 | Cash withdrawal from bank / co-operative society / post office | Bank / co-op / post office | 2% | ₹1 crore (₹3 crore for co-op societies) | 194N |
| 6 | NSS / National Savings Scheme deposit withdrawal | Any person | 10% | ₹2,500 | 194EE |
| 7 | Salary / remuneration / commission / bonus / interest paid to partner of firm | Firm | 10% | ₹20,000 | New provision |
Note [Sl. 2 — Online Games]: TDS on net winnings at year-end in user account AND on net winnings comprised in any withdrawal during the year. Where winnings are in kind, operator must ensure tax is paid before releasing winnings. Note [Sl. 1 & 2]: Where winnings are wholly/partly in kind and cash portion insufficient to cover TDS — payer must ensure tax is paid before releasing prize.
Exemptions — Section 393(4) & (5)
Section 393(5) — Blanket Exemptions (TDS never applicable to these payees):
- Central or State Government
- Reserve Bank of India
- Corporation established by Central Act, exempt from income-tax
- Mutual Fund [Schedule VII, Sl. 20 or 21] — on interest, dividend, or any income accruing to it
| Sl. | Payment Type [Section 393(4)] | Condition for No TDS |
|---|---|---|
| 1 | Commission — BSNL/MTNL [Sl. 1(ii)] | Commission paid to PCO franchisees of BSNL/MTNL |
| 2 | Rent to REIT [Sl. 2(ii)] | Rent on real estate asset owned directly by the REIT |
| 3 | Land acquisition compensation [Sl. 3(iii)] | Award exempt under Section 96 of RFCTLARR Act 2013 |
| 4 | Mutual fund units — capital gains [Sl. 4(i)] | Income is in the nature of capital gains — no TDS |
| 6 | Interest on securities [Sl. 5(i)] | National Development Bonds; Govt securities (except taxable bonds); LIC/GIC/insurer-owned securities; business trust SPV securities |
| 7 | Other interest [Sl. 5(ii) & (iii)] | Interest to banking companies, financial corporations, LIC, UTI, insurance companies; co-op society member interest; primary agricultural credit society deposits; Govt interest; MACT compensation ≤ ₹50,000; zero coupon bonds (PSU/bank); partner interest from firm |
| 8 | Contractor payment [Sl. 6(i)] | Contractor owns ≤10 goods carriages + furnishes declaration with PAN; OR payment by Individual/HUF for personal purposes |
| 9 | Professional fees [Sl. 6(iii)] | Payment by Individual/HUF exclusively for personal purposes |
| 10 | Dividend [Sl. 7] | To LIC/GIC/insurers on owned shares; business trust SPV dividends; Govt-notified persons; Individual shareholders where aggregate ≤ ₹10,000 and paid by non-cash mode |
| 11 | E-commerce participant [Sl. 8(v)] | Participant is Individual/HUF with gross annual sales ≤ ₹5 lakh + has furnished PAN/Aadhaar |
| 12 | Virtual digital asset [Sl. 8(vi)] | Value ≤ ₹50,000 (Individual/HUF non-trader) or ≤ ₹10,000 (any other person) |
| 15 | Mutual fund units — non-resident [Sl. 393(2), Sl. 10] | UTI units payable to non-resident Indian or non-resident HUF, subject to prescribed conditions |
| 16 | FII income from securities [Sl. 393(2), Sl. 15] | Income is by way of capital gains — no TDS on FII capital gains |
| 18 | Cash withdrawal [Sl. 393(3), Sl. 5] | Payment to: Government; banking company / co-op bank / post office; business correspondent of bank; white-label ATM operator |
| 19 | NSS withdrawal [Sl. 393(3), Sl. 6] | Payment made to heirs of the assessee |
Nil Deduction by Self-Declaration — Section 393(6)
A resident individual (or certain other persons) may submit a written declaration in prescribed form stating their estimated total income for the tax year will be nil. On receipt, the payer need not deduct TDS on these payments:
- EPF accumulated balance [Section 392(7)]
- Insurance commission [Sl. 1(i)]
- Rent — specified person [Sl. 2(ii)]
- Mutual fund units income [Sl. 4(i)]
- Interest income [Sl. 5(i), (ii), (iii)]
- Life insurance policy payout [Sl. 8(i)]
- Dividend [Sl. 7]
⚠️ Restriction: Does not apply where aggregate income exceeds the basic exemption limit (except for residents aged 60+). The payer must forward a copy of the declaration to the Commissioner by the 7th of the following month [Section 393(7)].
Special rule [Section 393(8)]: No TDS on interest paid by an Offshore Banking Unit on borrowings/deposits made on/after 1 April 2005 by a non-resident or person not ordinarily resident in India.
Key Definitions — Section 402
| Term | Definition [Section 402] |
|---|---|
| Specified person | Any person NOT being an Individual/HUF; OR an Individual/HUF with business turnover > ₹1 crore or professional receipts > ₹50 lakh in the preceding year [Sec 402(37)] |
| Designated person | Govt, local authority, company, firm, co-op society, trust, university, foreign govt/enterprise, and Individual/HUF with turnover > ₹1 crore (business) / ₹50 lakh (profession) [Sec 402(11)] |
| Rent | Any payment under lease/tenancy/agreement for use of land, building, factory building, machinery, plant, equipment, furniture, or fittings — whether or not owned by the payee [Sec 402(29)] |
| Professional services | Legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, advertising, and other notified professions [Sec 402(28)] |
| Work | Includes advertising, broadcasting, carriage of goods/passengers, catering, and manufacturing to customer specification using customer's material [Sec 402(47)] |
| Specified senior citizen | Individual aged 75+ with only pension + interest income from the same bank where pension is received, who has submitted a declaration [Sec 402(39)] |
| Person responsible for paying | For salary: employer (if company, the company + principal officer). For other payments: payer himself (if company, the company + principal officer) [Sec 402(27)] |
Practical Q&A — Common Scenarios
| Situation | Answer |
|---|---|
| Company pays ₹80,000 to a CA for audit fees — TDS? | Yes. Company = specified person. Sl. 6(iii)(a) @ 10%. Threshold ₹50,000 crossed. |
| Individual pays ₹2 lakh to interior decorator for home renovation — TDS? | No TDS if individual's turnover ≤ ₹1 crore and professional receipts ≤ ₹50 lakh. Sl. 6(ii) applies only if aggregate payments > ₹50 lakh in year. |
| Bank pays ₹55,000 interest to a non-senior-citizen FD holder — TDS? | Yes. Sl. 5(ii). Threshold ₹50,000 exceeded. Rate: rates in force (slab rates). |
| Indian company pays software licence fee to a US company — TDS? | Yes. Sl. 17 (Sec 393(2)). Rates in force. Check India-USA DTAA — treaty rate may be lower. Obtain TRC + Form 10F from US company. |
| Company pays ₹5,000 dividend to shareholder by NEFT — TDS? | No TDS. Amount ≤ ₹10,000, paid by non-cash mode [Section 393(4), Sl. 10(f)]. |
| Payee refuses to give PAN — what rate applies? | Higher of: applicable rate / rates in force / 20% (for most cases) [Section 397(2)]. |
| Shopkeeper buys goods worth ₹70 lakh from supplier in a year — TDS? | Only if buyer's own turnover > ₹10 crore. Rate: 0.1% on ₹20 lakh (amount exceeding ₹50 lakh). [Sl. 8(ii)] |
| Firm pays ₹25,000 monthly interest to a partner — TDS? | Yes. Sl. 393(3), Sl. 7 @ 10%. Threshold ₹20,000 crossed. New provision — no equivalent in 1961 Act. |
📖 TDS & TCS Series — Continue Reading
📌 Source: Income Tax Act 2025, Act No. 30 of 2025 — Section 393(1) (pages 454–457), Section 393(2) (pages 457–459), Section 393(3) (pages 459–460), Section 393(4) & (5) (pages 460–463), Section 402 (pages 473–475), as published in the Gazette of India Extraordinary dated 21st August 2025. Use the Section Cross-Reference tool for 1961 ↔ 2025 section mapping.