Section 393 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 393(4) of the Income-tax Act, 2025 holds a Table of nineteen cases in which tax at source is not deducted, "for no deduction at source". Each row names the provision of section 393 that is switched off (column B) and the condition on which it is switched off (column C). The Table has no rate column; the limits in the conditions are the figures that matter. This article reproduces each row as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026.
Under section 393(4), "the deduction of tax at source shall not be made under the provisions referred to in column B ... in respect of the income or sum along with the conditions specified in column C". The limits printed in the conditions are: Rs. 50,000 (interest on motor accident compensation payable to a non-individual), fifty crore rupees (co-operative society turnover test), ten or fewer goods carriages, Rs. 10,000 (dividend paid other than in cash), Rs. 5,00,000 (e-commerce participant), and Rs. 50000 or Rs. 10000 (virtual digital asset). Two items in the Table were changed by the Finance Act, 2026 (serial number 7).
How to use this Table
Section 393(1)(d), 393(2)(c) and 393(3)(d) each say the deduction is "subject to" section 393(4) (and other sub-sections). So before applying a row of the Tables in sub-sections (1), (2) and (3), check section 393(4). The overview of the section is in our post on section 393. The rows of the other Tables are in the articles on commission, rent and property, interest and capital market income, contractors, professional fees and dividend, other cases, non-residents and winnings, cash withdrawals and partner payments. Salary is in section 392. The earlier Act's provisions are mapped in our TDS sections mapping note (see our note on where the earlier Act's provisions sit in the 2025 Act). Section 393 was amended by section 84 of the Finance Act, 2026. Later amendments, rules and notifications should be checked.
For help with deciding whether a payment is covered by an exception, see our page on TDS compliance.
The Table: serial numbers 1 to 19 (each cell as printed)
| Serial number | Provision for tax deduction at source (column B) | Condition for no deduction on income or sum (column C) |
|---|---|---|
| 1 | Commission or brokerage referred to in section 393(1) | 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) | 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: serial number 4), owned directly by such business trust |
| 3 | Compensation on acquisition of certain immovable property referred to in section 393(1) | 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 2013) |
| 4 | Income in respect of units referred to in section 393(1) | If income is of the nature of capital gain |
| 5 | Income from units of a business trust referred to in section 393(1) | Income of the nature referred to in Schedule V , if the special purpose vehicle referred to in the said serial number has not exercised the option under section 200 |
| 6 | Interest on securities referred to in section 393(1) | See below (long entry) |
| 7 | Interest other than interest on securities referred to in section 393(1) | See below (long entry) |
| 8 | Payments to contractors referred to in section 393(1) | (a) Where (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 or crediting 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 may be 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) | 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: serial number 7) | See below (long entry) |
| 11 | Payment by e-commerce operator to e-commerce participant referred to in section 393(1) | Where 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 Rs. 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) | Where value or aggregate value of such consideration during the tax year does not exceed (a) Rs. 50000, 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 one crore rupees in case of business or fifty lakh rupees 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) Rs. 10000, 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: serial number 6) | Income of the nature referred to in Schedule V , 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: serial number 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: serial number 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: serial number 15) | Income, by way of capital gains arising from 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: serial number 16) | Income is exempt as per Schedule VI (Table: serial numbers 1 to 4) |
| 18 | Payment of certain amounts in cash referred to in section 393(3) (Table: serial number 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: serial number 6) | Payment made to heirs of an assessee |
The Table runs across several pages in the copy consulted, with the header repeated at each break and some entries cut in two; each cell above was rebuilt from the lines on either side. Where the Table refers to other Acts (the 2013 Act in serial number 3, the Reserve Bank of India Act, 1934 and the Payment and Settlement Systems Act, 2007 in serial number 18), the references are quoted as printed; check those laws where it matters.
The long entries: serial numbers 6, 7 and 10
Serial number 6, interest on securities. No deduction on:
- (a) interest payable on (i) National Development Bonds; (ii) such debentures, issued by such institution or authority or any other person as the Central Government may by notification specify; (iii) any security of the Central Government or a State Government, other than (A) 8% Savings (Taxable) Bonds, 2003; (B) 7.75% Savings (Taxable) Bonds, 2018; (C) Floating Rate Savings Bonds, 2020 (Taxable); or (D) any other security of the Central or a State Government as the Central Government may notify;
- (b) interest payable to (i) the Life Insurance Corporation of India, in respect of securities owned by it or in which it has full beneficial interest; (ii) the General Insurance Corporation of India or any of the four companies formed under schemes made under section 16(1) of the General Insurance Business (Nationalisation) Act, 1972, on the same basis; (iii) any other insurer, on the same basis; or (iv) a "business trust" as defined in section 2(21), in respect of securities, by a special purpose vehicle referred to in Schedule V (Table: serial number 3).
Serial number 7, interest other than interest on securities.
- (a) Interest credited or paid to (i) any banking company or any co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank); (ii) any financial corporation established by or under a Central, State or Provincial Act; (iii) the Life Insurance Corporation of India; (iv) the Unit Trust of India; (v) any company or co-operative society carrying on the business of insurance; or (vi) such other institution, association or body, or class, as the Central Government may, for reasons recorded in writing, have notified before the 1st April, 2020. The words in bold in (a)(i) were inserted by the Finance Act, 2026 with effect from 1 April 2026 (footnote 82).
- (b) Interest credited or paid (i) by a co-operative society other than a co-operative bank, to a member; (ii) by a co-operative society to any other co-operative society; (iii) in respect of deposits with a primary agricultural credit society, a primary credit society, 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 society or bank in (iii), engaged in the business of banking; except when (A) the total sales, gross receipts or turnover of the co-operative society exceed fifty crore rupees during the immediately preceding tax year; and (B) the amount or aggregate of interest credited or paid exceeds the threshold limit in section 393(1) (Table: serial number 5(ii), column D). In the copy consulted the words "except when" are set at the level of clause (b), after item (iv); the text consulted does not make clear whether the exception qualifies item (iv) alone or the whole of clause (b), so the layout is reproduced and no reading is imposed.
- (c) Interest credited or paid (i) by the Central Government under any provision of this Act, the Income-tax Act, 1961, the Estate Duty Act, 1953, the Wealth-tax Act, 1957, the Gift-tax Act, 1958, the Companies (Profits) Surtax Act, 1964 or the Interest-tax Act, 1974; (ii) in respect of deposits under any scheme framed and notified by the Central Government; (iii) in respect of deposits (other than time deposits made on or after the 1st July, 1995) with a banking company; (iv) on the compensation amount awarded by a Motor Accidents Claims Tribunal, (A) to an individual; or (B) to a person other than an individual, where the aggregate interest on such compensation does not exceed Rs. 50,000 during the tax year (substituted by the Finance Act, 2026 with effect from 1 April 2026, footnote 83); (v) or payable by an infrastructure capital company, infrastructure capital fund, infrastructure debt fund, public sector company or scheduled bank in relation to a zero coupon bond issued on or after the 1st June, 2005; (vi) as referred to in Schedule V (Table: serial number 3); or (vii) by a firm to a partner of the firm.
Serial number 10, dividend. No deduction on dividend income credited or paid to (a) the Life Insurance Corporation of India, in respect of shares owned by it or in which it has full beneficial interest; (b) the General Insurance Corporation of India or any of the four companies, on the same basis; (c) any other insurer, on the same basis; (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 the Central Government may notify; or (f) a shareholder, being an individual, if (I) the dividend is paid by the company by any mode other than cash; and (II) the amount or aggregate of such dividend distributed or paid or likely to be distributed or paid during the tax year does not exceed Rs. 10,000. What the Central Government has notified under (e) is not in the text consulted.
Other no-deduction sub-sections (outside the Table)
Sub-sections (5), (8) and (9) of section 393 also bar deduction (for example, on amounts payable to the Government, the Reserve Bank of India, certain corporations and Mutual Funds; on interest paid by an Offshore Banking Unit on specified borrowings or deposits; and on payments for or on behalf of the New Pension System Trust). They are covered in the article on section 393(5) to (11).
Worked examples
Motor accident compensation interest, serial number 7(c)(iv). An insurer (invented) pays interest on a compensation amount awarded by a Motor Accidents Claims Tribunal to Mr. Khan (invented), an individual: no deduction, whatever the amount. If the payee is a company (invented) and the aggregate interest in the tax year is Rs. 40,000, it does not exceed Rs. 50,000 and there is no deduction; if it is Rs. 60,000, the condition is not met and the deduction provisions apply.
Dividend by cheque, serial number 10(f). A company (invented) pays a dividend of Rs. 9,000 to an individual shareholder by bank transfer (a mode other than cash). The aggregate in the tax year does not exceed Rs. 10,000, so no deduction. At Rs. 11,000 in the tax year, condition (II) is not met.
E-commerce participant, serial number 11. Ms. Sharma (invented), an individual, sells through an e-commerce operator's platform, with gross sales for the tax year of Rs. 4,00,000, and has given her Permanent Account Number to the operator. All three conditions are met: no deduction under the e-commerce row. At Rs. 6,00,000 the gross-amount condition fails.
Goods carriage contractor, serial number 8(a). A transporter (invented) owning eight goods carriages gives a declaration with his Permanent Account Number to a company paying freight; the company furnishes the particulars to the prescribed authority. All four conditions in clause (a) are met, so no deduction under the contractor row on that sum.
Virtual digital asset, serial number 12. Mr. Dutta (invented), an individual with no business or profession income, transfers a virtual digital asset for consideration of Rs. 40,000 to an individual payer within the turnover limits. The aggregate does not exceed Rs. 50000: no deduction. For a payer who is not such an individual, the limit is Rs. 10000.
Need help deciding whether tax must be deducted?
If you are unsure whether a payment falls in one of the nineteen cases, our team can read the row and its conditions against your facts. Please contact us through the page for TDS compliance.
Key takeaways
- Section 393(4) switches off the deduction rows only when the stated condition is met.
- Limits printed: Rs. 50,000 (motor accident compensation interest to a non-individual), fifty crore rupees (co-operative society turnover), ten or fewer goods carriages, Rs. 10,000 (dividend not in cash), Rs. 5,00,000 (e-commerce participant), Rs. 50000 and Rs. 10000 (virtual digital asset).
- Serial number 7(a)(i) was widened and serial number 7(c)(iv) was substituted by the Finance Act, 2026.
- Sub-sections (5), (8) and (9) add further no-deduction cases outside the Table.
- The Table has no rates; rates are in the other Tables of the section.
Read next
- Section 393(5) to (11): declaration and other rules
- Section 393(3): winnings, cash withdrawals and partner payments
- Section 394: collection of tax at source
- Section 393: overview
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.