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TDS & TCS

Section 194DA TDS — Rate Chart, Threshold & Applicability

Section 194DA covers TDS on Payout under a life insurance policy (taxable portion). This guide explains its rate, threshold and applicability. Section 194DA — rate, threshold...

Written byDirector, TaxClue
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Updated
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4 answered
  • Medium Complexity
Topic
TDS & TCS
Published
August 20, 2026
Last updated
Aug 20, 2026
Reading time
4 min
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Last updated: August 2026Verified against: Government sources

Section 194DA TDS explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

Section 194DA covers TDS on Payout under a life insurance policy (taxable portion). This guide explains its rate, threshold and applicability.

Section 194DA — rate, threshold & applicability

Section194DA
Nature of paymentPayout under a life insurance policy (taxable portion)
TDS rate2% on the income component
Threshold limitPayout of ₹1,00,000 or more (where not exempt)
Who deductsThe insurer making the payment
Rate if PAN not furnishedGenerally 20% (or the applicable higher rate)

When Section 194DA applies

  • It applies to Payout under a life insurance policy (taxable portion)
  • TDS must be deducted once the payment crosses Payout of ₹1,00,000 or more (where not exempt)
  • The deductor is: The insurer making the payment
  • A higher rate applies if PAN is not furnished by the payee

Example

A taxable policy maturity of ₹3,00,000 attracts 2% TDS on the income part.

Points to note

  • TDS is deducted at the time of credit or payment, whichever is earlier
  • A higher rate applies if the payee has not furnished a PAN
  • Non-filers may attract a higher rate under Sections 206AB/206CCA
  • Always verify the latest rate, as thresholds are periodically revised

TDS compliance essentials

Whichever section applies, the core TDS process is the same:

  • Obtain a TAN before deducting any TDS
  • Deduct at the correct rate at the time of credit or payment, whichever is earlier
  • Deposit the TDS by the 7th of the next month using the right challan
  • File quarterly TDS returns (24Q/26Q/27Q) and issue Form 16/16A to the payee
  • Verify deductions in Form 26AS/AIS and reconcile before filing

Related Section 194DA guides

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Quick recapKey facts & short answers

Key Facts About Section 194DA TDS

  • Applies in: All states across India, under the relevant central law.
  • Mode: Mostly online via the official government portal.
  • Typical timeline: Ranges from a few days to a few weeks depending on the case.
  • Non-compliance: May attract penalties, interest or late fees.
  • Expert help: TaxClue completes the entire process end to end for you.

What is the TDS rate under Section 194DA?

The TDS rate under Section 194DA is 2% on the income component on Payout under a life insurance policy (taxable portion).

What is the threshold for TDS under Section 194DA?

TDS under Section 194DA applies when the payment crosses Payout of ₹1,00,000 or more (where not exempt).

Capital gains are computed from dates and costs — keep the purchase papers as long as you hold the asset.

— TaxClue Direct Tax Desk

Section 194DA TDS: a key compliance topic in Indian tax and corporate law that businesses and individuals must understand to remain compliant.

Related Services & Guides

Why This Matters

Staying compliant with Indian regulations protects your business from penalties, interest and unnecessary legal trouble. It is always wise to maintain proper records and documentation so that any future scrutiny can be handled smoothly. Rules and thresholds in tds tcs are revised periodically, so it helps to review your obligations at the start of each financial year. Professional guidance from a qualified CA, CS or advocate ensures that filings are accurate and submitted well before the due date.

Small businesses and startups especially benefit from setting up a simple compliance calendar to track recurring deadlines. Government portals now allow most applications and filings to be completed online, reducing paperwork and turnaround time. Keeping your PAN, registration certificates and board resolutions organised makes every subsequent filing faster. When in doubt, it is better to seek clarification early rather than risk a notice or a late-filing penalty later.

A clear understanding of the applicable law helps you make confident, well-informed business decisions. TaxClue's experts regularly assist businesses across India with end-to-end tds tcs support at transparent, affordable pricing. Timely compliance also improves your credibility with banks, investors and government authorities. Reviewing your obligations with a professional at least once a year keeps your business audit-ready and stress-free.

Staying compliant with Indian regulations protects your business from penalties, interest and unnecessary legal trouble. It is always wise to maintain proper records and documentation so that any future scrutiny can be handled smoothly. Rules and thresholds in tds tcs are revised periodically, so it helps to review your obligations at the start of each financial year.

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Monika Sharma Director at TaxClue
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Disclaimer: This article is for general informational purposes only and does not constitute professional tax, legal or financial advice. Laws, rates and due dates change and can vary by individual case — always verify with the relevant government source (e.g. mca.gov.in, incometax.gov.in) or consult a qualified professional before acting. TaxClue accepts no liability for decisions taken based on this content.

People also ask

Questions, answered

Short, direct answers to the 4 questions readers ask most on this topic.

The TDS rate under Section 194DA is 2% on the income component on Payout under a life insurance policy (taxable portion).

TDS under Section 194DA applies when the payment crosses Payout of ₹1,00,000 or more (where not exempt).

The insurer making the payment.

By the 7th of the following month (30 April for March), with quarterly returns and TDS certificates thereafter.

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