Section 393 Income Tax Act 2025: What Are the TDS Rates and Limits?
Section 393 consolidates tax deduction at source (TDS) rules for payments other than salary. Its statutory tables distinguish payments to residents, non-residents and any person. The correct rate depends on the type of payment, payer, recipient, threshold and applicable statutory exceptions.
Law: Income-tax Act, 2025, as amended by the Finance Act, 2026.
Application: Check the rules and rates for the relevant tax year, including treaty relief where applicable.
What does Section 393 regulate?
The section sets out who must deduct tax, which transactions are covered, when deduction occurs, and the rates or thresholds. Its three principal tables address payments to residents under subsection (1), payments to non-residents under subsection (2), and specified payments to any person under subsection (3). Subsequent subsections prescribe exclusions, declarations and special rules. Salary TDS is dealt with separately under Section 392.
For a resident payment covered by subsection (1), deduction is ordinarily at credit or payment, whichever is earlier, and generally on the full amount once the specified threshold is crossed, except where the applicable entry or note provides otherwise.
Section 393(1): Common TDS rates and thresholds for residents
The following is a selected guide to the statutory table, not a replacement for its full entries and notes. A reference to rates in force means the applicable rate must be checked under the relevant law and rate schedule.
| Payment | Indicative statutory rate | Threshold / important condition |
|---|---|---|
| Insurance commission (1(i)) | Rates in force | Rs. 20,000 |
| Other commission or brokerage (1(ii)) | 2% | Rs. 20,000; specified payer |
| Rent by payer other than specified person (2(i)) | 2% | Rs. 50,000 per month or part; special timing rule |
| Rent by specified person (2(ii)) | 2% plant, machinery or equipment; 10% land, buildings, furniture or fittings | Rs. 50,000 per month or part |
| Transfer of certain immovable property (3(i)) | 1% of higher of consideration or stamp duty value | Applies where either value is Rs. 50 lakh or more; see statutory notes |
| Specified mutual-fund unit income (4(i)) | 10% | Rs. 10,000 |
| Interest on securities (5(i)) | Rates in force | Rs. 10,000 |
| Bank/post-office interest other than securities (5(ii)) | Rates in force | Rs. 1 lakh for senior citizens; Rs. 50,000 for others |
| Other interest paid by specified person (5(iii)) | Rates in force | Rs. 10,000 |
| Contractor payments (6(i)) | 1% individual/HUF contractor; 2% other contractors | Apply threshold and exclusions in the statutory table and subsection (4) |
| Specified professional/technical services (6(iii)) | 2% for specified technical/film royalty/call-centre cases; 10% otherwise | Rs. 50,000 for specified services; nil for director remuneration covered by entry |
| Dividend (7) | 10% | General table entry says nil; specific exclusions may apply under subsection (4) |
| Taxable life insurance policy proceeds (8(i)) | 2% of income component | Rs. 1 lakh |
| Purchase of goods (8(ii)) | 0.1% | Only sum exceeding Rs. 50 lakh; subject to statutory note |
| Business benefit or perquisite (8(iv)) | 10% | Rs. 20,000; includes certain benefits in kind |
| E-commerce operator payments (8(v)) | 0.1% of gross sales/services | Nil general threshold; qualifying small participants may be exempt |
| Transfer of virtual digital asset (8(vi)) | 1% | Nil general threshold; subsection (4) contains qualifying exceptions |
Important: Special notes govern the basis of deduction, aggregation of property consideration, e-commerce precedence, payments in kind and overlap with virtual digital assets. In particular, the property threshold is not merely a threshold on the excess; the statutory rule and the higher-of-value test must be applied.
Section 393(2): Payments to non-residents
The non-resident table contains separate entries for specified interest, distributions, royalty, fees, income of non-resident sportspersons and other covered payments. The rate varies by transaction and recipient. For example, certain qualifying foreign-currency borrowing interest is subject to a specified 5% rate, while income of certain non-resident sportspersons or entertainers is subject to 20% under its table entry.
Do not apply a resident table rate automatically to a non-resident recipient. Check the precise statutory entry, the character of the sum, any applicable tax treaty, withholding certificate and related provisions.
Section 393(3): Specified payments to any person
The third table applies to particular payments regardless of the resident/non-resident classification of the recipient, subject to the table's conditions. It includes winnings from lotteries and certain games, winnings from online games, and other specially identified payments. The rate on specified lottery/game winnings and online-game winnings is generally 30%, subject to the statutory calculation and timing rules. These payments require separate attention to the treatment of net winnings and non-cash prizes.
Sections 393(4) to 393(11): Exemptions and procedural rules
| Subsection | Effect |
|---|---|
| (4) | Sets out specific cases in which deduction is not required, subject to detailed conditions and exceptions in its table. |
| (5) | Excludes qualifying payments to the Government, RBI, certain exempt statutory corporations and specified mutual funds. |
| (6) | Permits specified eligible recipients to furnish a prescribed declaration for non-deduction, subject to statutory conditions. |
| (7) | Requires the payer to forward a copy of the declaration within the prescribed statutory timeline. |
| (8) | Excludes specified interest paid by an Offshore Banking Unit on qualifying deposits or borrowings. |
| (9) | Excludes specified payments to or on behalf of the New Pension System Trust. |
| (10) | Provides for grossing up where the payer agrees to bear the recipient's tax, subject to its exception. |
| (11) | Treats credit to a suspense or similarly named account as credit to the payee for TDS purposes. |
For declarations under subsection (6), the statutory eligibility and income limits must be checked; merely providing a declaration does not override an inapplicable condition.
Relevant legal expressions
- TDS
- Tax deducted by the person responsible for making a specified payment and deposited in accordance with the Act.
- Specified person / designated person
- Categories of payers identified in the relevant statutory table and applicable definitions; the terms are not interchangeable.
- Rates in force
- Rates applicable under the relevant statutory rate provisions rather than a single fixed percentage in the table.
- Threshold limit
- The payment amount or aggregate amount that triggers deduction under the relevant table entry; its effect depends on that entry's wording.
- Resident and non-resident
- Tax-residence classifications determined under the applicable provisions of the Act, not merely by citizenship.
Practical illustrations
Example 1: Transfer of a residential property
If a covered property is sold for Rs. 48 lakh but its stamp duty value is Rs. 52 lakh, the higher-of-value rule and Rs. 50 lakh trigger must be considered. On these simplified facts, the 1% deduction base is Rs. 52 lakh, subject to the full statutory conditions.
Example 2: Rent for a business premises
Where a specified person pays qualifying building rent of Rs. 60,000 per month to a resident, the 10% rate in the specified-person rent entry may apply, subject to all statutory requirements. A payer in the other rent category is governed by a different 2% entry and timing rule.
Example 3: Purchase of goods
If a covered buyer purchases Rs. 65 lakh of goods from a resident seller, the 0.1% rule generally applies only to the Rs. 15 lakh exceeding Rs. 50 lakh, subject to the table's exclusion for transactions already subject to other TDS/TCS provisions.
Frequently asked questions
What is covered by Section 393?
TDS on specified payments to residents, non-residents and any person, with separate statutory tables and exceptions.
When is TDS deducted on payments to residents?
Generally at credit or payment, whichever is earlier, subject to specific exceptions and notes.
Is TDS on property applicable at Rs. 50 lakh?
For covered immovable property transfers, the statutory rule applies when consideration or stamp duty value is at least Rs. 50 lakh; tax is generally 1% of the higher amount.
Can a valid declaration prevent TDS?
Certain eligible recipients may furnish a prescribed declaration under Section 393(6), subject to the conditions in the Act.
Statutory sources and related provisions
Read the official Income-tax Act, 2025, as amended by Finance Act, 2026 and the Income Tax Department's TDS rates reference. Also see Section 390, Section 391, Section 392 and Section 394 (tax collection at source).
This article is a practical explanation. For compliance, apply the exact table entry, all notes, exemptions, amendments, and relevant rules for the tax year concerned.