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.
Serial numbers 4 and 5 of the Table in section 393(1) of the Income-tax Act, 2025 deal with income from the capital market (units of mutual funds, business trusts, investment funds and securitisation trusts) and with interest income. This article gives, for each row, the payer, the rate and the threshold exactly as printed, with the two Notes that follow. It reads the Table as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026.
Units and trust income (serial number 4): 10%, threshold Rs. 10,000 for mutual fund and similar units and Nil for business trust, investment fund and securitisation trust income. Interest on securities (serial number 5(i)): rates in force, threshold Rs. 10,000. Other interest paid by a bank, co-operative bank or post office (serial number 5(ii)): rates in force, threshold Rs. 1,00,000 for a senior citizen and Rs. 50,000 for others. Other interest by a specified person (serial number 5(iii)): rates in force, threshold Rs. 10,000.
How the Table is applied
Under section 393(1), where income or a sum of the nature in column B is credited, paid or distributed by the person in column C during the tax year to a resident, the person responsible for paying shall deduct tax on the entire amount where the amount or aggregate exceeds the threshold limit, at the rate in column D, at the earlier of credit and payment, subject to sub-sections (4), (5), (6), (8) and (9). The overview is in our post on section 393, and the first rows of the Table are in the article on commission, rent and property. The deduction from 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 TDS returns and compliance on interest, see our page on TDS return filing.
"Rates in force" is defined in section 2(90) and means the rate fixed by the annual Finance Act; this article states no figure for it.
Serial number 4: income from capital market
| Serial number | 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: serial number 20 or 21); or (b) units from the Administrator of the specified undertaking; or (c) units from the specified company | Any person | 10% | Rs. 10,000 |
| 4(ii) | Any distributed income referred to in section 223, being of the nature referred to in Schedule V (Table: serial numbers 3 and 4), payable to a unitholder of a Business Trust | Any Business Trust | 10% | Nil |
| 4(iii) | Any income, other than that proportion of income which is exempt under Schedule V (Table: serial number 2), in respect of units of an investment fund specified in section 224, payable to its unitholder | Any Investment fund specified in section 224 | 10% | 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 | 10% | Nil |
Definitions: "specified undertaking" and "specified company" are the undertaking and company of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 as printed in section 402(36) and (40); check that Act. "Investor" in 4(iv) has the meaning in section 221(6)(a) (section 402(20)). The Schedule and section references in column B are reproduced as printed.
Serial number 5: interest income
| Serial number | Nature of income or sum | Payer | Rate | Threshold limit |
|---|---|---|---|---|
| 5(i) | Any income by way of Interest on securities | Any person | Rates in force | Rs. 10,000 |
| 5(ii) | Any income by way of interest other than interest on securities | (a) A banking 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 | Rates in force | (a) Rs. 1,00,000 in the case of a senior citizen; (b) Rs. 50,000 in case of person other than senior citizen |
| 5(iii) | Any income being interest other than interest on securities | Specified person | Rates in force | Rs. 10,000 |
In the copy consulted a page break and a repeated header fall inside the entries for serial numbers 4 and 5(ii), and the entry for 5(ii) payer (c) is cut across the break ("for a deposit made under a scheme notified by the Central Government"). The cells above were rebuilt from the lines above and below.
Definitions that decide the row
- Interest on securities (section 2(60)) includes interest on any security of the Central Government or a State Government, and interest on debentures or other securities for money issued by or on behalf of a local authority, a company or a corporation established by an Act.
- Senior citizen (section 2(100)): an individual resident in India who is of the age of sixty years or more at any time during the relevant tax year.
- Specified person (section 402(37)): any person who is not an individual or Hindu undivided family, or an individual or Hindu undivided family whose turnover exceeded one crore rupees (business) or fifty lakh rupees (profession) in the immediately preceding tax year.
- Time deposits (section 402(41)): deposits (including recurring deposits) repayable on the expiry of fixed periods.
- The "person responsible for paying" interest on securities is defined in section 402(27)(b).
The two Notes under serial number 5
Note 1. In serial numbers 5(ii) and (iii), where the interest income credited or paid is in respect of (a) time deposits with a banking company; (b) time deposits with a co-operative society engaged in 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 eligible for deduction under section 32(e); and the person in column C has not adopted core banking solutions, the threshold in column D is computed with reference to the income credited or paid by a branch of such person.
Note 2. The person responsible for paying the interest in serial number 5(ii) and (iii) may, at the time of making any deduction, increase or reduce the amount to be deducted to adjust any excess or deficiency arising from any previous deduction or failure to deduct during the tax year.
What the Table does not say
The Table does not give a figure for "rates in force". The detail of forms and procedure is left to the Income-tax Rules, 2026; see our rule-wise guides. The wording of 4(i)(b) and (c), "units from the Administrator of the specified undertaking" and "units from the specified company", is reproduced as printed.
Worked examples
Mutual fund units, serial number 4(i). Sunrise Mutual Fund (invented) pays Rs. 12,000 of income on units of a Mutual Fund of the kind in the cell to Mr. Verma (invented) during the tax year. The amount exceeds Rs. 10,000, so tax is deducted on the entire Rs. 12,000 at 10%: Rs. 1,200. If the income were Rs. 9,000, the threshold is not exceeded and no deduction is required under this row.
Business trust, serial number 4(ii). A business trust distributes income of the nature in Schedule V (Table: serial numbers 3 and 4) of Rs. 5,000 to a unitholder. The threshold is Nil, so tax is deducted at 10% on Rs. 5,000: Rs. 500.
Bank interest, serial number 5(ii). A bank pays interest on a deposit to Mrs. Gupta (invented), aged 62, of Rs. 1,10,000 in the tax year. As a senior citizen the threshold is Rs. 1,00,000, which the interest exceeds, so tax is deducted on the entire amount at the rate in force. For Mr. Rao (invented), aged 40, with interest of Rs. 55,000 from the same bank, the threshold is Rs. 50,000, which is exceeded, so tax is deducted on Rs. 55,000 at the rate in force. If Mr. Rao's interest were Rs. 45,000, no tax is deducted under this row.
Branch threshold, Note 1. A bank that has not adopted core banking solutions pays Mr. Rao interest of Rs. 30,000 on a time deposit at branch A and Rs. 30,000 at branch B. Under Note 1 the threshold is applied branch by branch; each branch's Rs. 30,000 is below Rs. 50,000, so no deduction is due on that ground.
Need help with TDS on interest or fund income?
If you are a bank, company or fund manager and need to apply the threshold, the branch rule or the Notes, or you are a depositor reconciling the tax deducted, our team can help. Please contact us through the page for TDS return filing.
Key takeaways
- Serial number 4: 10% on fund and trust income; Rs. 10,000 threshold for mutual fund units, Nil for business trust, investment fund and securitisation trust income.
- Serial number 5(i): interest on securities, Rs. 10,000; rates in force.
- Serial number 5(ii): Rs. 1,00,000 for a senior citizen, Rs. 50,000 for others; payers are banks, co-operative banks and a post office.
- Serial number 5(iii): Rs. 10,000, payer a specified person who is not a payer in 5(ii).
- Note 1 applies the threshold branch-wise where core banking solutions have not been adopted; Note 2 allows adjustment of excess or deficiency.
Read next
- Section 393 on commission, rent and immovable property (serial numbers 1 to 3)
- Section 393 on contractors, professional fees and dividend (serial numbers 6 and 7)
- 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.