Section 393
Section 393: tax to be deducted at source - the master TDS rate table
Section 393 consolidates almost all the TDS obligations under the Income-tax Act, 2025 into three tables: payments to residents, payments to non-residents, and payments to any person (mainly winnings). It then sets out the situations where no deduction is required, the self-declaration ("Form 15G/15H"-type) mechanism for nil deduction, and related rules on certificates, suspense accounts and tax borne by the payer.
This explanation is AI-assisted and pending review by our CA/CS team. It is general information, not professional advice - always cross-check against the bare law text above or talk to our tax team for guidance specific to your situation.
How Section 393 works
Where an income or sum listed in the tables is credited, paid or distributed to the specified payee during the tax year, the person responsible for paying it must deduct income-tax on the entire amount once it exceeds the threshold specified for that item, at the specified rate, at the time of credit to the payee's account or at the time of payment (in cash, cheque, draft or other mode), whichever is earlier.
Table for payments to residents - Section 393(1)
Key rates and thresholds from the resident-payments table (thresholds are per year unless stated otherwise):
| Nature of income or sum | Rate | Threshold |
|---|---|---|
| Insurance commission (soliciting/procuring insurance business) | Rates in force | ₹20,000 |
| Other commission or brokerage (not insurance), paid by a "specified person" | 2% | ₹20,000 |
| Rent, paid by a person other than a specified person | 2% | ₹50,000 for a month or part of a month |
| Rent for machinery/plant/equipment, paid by a specified person | 2% | ₹50,000 for a month or part of a month |
| Rent for land/building/furniture/fittings, paid by a specified person | 10% | ₹50,000 for a month or part of a month |
| Transfer of immovable property (not agricultural land) - on consideration or stamp duty value, whichever is higher | 1% | ₹50,00,000 |
| Consideration (not in kind) under a joint development agreement (Section 67(14)) | 10% | Nil |
| Compensation/enhanced compensation on compulsory acquisition of immovable property (not agricultural land) | 10% | ₹5,00,000 |
| Income from units of specified mutual funds / UTI Administrator / specified company | 10% | ₹10,000 |
| Business trust distributed income of the nature in Schedule V Sl. Nos. 3 and 4 | 10% | Nil |
| Investment fund income (non-exempt portion) to a unitholder | 10% | Nil |
| Securitisation trust income to an investor | 10% | Nil |
| Interest on securities | Rates in force | ₹10,000 |
| Interest (other than on securities) from a bank, co-operative bank or post office | Rates in force | ₹1,00,000 for a senior citizen; ₹50,000 for others |
| Interest (other than on securities) from any other specified person | Rates in force | ₹10,000 |
| Payments to contractors by a "designated person" (individual/HUF contractor) | 1% | ₹30,000 (single sum) / ₹1,00,000 (aggregate) |
| Payments to contractors by a designated person (other contractors) | 2% | ₹30,000 (single sum) / ₹1,00,000 (aggregate) |
| Contract work / professional fees / commission or brokerage, paid by an individual/HUF not otherwise covered | 2% | ₹50,00,000 |
| Fees for technical services, call-centre operation payments, certain other specified payments, royalty for cinematographic film distribution/exhibition, and Section 26(2)(h) sums, paid by a specified person | 2% | ₹50,000 (Nil for payments to a company director) |
| Fees for professional services and other specified-person payments not listed above (e.g. general royalty) | 10% | ₹50,000 |
| Dividend (including on preference shares), declared by a domestic company | 10% | Nil |
| Sum under a life insurance policy including bonus (on the income component, excluding amounts exempt under Schedule II Sl. No. 2) | 2% | ₹1,00,000 |
| Purchase of goods by a buyer | 0.1% | ₹50,00,000 |
| Total income of a "specified senior citizen" (75+, pension + interest only), paid by a specified bank | Rates in force | As applicable |
| Benefit or perquisite from business or profession, to a resident | 10% of the value | ₹20,000 |
| Sale of goods/services by an e-commerce participant via an e-commerce operator | 0.1% of gross sale/service amount | Nil |
| Consideration for transfer of a virtual digital asset | 1% | Nil |
Table for payments to non-residents - Section 393(2)
Selected rates from the non-resident payments table (in addition to any lower rate available under a tax treaty where a certificate is furnished):
| Nature of income | Rate |
|---|---|
| Income of a non-resident sportsman/entertainer or non-resident sports association (Section 211) | 20% |
| Interest on foreign-currency borrowing under approved loan or long-term infrastructure bond (before 1 July 2023) | 5% |
| Interest on rupee denominated bonds issued before 1 July 2023 | 5% |
| Interest on long-term bonds / rupee denominated bonds listed only on a recognised stock exchange in an IFSC | 4% (issued before 1 July 2023) or 9% (issued on/after 1 July 2023) |
| Interest from an infrastructure debt fund (Schedule VII Sl. No. 46) | 5% |
| Business trust distributed income - Schedule V Sl. No. 3 | 5% for income under Sl. No. 3.B(a); 10% for income under Sl. No. 3.B(b) |
| Business trust distributed income - Schedule V Sl. No. 4 | Rates in force |
| Investment fund income (non-exempt portion) | Rates in force |
| Securitisation trust investment income | Rates in force |
| Income from units of a specified mutual fund / specified company | 20%, or the lower DTAA rate if a valid tax residency certificate is furnished (Note 2) |
| Income from units of an offshore fund (Section 208) | 10% |
| Long-term capital gains on transfer of offshore fund units (Section 208) | 12.5% |
| Interest or dividends on bonds/GDRs (Section 209) | 10% |
| Long-term capital gains on transfer of bonds/GDRs (Section 209) | 12.5% |
| Income from securities to a Foreign Institutional Investor (Section 210(1)) | 20%, or the lower DTAA rate if a valid tax residency certificate is furnished (Note 2) |
| Income from securities to a specified fund (Schedule VI Note 1(g)) | 10% |
| Any other interest, or any other sum chargeable under the Act (not being salary), paid to a non-resident | Rates in force |
Table for payments to any person - Section 393(3)
| Nature of income or sum | Rate | Threshold |
|---|---|---|
| Winnings from lottery, crossword puzzle, card game or other game, gambling or betting (other than online games) | Rates in force | ₹10,000 per single transaction |
| Winnings from an online game | Rates in force | As per Note 1 - computed on net winnings |
| Winnings from a horse race, paid by a bookmaker or licensed race-course operator | Rates in force | ₹10,000 per single transaction |
| Commission, remuneration or prize on lottery tickets to stockists/distributors/sellers | 2% | ₹20,000 |
| Cash withdrawal from one or more accounts with a bank, co-operative society engaged in banking, or post office | 2% | ₹3 crore where the recipient is a co-operative society; ₹1 crore for other recipients |
| Amount referred to in Section 80CCA(2)(a) of the Income-tax Act, 1961 (National Savings Scheme withdrawal) | 10% | ₹2,500 |
| Salary, remuneration, commission, bonus or interest paid by a firm to its partner | 10% | ₹20,000 |
When no TDS is required
Section 393(4) lists a detailed set of "no deduction at source" situations tied to specific rows of the tables above - among them: certain rent paid to a REIT special purpose vehicle; compensation exempt under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013; capital-gains income from units; interest on notified Government securities, National Development Bonds and specified debentures; interest paid to LIC, GIC and other insurers on securities they beneficially own; interest paid by/to banks, co-operative societies (subject to a turnover and threshold test), and on specified Government deposit schemes; small road-transport contractors (owning ten or fewer goods carriages, with a PAN declaration); personal-purpose payments by an individual/HUF; dividends paid to LIC, GIC, other insurers, REIT SPVs and notified persons, and non-cash dividends to individual shareholders up to ₹10,000; small e-commerce participants (individual/HUF, turnover up to ₹5,00,000, PAN or Aadhaar furnished); and small virtual digital asset transfers (up to ₹50,000 for certain individuals/HUFs, ₹10,000 otherwise).
Section 393(5) says tax is never deducted from amounts payable to the Government, the Reserve Bank of India, a Central-Act corporation exempt from income-tax, or a specified mutual fund (for interest, dividend or other income it beneficially owns).
Self-declaration for nil deduction
Section 393(6) lets a resident individual (and, for a narrower list of payments, other non-company, non-firm persons) furnish a written declaration - in duplicate, in prescribed form - that tax on the estimated total income for the year will be nil, covering payments such as accumulated PF balance, insurance commission, rent, unit income, interest, life insurance policy payouts and dividend. This mechanism (commonly known from Forms 15G/15H) does not apply to non-senior-citizen declarants once the relevant income exceeds the basic exemption limit.
The declaration can also be furnished electronically to a depository in specified cases (units, interest on securities or dividends held in demat form).
Section 393(7) requires the payer to forward the declaration to the prescribed income-tax authority within the prescribed time (currently by the seventh day of the month following the quarter in which it is furnished).
Other exemptions and special rules
Section 393(8): no deduction from interest paid by an Offshore Banking Unit on borrowings or deposits made on or after 1 April 2005 by a non-resident or a not-ordinarily-resident person.
Section 393(9): no deduction from any payment to, or on behalf of, the New Pension System Trust (Schedule VII Sl. No. 41).
Section 393(10): where, under an agreement, the payer has agreed to bear the tax on the recipient's income, the income is first grossed up so that, after deducting tax under this Chapter, the recipient still receives the net amount agreed.
Section 393(11): a credit to any "suspense account" or similarly named account in the payer's books is deemed to be a credit to the payee's account, triggering the TDS obligation just as an actual credit or payment would.
Frequently asked questions
What is the TDS rate on rent paid by an individual not otherwise liable to tax audit (a non-specified person)?
2%, with a threshold of ₹50,000 for a month or part of a month, under Section 393(1) [Table Sl. No. 2(i)].
What is the TDS rate on purchase of goods above ₹50 lakh?
0.1%, applied on the sum exceeding ₹50,00,000, under Section 393(1) [Table Sl. No. 8(ii)] read with Note 1 to that table.
What is the TDS rate on dividend under the Income-tax Act, 2025?
10%, with no threshold, deducted by the domestic company before it distributes or pays the dividend, under Section 393(1) [Table Sl. No. 7].
What is the TDS rate on transfer of a virtual digital asset (crypto)?
1%, with no minimum threshold under the main rate table, under Section 393(1) [Table Sl. No. 8(vi)] - though Section 393(4) [Table Sl. No. 12] provides narrower no-deduction thresholds (₹50,000 or ₹10,000 depending on the payer) in specified cases.
Related sections
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