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.
After the three Tables for rates and the Table of exceptions, section 393 of the Income-tax Act, 2025 ends with seven sub-sections of general rules: amounts on which tax is never deducted (sub-section (5)), the written declaration that lets a payee avoid deduction (sub-sections (6) and (7)), interest paid by an Offshore Banking Unit (sub-section (8)), payments for the New Pension System Trust (sub-section (9)), tax borne by the payer (sub-section (10)) and credit to a suspense account (sub-section (11)). This article reads them as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026.
Under sub-section (6), a payee in the Table who gives the payer a written declaration in duplicate that tax on his estimated total income of the tax year will be nil can receive the listed payments without deduction, but not where the aggregate of such amounts exceeds the maximum amount not chargeable to tax (unless the payee is a resident individual aged sixty or more). The payer must deliver the declaration to the prescribed authority by the seventh day of the month after the quarter in which it is furnished (sub-section (7), substituted from 1 April 2026). A new clause (b), allowing electronic declarations to a depository, is to be inserted with effect from 1 April 2027.
Where these sub-sections sit
Sub-sections (5) to (11) follow the Table of no-deduction cases in section 393(4), covered in our article on cases where tax is not deducted. The overview of section 393 is in our post on section 393; the salary rule 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; the changes relevant here are noted below. Later amendments, rules and notifications should be checked.
For help with declarations and TDS returns, see our page on TDS return filing.
Sub-section (5): amounts on which tax is never deducted
Irrespective of anything in the Chapter, tax shall not be deducted by any person from any amount payable to:
- (a) the Government;
- (b) the Reserve Bank of India;
- (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
- (d) a Mutual Fund as specified at Schedule VII (Table: serial number 20 or 21), where the amount is payable to it by way of (A) interest; (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.
Sub-section (6): the written declaration
The deduction of tax shall not be made under the provisions in column C of the Table below, in the case of a person in column B, if he furnishes to the person responsible for paying the income or sum a written declaration in duplicate, in such form and manner as may be prescribed, that the tax on his estimated total income of the tax year in which the income or sum is to be included in computing his total income shall be nil. The form and manner are left to the Income-tax Rules, 2026; see our rule-wise guides.
The Table: declaration for no deduction at source
| Serial number | Person (column B) | Provisions for tax deduction at source (column C) |
|---|---|---|
| 1 | An individual being a resident | (a) payment of accumulated balance due to an employee referred to in section 392(7); (b) insurance commission referred to in section 393(1) ; (c) rent referred to in section 393(1) ; (d) income in respect of units referred to in section 393(1) ; (e) interest referred to in section 393(1) ; (f) payment in respect of life insurance policy referred to in section 393(1) ; (g) dividend referred to in section 393(1) (Table: serial number 7) |
| 2 | Any person not being a company or a firm or an individual covered in serial number 1 | Serial number 1, column C, items (a) to (f) |
The page break in the copy consulted falls inside serial number 1 (after item (c)), and the header is repeated; the items above were read from the lines on either side.
The Note: when the declaration does not help
The provisions of sub-section (6) do not apply to a person in column B, other than an individual being a resident who is of the age of sixty years or more at any time during the tax year, if the aggregate of amounts of any income or sum of the nature in column C, credited or paid or likely to be credited or paid during the relevant tax year, exceeds the maximum amount not chargeable to tax.
In plain terms: a resident individual aged sixty or more may give the declaration even if his aggregate exceeds the maximum amount not chargeable to tax. Any other declarant (a younger resident individual, or a person in serial number 2) can use the declaration only while the aggregate stays at or below that maximum amount. The Act does not print the maximum amount here; it comes from the rates in force for the year.
The Finance Act, 2026 and the renumbering
The opening of the sub-section is printed as "(6) [(a)]" in the copy consulted. The footnote says that the sub-section shall be renumbered as sub-section (6)(a) by the Finance Act, 2026, with effect from 1 April 2027. The copy also prints, below the Note, a clause (b) that is to be inserted after clause (a) by the Finance Act, 2026 with effect from 1 April 2027. It reads: the declaration may also be furnished electronically to a depository, as defined in section 2(e) of the Depositories Act, 1996 (22 of 1996), where (i) the income is from units, interest on securities or dividends, as referred to in section 393(1) ; (ii) such units or securities are held with that depository; and (iii) such securities are listed on a recognised stock exchange, in accordance with such procedure and manner as may be prescribed.
Clause (b) is not in force before 1 April 2027. Until then the sub-section operates without it.
Sub-section (7): delivery of the declaration
As substituted by the Finance Act, 2026 with effect from 1 April 2026 (footnote 85), the person responsible for paying any income or sum of the nature referred to in sub-section (6) shall deliver or cause to be delivered the declaration, received from the person in column B of the Table in sub-section (6) or the depository, to the prescribed income-tax authority, on or before the seventh day of the month immediately following the end of each quarter in which the declaration is furnished to him. The reference to the depository appears in the substituted text as printed. The prescribed authority and the quarters are matters for the Income-tax Rules, 2026.
Sub-sections (8) and (9): two more no-deduction cases
- (8) Irrespective of sub-section (6), tax shall not be deducted from the interest paid by an Offshore Banking Unit on borrowing from, or a deposit made on or after the 1st April, 2005 by, a non-resident or a person not ordinarily resident in India.
- (9) Irrespective of anything in the Chapter, tax shall not be deducted from any payment to a person for, or on behalf of, the New Pension System Trust referred to in Schedule VII (Table: serial number 41).
Sub-section (10): tax borne by the payer
In a case other than that referred to in section 392(2)(a), where, under an agreement or arrangement, the tax chargeable on any income of the recipient referred to in the Chapter is to be borne by the payer, then, for deducting tax, the income shall be increased to an amount which, after deduction of tax as per the Chapter, becomes equal to the net amount payable under the agreement or arrangement.
Sub-section (11): credit to a suspense account
The credit of any income or sum to any account, whether called "suspense account" or by any other name, in the books of the person liable to pay it, shall be deemed to be the credit to the account of the payee, and the provisions of the Chapter apply accordingly. So tax is to be deducted at the time of such credit, the earlier of credit and payment under sub-section (1).
Worked examples
Declaration. Mrs. Lakshmi (invented), a resident individual aged 64, estimates that tax on her total income for the tax year will be nil. She gives her bank a written declaration in duplicate in the prescribed form. The bank does not deduct tax on interest of the kind in serial number 1(e), even if the interest exceeds the maximum amount not chargeable to tax, because she is a resident individual aged sixty or more. The bank delivers the declaration to the prescribed authority on or before the seventh day of the month following the end of the quarter in which she furnished it (for example, a quarter ending on 30 September gives 7 October).
Younger payee. Mr. Anand (invented), a resident individual aged 40, also gives a declaration. If the aggregate of the interest, rent and other listed payments credited or likely to be credited to him exceeds the maximum amount not chargeable to tax, the Note says sub-section (6) does not apply and tax is deducted. If it does not exceed that amount, no deduction is made.
Tax borne by the payer. Silverline Estates Private Limited (invented) agrees to pay a shareholder a net dividend of Rs. 90,000, with the tax borne by the company. The dividend row in section 393(1) (serial number 7) gives 10%. The income is increased to the amount which, after deduction at 10%, equals Rs. 90,000: Rs. 90,000 / 0.9 = Rs. 1,00,000. Tax is 10% of Rs. 1,00,000 = Rs. 10,000, and Rs. 1,00,000 - Rs. 10,000 = Rs. 90,000.
Suspense account. On 28 March a company credits a professional's fee to a "suspense account" in its books. Under sub-section (11) the credit is deemed to be a credit to the payee's account, and the deduction provisions apply at that time.
Need help with declarations or TDS returns?
If you receive interest, rent or dividend and want to avoid deduction, or you are the payer collecting declarations and delivering them on time, our team can help you read sub-sections (6) and (7) against your facts. Please contact us through the page for TDS return filing.
Key takeaways
- Sub-section (5): no deduction from amounts payable to the Government, the Reserve Bank of India, an exempt corporation or a specified Mutual Fund.
- Sub-section (6): written declaration in duplicate of nil tax on estimated total income; for declarants other than a resident individual aged sixty or more, it fails if the aggregate exceeds the maximum amount not chargeable to tax.
- Sub-section (6)(b), electronic declaration to a depository, is to be inserted with effect from 1 April 2027 and is not in force before then.
- Sub-section (7), substituted with effect from 1 April 2026: deliver the declaration by the seventh day of the month after each quarter.
- Sub-sections (10) and (11): gross-up where the payer bears the tax; suspense account credit counts as credit to the payee.
Read next
- Section 393(4): cases where tax is not deducted at source
- Section 394: collection of tax at source
- Section 393 on payments to non-residents
- 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.