Tax to be deducted at source
[Section-393 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 393(1) of Income Tax Act 2025
393(1) Where any income or sum of the nature specified in column B of the Table below, is credited or paid or distributed by the person specified in column C during the tax year, to a resident, the person responsible for paying shall deduct income-tax,—
- 393(1)(a) on the entire amount of such income or sum, where the amount or aggregate of amounts exceeds the threshold limit specified in column D;
- 393(1)(b) at the rate specified in column D;
- 393(1)(c) at the time of credit of such income or sum to the account of the payee or at the time of its payment in cash or by way of a cheque or a draft or by any other mode, whichever is earlier; and
- 393(1)(d) subject to the provisions of sub-sections (4), (5), (6), (8) and (9).
Table
FOR PAYMENTS TO RESIDENT
1. Commission or brokerage
| Nature of Income or sum | Payer | Rate Threshold limit |
|---|---|---|
| 1(i) Income by way of remuneration or reward, whether by way of commission or otherwise, for soliciting or procuring insurance business (including business relating to the continuance, renewal or revival of insurance policies). | Any person | Rate: Rates in force. —— Threshold limit: ₹ 20,000 |
| 1(ii) Income by way of commission [not being insurance commission referred to in serial number 1(i)] or brokerage. | Specified person. | Rate: 2% —— Threshold limit: ₹ 20,000 |
2. Rent
| Nature of Income or sum | Payer | Rate Threshold limit |
|---|---|---|
| 2(i) Income by way of rent. | Person other than specified person. | Rate: 2% —— Threshold limit: ₹50,000 for a month or part of a month |
| 2(ii) Income by way of rent. | Specified person. | Rate: (a) 2%, for the use of any machinery or , plant, or equipment; and (b) 10%, for the use of any land, or building (including factory building), or land appurtenant to a building (including factory building), or furniture, or fittings. —— Threshold limit [for (a) and (b)]: ₹ 50,000 for a month or part of a month. |
Note 1.–– In serial number 2(i), the tax shall be deducted on such income at the time of—
- (a)credit of rent to the account of the payee; or
- (b)payment thereof in cash or by way of a cheque or a draft or anyother mode,
whichever is earlier, for the last month of the tax year or the last month of tenancy.
3. Payment on transfer of certain immovable property other than agricultural land
| Nature of Income or sum | Payer | Rate Threshold limit |
|---|---|---|
| 3(i)Any consideration for transfer of any immovable property (other than agricultural land). | Person (other than the person who are required to deduct tax under serial number 3(iii)). | Rate:1% of such sum or stamp duty value of the property if more than ₹50,00,000 , whichever is higher. —— Threshold limit: ₹50,00,000. |
| 3(ii) Any consideration, not being consideration in kind, under the agreement referred to in section 67(14). | Any person. | Rate: 10% —— Threshold limit: Nil. |
| 3(iii)Sum, being in thenature of— (a)compensation orthe enhanced compensation; or (b)consideration orthe enhanced consideration, on account of compulsory acquisition, under any law for the time being in force, of any immovable property (other than agricultural land). | Any person | Rate: 10% —— Threshold limit: ₹5,00,000 |
Note 1.––Consideration for transfer of any immovable property under serial number 3(i) shall be the aggregate of the amounts paid or payable by all the transferees to the transferor or all the transferors for transfer of such immovable property for the purposes of the threshold limit mentioned in column D.
Note 2.— In case of consideration on which provisions of both serial numbers 3(i) and 3(ii) are applicable, tax shall be deducted under 3(ii) only.
4. Income from capital market
| Nature of Income or sum | Payer | Rate Threshold limit |
|---|---|---|
| 4(i)Any income in respect of— (a)units of a Mutual Fund specified under Schedule VII (Table: Sl. No. 20 or 21); or (b)units from the Administrator of the specified undertaking; or (c)units from the specified company. | Any person. | Rate: 10% —— Threshold limit: ₹ 10,000. |
| 4(ii)Any distributed income referred to in section 223, referred to in Schedule V (Table: Sl. Nos. 3 and 4) or (Table: Sl. No. 4), payable to a unitholder of a Business Trust. | Any Business Trust. | Rate: 10% —— Threshold limit: Nil. |
| 4(iii)Any income, other than that proportion of income which is exempt under Schedule V (Table: Sl. No. 2), in respect of units of an investment fund specified in section 224, payable to its unitholder. | Any Investment fund specified in section 224. | Rate: 10% —— Threshold limit: Nil |
| 4(iv)Any income, in respect of an investment in a securitisation trust specified in section 221 to an investor. | Any securitisation trust specified in section 221. | Rate: 10% —— Threshold limit: Nil. |
5. Interest income
| Nature of Income or sum | Payer | Rate Threshold limit |
|---|---|---|
| 5(i)Any income by way of Interest on securities | Any person | Rate: Rates in force. —— Threshold limit: ₹10,000 |
| 5(ii)Any income byway of interest other than interest on securities. | (a)Abanking company; or (b)a co-operative society carrying on the business of banking; or (c)a post office for a deposit made under a scheme notified by the Central Government | Rate: Rates in force. —— Threshold limit: (a) ₹1,00,000 in the case of a senior citizen; (b)₹50,000 in case of person other than senior citizen. |
| 5(iii) Any income being interest other than interest on securities. | Specified person [other than person in Sl. No. 5(ii).C] | Rate: Rates in force. —— Threshold limit: ₹10,000. |
Note 1.— In serial number 5(ii) and (iii), where the interest income credited or paid is in respect of—
- (a) time deposits with a banking company; or
- (b) time deposits with a co-operative society engaged in carrying on the business of banking; or
- (c) deposits with a public company formed and registered in India with the main object of carrying on business of long-term finance for construction or purchase of houses in India for residential purposes and is eligible for deduction under section 32(e),
and the person mentioned in column C has not adopted core banking solutions, the threshold limit in column D shall be computed with reference to the income credited or paid by a branch of such person.
Note 2.—The person responsible for making the payment referred to in serial numbers 5(ii) and (iii) of this Table, may at the time of making any deduction, increase or reduce the amount to be deducted for the purpose of adjusting any excess or deficiency arising out of any previous deduction or failure to deduct during the tax year.
6. Payments to contractors, fees for professional and technical services, etc.
| Nature of Income or sum | Payer | Rate Threshold limit |
|---|---|---|
| 6(i) Any sum for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a designated person. | Any designated person. | Rate: (a) 1%, if contractor is individual or Hindu undivided family; (b) 2%, if contractor is a person other than the person mentioned in (a). —— Threshold limit: [for (a) and (b)] (a) ₹30,000; or aggregate of amount; and (b) ₹1,00,000 in case of aggregate of amounts. |
| 6(ii) Any sum–– (a) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract; or (b) by way of fees for professional services; or (c) by way of commission [not being insurance commission referred to in serial number 1(i)] or brokerage. | Any person, being an individual or Hindu undivided family [other than those required to deduct income-tax as per Sl. No. 6(i) and (iii) or Sl. No. 1(ii)] | Rate: 2%. —— Threshold limit: ₹50,00,000. |
| 6(iii) Any sum by way of–– (a) fees for professional services; or (b) fees for technical services; or (c) remuneration or fees or commission by whatever name called, other than those on which tax is deductible under section 392, to a director of a company; or (d) royalty; or (e) any sum referred to in section 26(2)(h). | Specified person. | Rate: (a) 2% of such sum in case of— (i) fees for technical services (not being a professional services); or (ii) royalty in the nature of consideration for sale, distribution or exhibition of cinematographic films; or (iii) payee, engaged only in the business of operation of call centre; (b) 10% of such sum in cases other than (a) —— Threshold limit: [for (a) and (b)]: ₹ 50,000. |
Note.––In serial number 6 (i), if any sum is paid or credited for carrying out any work specified in section 402(47)(e), tax shall be deducted at source—
- (a) on the invoice value excluding the value of material, if such value is specified separately in the invoice; or
- (b) on the whole of the invoice value, if the value of material is not specified separately in the invoice.
7. Dividend
| Nature of Income or sum | Payer | Rate Threshold limit |
|---|---|---|
| Any dividends (including on preference shares) declared. | Any domestic company. | Rate: 10%. —— Threshold limit: Nil. |
Note.––The tax shall be deducted at source before making any distribution or payment of dividend.
8. Other cases
| Nature of Income or sum | Payer | Rate Threshold limit |
|---|---|---|
| 8(i) Any sum under a life insurance policy, including the sum allocated as bonus on such policy, other than the amount not includible in the total income under Schedule II (Table: Sl. No. 2). | Any person. | Rate: 2% on income comprised in such sum. —— Threshold limit: ₹1,00,000 |
| 8(ii) Any sum for purchase of any goods. | Any person, being a buyer. | Rate: 0.1% of such sum exceeding ₹50,00,000. —— Threshold limit: ₹50,00,000. |
| 8(iii) Total income of a specified senior citizen after allowing deduction under Chapter VIII and rebate under section 156. | specified bank. | Rate: Rates in force. —— Threshold limit: Nil. |
| 8(iv) Any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession of any resident. | Any specified person. | Rate: 10% of value or aggregate of values of such benefit or perquisite. —— Threshold limit: ₹ 20,000. |
| 8(v) Sale of goods or provision of services by an e-commerce participant, facilitated by an e-commerce operator through its digital or electronic facility or platform. | Any e-commerce operator. | Rate: 0.1% of gross amount of such sale or services or both. —— Threshold limit: Nil. |
| 8(vi) Any sum by way of consideration for transfer of a virtual digital asset. | Any person | Rate: 1%. —— Threshold limit: Nil. |
Note1.––The deduction of tax under serial number 8(ii) shall not apply to a transaction on which tax is deductible or collectible under any of the provisions of the Act.
Note 2.––The provisions of serial number 8(iv) shall apply to any benefit or perquisite, whether in cash or in kind or partly in cash and partly in kind, provided to a resident.
Note 3.––In respect of serial number 8(v)––
- (a) for deduction of tax, the provisions thereof shall take precedence over any other provisions of this Chapter;
- (b) any payment made by a purchaser of goods or recipient of services directly to an e-commerce participant for the sale of goods or provision of services or both, facilitated by an e-commerce operator, shall be deemed to be the amount credited or paid by the e-commerce operator to the e-commerce participant and this amount shall be included in the gross amount of such sale or services for the purposes of deduction of income-tax under this serial number;
- (c) e-commerce operator shall be deemed to be the person responsible for paying to e-commerce participant;
- (d) irrespective of anything contained in this Chapter, if—
- (i) tax has been deducted on a transaction under this serial number; or
- (ii) a transaction is not liable for tax deduction as provided in section 393(4) (Table: Sl. No. 11),
- then tax shall not be deducted on such transaction under any other provision of this Chapter;
- (e) clause (d) shall not apply to any amount or aggregate of amounts received or receivable by an e-commerce operator for—
- (i) hosting advertisements; or
- (ii) providing any other services,
- which are not in connection with the sale or services referred to in this serial number.
Note 4.––In case of a transaction on which provisions of serial number 8(v) are applicable along with the provisions of serial number 8(vi) for deduction of tax, then tax on such transaction shall be deducted only under the provisions of serial number 8(vi).
Note 5.—The provisions of serial number 8(iii) shall take precedence over any other provisions of this Chapter and tax shall be deducted under this provision.
Note 6.—For serial numbers 8(iv) and (vi),—
- (a) where the consideration or benefit or perquisite is—
- (i) in exchange of another virtual digital asset where there is no part in cash, in respect of serial number 8(iv); or
- (ii) is wholly in kind; or
- (iii) is partly in kind and partly in cash, but such part in cash is not sufficient to meet the liability of deduction of tax in respect of the whole of such payment or benefit or perquisite,
- the person responsible for paying or providing shall ensure that the tax required to be deducted has been paid, before releasing such consideration or providing such benefit or perquisite, as the case may be.
- (b) “person responsible for providing” means the person providing such benefit or perquisite, or in case of a company, the company itself including the principal officer thereof.
Section 393(2) of Income Tax Act 2025
393(2) Where any income or sum of the nature specified in column B of the Table below, is credited or paid by the person specified in column D during the tax year, to a non-resident specified in column C, the person responsible for paying shall deduct income-tax on the amount of such income or sum,—
- 393(2)(a) at the rate specified in column E;
- 393(2)(b) at the time of credit of income or sum to the account of the payee or at the time of its payment in cash or by way of a cheque or a draft or by any other mode, whichever is earlier; and
- 393(2)(c) subject to the provisions of sub-sections (4), (8) and (9).
Table
FOR PAYMENTS TO NON-RESIDENT
1. Any income referred to in section 211.
| Nature of Income or sum | Payee | Payer | Rate |
|---|---|---|---|
| 1. Any income referred to in section 211. | (a) A non-resident sportsman (including an athlete) or an entertainer, who is not a citizen of India; or (b) a non-resident sports association or institution. | Any person. | 20%. |
2. Any income by way of interest payable in respect of monies borrowed in foreign currency from a source outside India,—
| Nature of Income or sum | Payee | Payer | Rate |
|---|---|---|---|
| 2. Any income by way of interest payable in respect of monies borrowed in foreign currency from a source outside India,— (a) under a loan agreement or issue of long-term infrastructure bond on or after the 1st July, 2012 but before the 1st July, 2023; or (b) by way of issue of any long-term bond on or after the 1st October, 2014 but before the 1st July, 2023, which is approved by the Central Government in this behalf. | Any non-resident (not being a company) or a foreign company. | Any Indian company or a business trust. | 5%. |
| Nature of Income or sum | Payee | Payer | Rate |
|---|---|---|---|
| 3. Any income by way of interest payable in respect of monies borrowed from a source outside India by way of issue of rupee denominated bond before the 1st July, 2023. | Any non-resident (not being a company) or a foreign company. | Any Indian company or a business trust. | 5%. |
| Nature of Income or sum | Payee | Payer | Rate |
|---|---|---|---|
| 4. Any income by way of interest payable in respect of monies borrowed from a source outside India by way of issue of any long-term bond or rupee denominated bond, which is listed only on a recognised stock exchange located in any International Financial Services Centre. | Any non-resident (not being a company) or a foreign company. | Any Indian company or a business trust. | (a) 4%, where issued on or after the 1st April, 2020 but before the 1st July, 2023; or (b) 9%, where issued on or after the 1st July, 2023. |
| Nature of Income or sum | Payee | Payer | Rate |
|---|---|---|---|
| 5. Any income by way of interest. | Any non-resident (not being a company) or a foreign company. | Any infrastructure debt fund referred to in Schedule VII (Table: Sl. No. 46). | 5%. |
| Nature of Income or sum | Payee | Payer | Rate |
|---|---|---|---|
| 6. Any distributed income referred to in section 223, being of the nature referred to in Schedule V (Table: Sl. No. 3). | Any unit holder, being a non-resident (not being a company) or a foreign company. | Any business trust. | (a) 5%, in case of income of the nature referred to in Schedule V [Table: Sl. No. 3.B(a)]; and (b) 10%, in case of income of the nature referred to in Schedule V [Table: Sl. No. 3.B(b)]. |
| Nature of Income or sum | Payee | Payer | Rate |
|---|---|---|---|
| 7. Any distributed income referred to in section 223, being of the nature referred to in Schedule V (Table: Sl. No. 4). | Any unit holder, being a non-resident (not being a company) or a foreign company. | Any business trust. | Rates in force |
| Nature of Income or sum | Payee | Payer | Rate |
|---|---|---|---|
| 8. Any income, other than that proportion of income which is exempt under Schedule V (Table: Sl. No. 2), in respect of units of an investment fund specified in section 224. | Any unit holder, being a non-resident (not being a company) or a foreign company. | Any investment fund specified in section 224. | Rates in force. |
| Nature of Income or sum | Payee | Payer | Rate |
|---|---|---|---|
| 9. Any income in respect of an investment in a securitisation trust specified in section 221. | Any investor, being a non-resident (not being a company) or a foreign company. | Any securitisation trust specified in section 221. | Rates in force. |
| Nature of Income or sum | Payee | Payer | Rate |
|---|---|---|---|
| 10. Any income— (a) in respect of units of a Mutual Fund specified under Schedule VII (Table: Sl. No. 20) or (Table: Sl. No. 21); or (b) from the specified company. | Any non-resident (not being a company) or a foreign company. | Any person. | As per Note 2. |
| Nature of Income or sum | Payee | Payer | Rate |
|---|---|---|---|
| 11. Any income in respect of units referred to in section 208. | Any Offshore fund. | Any person. | 10%. |
| Nature of Income or sum | Payee | Payer | Rate |
|---|---|---|---|
| 12. Any income by way of long-term capital gains arising from the transfer of units referred to in section 208; | Any offshore fund. | Any person. | 12.5% |
| Nature of Income or sum | Payee | Payer | Rate |
|---|---|---|---|
| 13. Any income by way of interest or dividends in respect of bonds or Global Depository Receipts referred to in section 209. | Any non-resident. | Any person. | 10%. |
| Nature of Income or sum | Payee | Payer | Rate |
|---|---|---|---|
| 14. Any income by way of long-term capital gains arising from the transfer of bonds or Global Depository Receipts referred to in section 209. | Any non-resident. | Any person. | 12.5% |
| Nature of Income or sum | Payee | Payer | Rate |
|---|---|---|---|
| 15. Any income in respect of securities referred to in section 210(1) (Table: Sl. No. 1). | Any Foreign Institutional Investor. | Any person | As per Note 2. |
| Nature of Income or sum | Payee | Payer | Rate |
|---|---|---|---|
| 16. Any income in respect of securities referred to in section 210(1) (Table: Sl. No. 1). | a specified fund, referred to in Schedule VI [ Note 1(g)]. | Any person. | 10%. |
| Nature of Income or sum | Payee | Payer | Rate |
|---|---|---|---|
| 17. Any interest (not being interest referred to against serial numbers 2, 3, 4 and 5) or any other sum chargeable under the provisions of this Act, not being income chargeable under the head “Salaries”. | Any non-resident (not being a company) or a foreign company. | Any person. | Rates in force. |
Section 393(3) of Income Tax Act 2025
393(3) Where any income or sum of the nature specified in column B of the Table below, is credited or paid by the person specified in column D during the tax year, to any person, the person responsible for paying the amount specified in column C, shall deduct income-tax on such amount—
- 393(3)(a) at the rate specified in column E;
- 393(3)(b) at the time of payment thereof in cash or by way of a cheque or a draft or by any other mode, or as specified therein; and
- 393(3)(c) subject to the provisions of sub-sections (4), (5), (6), (8) and (9).
Table
FOR PAYMENTS TO ANY PERSON
| Nature of Income or sum | Payer | Rate Threshold limit |
|---|---|---|
| 1. Any income by way of winnings (other than winnings from serial number 2) from–– (a) any lottery; or (b) crossword puzzle; or (c) card game and other game of any sort; or (d) gambling or betting of any form or nature whatsoever | Any person. | Rate: Rates in force. —— Threshold limit: ₹10,000 in case of a single transaction. |
| 2. Any income by way of winnings from online game. | Any person. | Rate: Rates in force. —— Threshold limit: Net winnings as per Note 1. |
| 3. Any income by way of winnings from any horse race. | Any person, being a bookmaker or a person to whom a licence has been granted by the Government under any law for the time being in force for horse racing in any race course or for arranging for wagering or betting in any race course. | Rate: Rates in force. —— Threshold limit: ₹10,000 in case of a single transaction. |
| 4. Any income, credited or paid to a person, who is or has been stocking, distributing, purchasing or selling lottery tickets, by way of commission, remuneration or prize (by whatever name called) on such tickets. | Any person. | Rate: 2%. —— Threshold limit: ₹20,000. |
| 5. Any sum, paid in cash, from one or more accounts maintained by the deductee. | Every person, being,— (a) a banking company to which the Banking Regulation Act, 1949 applies (including any bank or banking institution referred to in section 51 of that Act); (b) a co-operative society engaged in carrying on the business of banking; or (c) a post office. | Rate: 2%. —— Threshold limit: ₹3,00,00,000 in case of deductee being, a co-operative society; or (b) ₹1,00,00,000 in case of deductee being person other than a co-operative society. |
| 6. Any amount referred to in section 80CCA(2)(a) of the Income-tax Act, 1961 (43 of 1961). | Any person | Rate: 10%. —— Threshold limit: ₹2,500. |
| 7. Any sum in the nature of salary, remuneration, commission, bonus or interest paid to a partner of the firm or credited to his account (including capital account). | Any person, being a firm. | Rate: 10% —— Threshold limit: ₹20,000. |
Section 393(4) of Income Tax Act 2025
393(4) The deduction of tax at source shall not be made under the provisions referred to in column B of the Table below, in respect of the income or sum, specified in column C:
Table
FOR NO DEDUCTION AT SOURCE
| Provisions for tax deduction at source | Condition for no deduction |
|---|---|
| 1. Commission or Brokerage referred to in section 393(1) [Table: Sl. No. 1(ii)]. | Commission or brokerage payable by Bharat Sanchar Nigam Limited or Mahanagar Telephone Nigam Limited to their public call office franchisees. |
| 2. Rent referred to in section 393(1) [Table: Sl. No. 2(ii)]. | Income by way of rent credited or paid to a business trust, being a real estate investment trust, in respect of any real estate asset, referred to in Schedule V (Table: Sl. No. 4), owned directly by such business trust. |
| 3. Compensation on acquisition of certain immovable property referred to in section 393(1) [Table: Sl. No. 3(iii)]. | Income by way of any award or agreement which has been exempted from levy of income-tax under section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (30 of 3013). |
| 4. Income in respect of units referred to in section 393(1) [Table: Sl. No. 4(i)]. | If income is of the nature of capital gain |
| 5. Income from units of a business trust referred to in section 393(1) [Table: Sl. No. 4(ii)]. | Income of the nature referred to in Schedule V [Table: Sl. No. 3.B(b)], if the special purpose vehicle referred to in the said clause has not exercised the option under section 200. |
| 6. Interest on securities referred to in section 393(1) [Table: Sl. No. 5(i)]. | (a) Interest payable on–– (i) National Development Bonds; (ii) such debentures, issued by such institution or authority or person as the Central Government may, by notification, specify in this behalf; (iii) any security of the Central Government or a State Government, other than–– (A) 8% Savings (Taxable) Bonds, 2003; or (B) 7.75% Savings (Taxable) Bonds, 2018; or (C) Floating Rate Savings Bonds, 2020 (Taxable); or (D) any other security of the Central Government or State Government as the Central Government may, by notification, specify in this behalf; (b) interest payable to–– (i) the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956, in respect of any securities owned by it or in which it has full beneficial interest; or (ii) the General Insurance Corporation of India or to any of the four companies, formed by virtue of the schemes made under section 16(1) of the General Insurance Business (Nationalisation) Act, 1972, in respect of any securities owned by the Corporation or such company or in which the Corporation or such company has full beneficial interest; or (iii) any other insurer in respect of any securities owned by it or in which it has full beneficial interest; or (iv) a “business trust”, as defined in section 2(21), in respect of any securities, by a special purpose vehicle referred to in Schedule V (Table: Sl. No. 3 ). |
| 7. Interest other than Interest on securities referred to in section 393(1) [Table: Sl. No. 5(ii) and 5(iii)]. | (a) Interest income credited or paid to— (i) any banking company; or (ii) any financial corporation established by or under a Central Act or State Act or Provincial Act; or (iii) the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956); or (iv) the Unit Trust of India; or (v) any company or co-operative society carrying on the business of insurance; or (vi) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notified in this behalf before the 1st April, 2020; (b) interest income credited or paid–– (i) by a co-operative society (other than a co-operative bank) to a member thereof; or (ii) by a co-operative society to any other co-operative society; or (iii) in respect of deposits with a primary agricultural credit society or a primary credit society or a co-operative land mortgage bank or a co-operative land development bank; or (iv) in respect of deposits (other than time deposits made on or after the 1st July, 1995) with a co-operative society, other than a co-operative society or bank referred to in sub-clause (iii), engaged in the business of banking, Where the total sales, gross receipts or turnover of the co-operative society does not exceed ₹50,00,00,000 during the tax year immediately preceding the tax year in which such interest is credited or paid; (c) interest income credited or paid— (i) by the Central Government under any provision of this Act or the Income-tax Act, 1961 (43 of 1961), or the Estate Duty Act, 1953 (34 of 1953), or the Wealth-tax Act, 1957 (27 of 1957), or the Gift-tax Act, 1958 (18 of 1958), the Companies (Profits) Surtax Act, 1964 (7 of 1964), or the Interest-tax Act, 1974 (45 of 1974); (ii) in respect of deposits under any scheme framed by the Central Government and notified by it in this behalf; (iii) in respect of deposits (other than time deposits made on or after the 1st July, 1995) with a banking company; (iv) by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal where the amount of such income or, the aggregate of the amounts of such income does not exceed ₹50,000 during the tax year; (v) or payable by an infrastructure capital company; or infrastructure capital fund; or infrastructure debt fund; or a public sector company; or scheduled bank in relation to a zero coupon bond issued on or after the 1st June, 2005 by such company or fund or public sector company or scheduled bank; (vi) as referred to in Schedule V (Table: Sl. No. 3); (vii) by a firm to a partner of the firm. |
| 8. Payments to contractors referred to in section 393(1) [Table: Sl. No. 6(i)]. | (a) When–– (i) any sum credited or paid or likely to be credited or paid during the tax year to the account of a contractor during the course of business of plying, hiring or leasing goods carriages; and (ii) that contractor owns ten or less goods carriages at any time during the tax year; and (iii) furnishes a declaration to that effect along with his Permanent Account Number to the person paying the sum; and (iv) the person responsible for paying to the contractor furnishes to the prescribed income-tax authority the particulars in such form and within such time as prescribed; (b) where such sum is credited or paid by individual or Hindu undivided family exclusively for personal purposes of such individual or any member of Hindu undivided family. |
| 9. Fees for professional or technical services referred to in section 393(1) [Table: Sl. No. 6(iii)]. | Where such sum is credited or paid by individual or Hindu undivided family exclusively for personal purposes of such individual or any member of Hindu undivided family. |
| 10. Dividend referred to in section 393(1) (Table: Sl. No. 7). | Dividend income credited or paid to— (a) the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956, in respect of any shares owned by it or in which it has full beneficial interest; (b) the General Insurance Corporation of India or to any of the four companies, formed by virtue of the schemes made under section 16(1) of the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972), in respect of any shares owned by the Corporation or such company or in which the Corporation or such company has full beneficial interest; (c) any other insurer in respect of any shares owned by it or in which it has full beneficial interest; (d) a “business trust”, as defined in section 2(21), by a special purpose vehicle referred to in Schedule V (Note 2); (e) any other person as notified by the Central Government in this behalf; (f) a shareholder, being an individual, if— (I) the dividend is paid by the company by any mode other than cash; and (II) amount or aggregate of amounts of such dividend distributed or paid or likely to be distributed or paid during the tax year does not exceed ₹10,000. |
| 11. Payment by e-commerce operator to e-commerce participant referred to in section 393(1) [Table: Sl. No. 8(v)]. | If the amount is credited or paid or likely to be credited or paid during the tax year to the account of an e- commerce participant, which is–– (a) an individual or a Hindu undivided family; and (b) the gross amount of the sales or services or both during the tax year does not exceed ₹5,00,000; and (c) the e-commerce participant has furnished the Permanent Account Number or Aadhaar number to the e-commerce operator. |
| 12. Payment on transfer of virtual digital asset referred to in section 393(1) [Table: Sl. No. 8(vi)] | Where value or aggregate value of such consideration during the tax year does not exceed–– (a) ₹50,000, when payable by an individual or a Hindu undivided family,— (i) whose total sales, gross receipts or turnover from the business carried on by him or profession exercised by him does not exceed ₹1,00,00,000 in case of business or ₹50,00,000 in case of profession, during the tax year immediately preceding the tax year in which such virtual digital asset is transferred; (ii) not having any income under the head “Profits and gains of business or profession”; (b) ₹10,000, when payable by any person other than the person referred to in clause (a). |
| 13. Income from units of a business trust referred to in section 393(2) (Table: Sl. No. 6). | Income of the nature referred to in Schedule V [Table: Sl. No. 3.B(b)], if the special purpose vehicle referred to in the said clause has not exercised the option under section 200. |
| 14. Income in respect of units of investment fund referred to in section 393(2) (Table: Sl. No. 8). | Income that is not chargeable to tax under the provisions of this Act. |
| 15. Income in respect of units of non-residents referred to in section 393(2) (Table: Sl. No. 10). | Income payable in respect of units of the Unit Trust of India to a non-resident Indian or a non-resident Hindu undivided family, subject to prescribed conditions. |
| 16. Income of Foreign Institutional Investors from securities referred to in section 393(2)(Table: Sl. No. 15). | Income, by way of capital gains arising from the transfer of securities referred to in section 210, if payable to a Foreign Institutional Investor. |
| 17. Income of Specified Fund from securities referred to in section 393(2) (Table: Sl. No. 16). | Income exempt at Schedule VI (Table: Sl. No. 1) to (Table: Sl. No. 4). |
| 18. Payment of certain amounts in cash referred to in section 393(3) (Table: Sl. No. 5). | Payment made to— (a) the Government; (b) any banking company or co-operative society engaged in carrying on the business of banking or a post office; (c) any business correspondent of a banking company or co-operative society engaged in carrying on the business of banking, as per the guidelines issued in this regard by the Reserve Bank of India under the Reserve Bank of India Act, 1934 (2 of 1934); (d) any white label automated teller machine operator of a banking company or co-operative society engaged in carrying on the business of banking, as per the authorisation issued by the Reserve Bank of India under the Payment and Settlement Systems Act, 2007 (51 of 2007). |
| 19. Payment in respect of deposits under National Savings Scheme, etc., referred to in section 393(3) (Table: Sl. No. 6). | Payment made to— (a) an assessee being and individual; (b) heirs of an assessee. |
Section 393(5) of Income Tax Act 2025
393(5) Irrespective of anything contained in this Chapter, the tax shall not be deducted by any person from any amount payable to––
- 393(5)(a) the Government; or
- 393(5)(b) the Reserve Bank of India; or
- 393(5)(c) a corporation established by or under a Central Act which is, under any law in force, exempt from income-tax on its income; or
- 393(5)(d) a Mutual fund as specified at Schedule VII (Table: Sl. No. 20 or 21),
- where such amount is payable to it by way of—
- (A) interest; or
- (B) dividend in respect of any securities or shares owned by it or in which it has full beneficial interest; or
- (C) any other income accruing or arising to it.
Section 393(6) of Income Tax Act 2025
393(6) The deduction of tax shall not be made under provisions referred to in column C of the Table below, in the case of a person as specified in column B, if such person furnishes to the person responsible for paying any income or sum of the nature referred to in such provisions, a written declaration in duplicate in such form and manner as prescribed that the tax on such person’s estimated total income of the tax year in which such income or sum is to be included in computing his total income shall be nil.
Table
DECLARATION FOR NO DEDUCTION AT SOURCE
| Sl. No. | Person | Provisions for tax deduction at source |
|---|---|---|
| A | B | C |
| 1 | An individual, who is a resident of India. | Dividend referred to in section 393(1) (Table: Sl. No. 7). |
| 2 | (a) An individual, resident of India, who is of the age of sixty years or more at any time during the tax year; (b) any person (not being a company or a firm). | (a) Payment of accumulated balance due to an employee referred to in section 392(7); (b) Insurance Commission referred to in section 393(1)[Table: Sl. No. 1(i)]; (c) rent referred to in section 393(1) [Table: Sl. No. 2(ii)]; (d) income in respect of units referred to in section 393(1)[Table: Sl. No. 4(i)]; (e) interest referred to in section 393(1) [Table: Sl. No. 5(i)], [(ii)] and (iii)]; (f) payment in respect of Life Insurance Policy referred to in section 393(1) [Table: Sl. No. 8(i)]. |
Note.––The provisions of this sub-section shall not apply where the aggregate of amounts of any income or sum of the nature referred to in provision mentioned in column C of this Table, is credited or paid or likely to be credited or paid during the relevant tax year in which such income or sum is to be included, exceeds the maximum amount not chargeable to tax.
Section 393(7) of Income Tax Act 2025
393(7) The person responsible for paying any income or sum of the nature referred in sub-section (6) shall deliver or cause to be delivered, one copy of the declaration referred therein, received from the person to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, on or before the seventh day of the month following the month in which the declaration is furnished to him.
Section 393(8) of Income Tax Act 2025
393(8) Irrespective of anything contained in sub-section (6), the deduction of tax shall not be made from the interest paid by an Offshore Banking Unit on a borrowing or deposit made on or after 1st April, 2005, by a non-resident or a person not ordinarily resident in India.
Section 393(9) of Income Tax Act 2025
393(9) Irrespective of anything contained in this Chapter, the deduction of tax shall not be made from any payment to a person for, or on behalf of, the New Pension System Trust referred to in Schedule VII (Table: Sl. No. 41).
Section 393(10) of Income Tax Act 2025
393(10) In a case other than that referred to in section 392(2)(a), where under an agreement or an arrangement, if the tax chargeable on any income of the recipient referred to in this Chapter is to be borne by the payer, then, for the purposes of deduction of tax, the income shall be increased to an amount which after deduction of tax as per provisions of this Chapter becomes equal to the net amount payable under such agreement or arrangement.
Section 393(11) of Income Tax Act 2025
393(11) The credit of any income or sum to any account, whether called “suspense account” or by any other name, in the books of account of the person liable to pay such income or sum, shall be deemed to be the credit of such income or sum to the account of the payee and the provisions of this section shall apply accordingly.
FAQs on Section 393 of Income Tax Act 2025
What is the general rule for tax deduction at source under Section 393(1)?
Tax must be deducted on specified income or sums credited, paid, or distributed to a resident by the payer, if the amount exceeds the prescribed threshold and at the rate mentioned in the Table provided in the section.
When is tax required to be deducted under Section 393(1)?
Tax is to be deducted at the time of credit or payment, whichever is earlier.
Who is responsible to deduct tax under Section 393(1)?
The person responsible for making the payment, as specified in column C of the Table under Section 393(1), is required to deduct tax.
What is the threshold limit for deduction on insurance commission?
₹20,000 in a financial year.
What is the rate of TDS on insurance commission under Section 393(1)?
The rate is as per the rates in force.
At what rate is TDS deducted on general commission or brokerage?
2% by a specified person, if the amount exceeds ₹20,000.
What is the TDS rate on rent paid by a person other than a specified person?
2%, if rent exceeds ₹50,000 per month or part thereof.
How is TDS on rent determined for specified persons?
2% for use of machinery, plant or equipment; 10% for use of land, building, furniture, etc., with a threshold of ₹50,000 per month.
Is TDS applicable on property transactions?
Yes, if consideration exceeds ₹50,00,000, TDS at 1% is applicable.
What is the TDS rate on compensation for compulsory acquisition of immovable property?
10% if the amount exceeds ₹5,00,000.
What is the TDS rate on capital market income like mutual fund units?
10% if the income exceeds ₹10,000.
Is there any threshold limit for TDS on income distributed by a Business Trust?
No, the threshold limit is Nil.
What is the TDS threshold for interest on securities?
₹10,000.
What is the threshold for TDS on bank interest for senior citizens?
₹1,00,000.
What is the TDS rate on contractor payments by designated persons?
1% for individuals or HUFs, 2% for others, subject to thresholds.
What is the aggregate threshold for contractor payments requiring TDS?
₹1,00,000 in aggregate or ₹30,000 for a single payment.
What is the TDS threshold for professional fees by individuals or HUFs?
₹50,00,000.
What is the TDS rate on director’s remuneration not covered under Section 392?
10% by a specified person.
What is the TDS on dividends declared by a domestic company?
10%, with no threshold limit.
Is TDS applicable on life insurance policy proceeds?
Yes, 2% on the income part, if it exceeds ₹1,00,000 and is not exempt under Schedule II.
What is the TDS on purchase of goods exceeding ₹50,00,000?
0.1% by a buyer, if not covered under any other TDS/TCS provision.
What is the TDS rate applicable to e-commerce operators?
0.1% on gross amount of sale or services facilitated.
Is TDS required on virtual digital asset (VDA) transfers?
Yes, at 1% of the consideration, with no threshold.
What if the VDA consideration is fully or partly in kind?
Tax must be paid before releasing such consideration or benefit.
Does Section 393(1) override other TDS provisions?
Yes, in cases like e-commerce transactions and senior citizen income under 8(iii), provisions under Section 393(1) take precedence.
What happens if the payer does not specify material value separately in contractor payments?
TDS is deducted on the entire invoice value.
What is considered for threshold limit in property transfers involving multiple transferees or transferors?
The aggregate of amounts paid or payable by all transferees to all transferors.
What is the main requirement under Section 393(2) of the Income Tax Act, 2025?
Any person responsible for paying certain income or sums to a non-resident must deduct income-tax at the specified rate at the time of credit or payment, whichever is earlier, and in accordance with sub-sections (4), (8), and (9).
When should tax be deducted under Section 393(2)?
Tax should be deducted either at the time of credit to the account of the payee or at the time of payment (in cash, cheque, draft, or other mode), whichever is earlier.
What is the TDS rate for payments made to a non-resident sportsman or entertainer under Section 393(2)?
20%.
What is the TDS rate on interest paid on foreign currency borrowings under a loan agreement or infrastructure bonds issued before July 1, 2023?
5%.
What is the TDS rate for interest on rupee-denominated bonds issued before July 1, 2023?
5%.
What is the TDS rate for interest on long-term bonds or rupee-denominated bonds listed on an IFSC exchange?
4% if issued between April 1, 2020 and June 30, 2023; 9% if issued on or after July 1, 2023.
What is the TDS rate for interest paid by an infrastructure debt fund to a non-resident?
5%.
What is the TDS rate on distributed income from a business trust under section 223 as per Schedule V (Sl. No. 3)?
5% for Schedule V [Sl. No. 3.B(a)]; 10% for Schedule V [Sl. No. 3.B(b)].
What is the TDS rate on distributed income under section 223 for Schedule V (Sl. No. 4)?
Rates in force.
What is the TDS rate on income from units of investment funds under section 224?
Rates in force.
What is the TDS rate on income from investment in a securitisation trust under section 221?
Rates in force.
What is the TDS rate on income from mutual fund units or specified company?
As per Note 2.
What is the TDS rate on income from units referred to in section 208 received by an offshore fund?
10%.
What is the TDS rate on long-term capital gains from transfer of units referred to in section 208?
12.5%.
What is the TDS rate on interest or dividends from bonds or Global Depository Receipts under section 209?
10%.
What is the TDS rate on long-term capital gains from transfer of bonds or Global Depository Receipts under section 209?
12.5%.
What is the TDS rate on income from securities referred to in section 210(1) (Sl. No. 1) received by a Foreign Institutional Investor?
As per Note 2.
What is the TDS rate on income from securities referred to in section 210(1) (Sl. No. 1) received by a specified fund under Schedule VI?
10%.
What is the TDS rate for other interest income or other sums chargeable to tax paid to non-residents (excluding salaries and items at serial nos. 2 to 5)?
Rates in force.
What is the scope of Section 393(3) of the Income Tax Act, 2025?
Section 393(3) mandates that any person responsible for paying certain specified incomes or sums, as listed in the Table under this section, must deduct income-tax at specified rates at the time of payment or credit of such amounts, subject to conditions in sub-sections (4), (5), (6), (8), and (9).
What types of incomes require tax deduction under Section 393(3)?
Incomes such as winnings from lotteries, crossword puzzles, card games, gambling, betting, online games, horse races; commission or remuneration on lottery tickets; cash payments from certain accounts by banks, co-operative societies, post offices; amounts under section 80CCA(2)(a); and payments to partners by firms are covered.
What are the threshold limits for tax deduction on winnings from lotteries or gambling?
Tax is deductible if the amount in a single transaction exceeds ₹10,000.
At what rates is tax deducted on income by way of winnings from lotteries, games, or gambling?
Tax is deducted at the rates in force applicable to such incomes.
What is the rate of tax deduction on commission or remuneration paid to persons stocking or selling lottery tickets?
Tax is deducted at 2% where the amount exceeds the threshold limit of ₹20,000.
Are there any threshold limits for cash payments from accounts maintained by banks, co-operative societies, or post offices?
Yes. For deductees who are co-operative societies, the threshold is ₹3,00,00,000; for others, it is ₹1,00,00,000.
What is the rate of tax deduction on sums paid in cash from such accounts?
Tax is deducted at 2%.
Does Section 393(4) provide any exceptions where tax deduction at source (TDS) is not required?
Yes. Section 393(4) lists various incomes and conditions where no TDS is required, such as commission payable by certain telecom companies to franchisees, rent paid to specified business trusts, exempted compensation awards, capital gains income from units, interest on specific securities and bonds, and others.
Are payments to government and certain specified entities exempt from tax deduction under this section?
Yes. Section 393(5) states that tax shall not be deducted from amounts payable to the Government, Reserve Bank of India, certain corporations exempt from income tax, and specified mutual funds on interest, dividend, or other income.
Can a person furnish a declaration to avoid tax deduction under Section 393(6)?
Yes. If a person furnishes a prescribed written declaration that their estimated total income for the tax year is nil, tax deduction is not required under specified provisions.
What is the responsibility of the person deducting tax when a declaration is furnished under Section 393(6)?
Under Section 393(7), the person responsible for paying income must deliver a copy of the declaration to the relevant Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner by the seventh day of the month following the month in which the declaration was received.
Is tax deduction required on interest paid by Offshore Banking Units to non-residents?
No. Section 393(8) exempts tax deduction on interest paid by Offshore Banking Units on borrowings or deposits made on or after 1st April, 2005 by non-residents or persons not ordinarily resident in India.
Are payments to the New Pension System Trust exempt from tax deduction?
Yes. Section 393(9) exempts deduction of tax on payments made to or on behalf of the New Pension System Trust as specified in Schedule VII (Table: Sl. No. 41).
How is tax deduction handled when the payer agrees to bear the tax on behalf of the recipient?
Section 393(10) states the income should be grossed up so that after tax deduction, the net amount payable matches the agreed amount under such arrangement.
What if the income or sum is credited to a suspense account in the payer’s books?
Section 393(11) clarifies that crediting income to a suspense or similar account is deemed as credit to the payee’s account for purposes of tax deduction.
What is the main obligation under Section 393(3) of the Income Tax Act 2025?
Section 393(3) requires that when any specified income or sum is credited or paid by certain persons during the tax year, the person responsible for paying the specified amount must deduct income-tax at the prescribed rate, at the time of payment or credit, subject to certain provisions.
Which types of income are subject to tax deduction under Section 393(3)?
Types include winnings from lotteries, crossword puzzles, card games, gambling, betting, online games, horse races, commissions on lottery tickets, cash payments from certain accounts, payments to partners by firms, and others as specified in the Table under Section 393(3).
What are the threshold limits applicable for tax deduction under Section 393(3)?
Threshold limits vary by income type. For example, ₹10,000 for single transaction lottery winnings, ₹20,000 for commission on lottery tickets, ₹3 crore or ₹1 crore for cash payments from accounts depending on the deductee, ₹2,500 for certain specified income under section 80CCA(2)(a), and ₹20,000 for payments to partners by firms.
Are there any exceptions where no tax deduction at source is required under Section 393(4)?
Yes. Section 393(4) lists various incomes and conditions under which tax deduction at source shall not be made, including commission payable by certain telecom companies, rent paid to specified real estate trusts, income exempt under certain laws, interest payable on specified government securities, interest paid to certain institutions, and payments for personal purposes by individuals or Hindu Undivided Families among others.
Can tax be exempted on furnishing a declaration by the payee under Section 393(6)?
Yes. If the payee furnishes a prescribed written declaration that their estimated total income for the tax year is nil for tax deduction purposes, tax deduction is not required on such payments, subject to aggregate amount limits.
What is the responsibility of the person responsible for payment when a declaration for no deduction is furnished?
As per Section 393(7), the person responsible for payment must deliver one copy of the declaration to the appropriate income-tax authority by the seventh day of the month following the month in which the declaration is received.
Are there any payees exempt from tax deduction irrespective of other provisions as per Section 393(5)?
Yes. No tax shall be deducted from amounts payable to the Government, Reserve Bank of India, certain exempt corporations, and specified mutual funds on interest, dividend, or other income.
Is tax deduction required on interest paid by Offshore Banking Units to non-residents?
No. Section 393(8) exempts deduction of tax on interest paid by Offshore Banking Units on borrowings or deposits made on or after 1st April 2005 by non-residents or persons not ordinarily resident in India.
How is the tax deduction handled if tax is to be borne by the payer as per Section 393(10)?
The income shall be grossed up so that after deduction of tax as per the provisions, the net amount payable under the agreement or arrangement is achieved.
Does crediting income to a suspense account affect tax deduction under Section 393(11)?
No. Crediting income or sums to suspense accounts or other accounts in the payer’s books is deemed to be credit to the payee’s account, and tax deduction provisions apply accordingly.
What is the rate of tax deduction on winnings from lottery, card games, and gambling?
Tax is to be deducted at rates in force on such winnings if the amount exceeds ₹10,000 in a single transaction.
What is the tax deduction rate on commission paid for lottery tickets?
Tax is deducted at 2% on commission or remuneration paid to persons involved in stocking, distributing, purchasing, or selling lottery tickets when the amount exceeds ₹20,000.
What is the threshold for cash payments made by banks or post offices subject to tax deduction?
Cash payments from one or more accounts maintained by the deductee are subject to tax deduction at 2% if they exceed ₹3 crore for cooperative societies or ₹1 crore for others.
Are there any special provisions for partners receiving salary or commission from firms?
Yes. Firms must deduct tax at 10% when paying salary, remuneration, commission, or bonus to partners if the amount exceeds ₹20,000.
Under what conditions is no tax deduction required on payments by e-commerce operators to participants?
No deduction is required if the participant is an individual or Hindu undivided family, their gross sales or services do not exceed ₹5,00,000 during the tax year, and they have furnished their PAN or Aadhaar to the operator.
Is tax deduction required on dividend payments to certain specified entities?
No. Dividend payments to entities like Life Insurance Corporation of India, General Insurance Corporation, certain business trusts, and others specified in Section 393(5) are exempt from tax deduction.
Can an individual resident in India claim no tax deduction on dividends by declaration?
Yes. An individual resident in India can furnish a declaration that their estimated total income is nil, so no deduction of tax is made on dividends.
Are payments made to the New Pension System Trust exempt from tax deduction?
Yes. Section 393(9) exempts deduction of tax on payments made to the New Pension System Trust.
What is the effect of the threshold limit mentioned in Section 393(3) on tax deduction?
Tax deduction is required only if the amount paid or credited exceeds the specified threshold limit for that income type during a single transaction or in aggregate as applicable.
How should tax be deducted when the payer is a firm and the payee is a partner receiving commission?
Tax must be deducted at 10% on salary, remuneration, commission, bonus, or interest credited or paid to a partner if the amount exceeds ₹20,000.
Are there any exemptions for tax deduction on payments related to virtual digital assets?
Yes. No tax deduction is required if the value or aggregate value of consideration during the tax year does not exceed ₹50,000 for certain individual/HUF persons or ₹10,000 for others, subject to specific turnover and income conditions.
What is the timeline to submit a declaration for no tax deduction?
The declaration must be submitted by the payer to the prescribed income-tax authority on or before the seventh day of the month following the month in which the declaration is furnished.
Does the Act provide special exemptions for interest income credited or paid to banking companies and financial institutions?
Yes. Various categories of interest income credited or paid to banking companies, financial corporations, insurance companies, and certain cooperative societies are exempt from tax deduction.
Is tax deduction required on payments made by individuals or Hindu Undivided Families for personal purposes?
No. Payments made by individuals or HUF exclusively for personal purposes in relation to contractors or professional fees are exempt from tax deduction.
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