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 6 and 7 of the Table in section 393(1) of the Income-tax Act, 2025 cover payments to contractors, fees for professional and technical services, director's remuneration, royalty and dividend. These are among the most commonly applied rows of the Table. This article gives each row as printed, with the Notes, and reads it as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026.
Contractor payments by a designated person (serial number 6(i)): 1% if the contractor is an individual or Hindu undivided family, 2% otherwise; thresholds Rs. 30,000 for any such sum and Rs. 1,00,000 in aggregate. Payments by an individual or Hindu undivided family who is not otherwise a deductor (6(ii)): 2%, threshold fifty lakh rupees. Professional fees, technical fees, director's remuneration, royalty by a specified person (6(iii)): 2% or 10%, threshold Rs. 50,000 (Nil for director's remuneration). Dividend by a domestic company (serial number 7): 10%, threshold Nil.
How the Table is applied
Under section 393(1), where 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 deducts tax on the entire amount where the amount or aggregate exceeds the threshold in column D, 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; the earlier rows are in the articles on commission, rent and property and on capital market income and interest. 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.
If you deduct tax on contractor or professional payments, see our page on TDS compliance.
The Table, serial numbers 6 and 7 (each cell as printed)
| Serial number | Nature of income or sum | Payer | Rate | Threshold limit |
|---|---|---|---|---|
| 6(i) | Any sum for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a designated person | Any designated person | (a) 1%, if contractor is individual or Hindu undivided family; (b) 2%, if contractor is a person other than the person mentioned in (a) | (a) Rs. 30,000; for any such sum; and (b) Rs. 1,00,000 in case of aggregate of such sums |
| 6(ii) | Any sum (a) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract; or (b) by way of fees for professional services; or (c) by way of commission or brokerage | Any person, being an individual or Hindu undivided family | 2% | Fifty lakh rupees |
| 6(iii) | Any sum by way of (a) fees for professional services; or (b) fees for technical services; or (c) remuneration or fees or commission by whatever name called, other than those on which tax is deductible under section 392, to a director of a company; or (d) royalty; or (e) any sum referred to in section 26(2)(h) | Specified person | (a) 2% of such sum in case of (i) fees for technical services (not being a professional services); or (ii) royalty in the nature of consideration for sale, distribution or exhibition of cinematographic films; or (iii) payee, engaged only in the business of operation of call centre; (b) 10% of such sum in cases other than (a) | (i) for (a), (b), (d) and (e) of Col. B: Rs. 50,000; (ii) for (c) of Col. B: Nil |
| 7 | Any dividend (including dividend on preference shares) declared | Any domestic company | 10% | Nil |
In the copy consulted, the Table is cut by a page break inside serial number 6 and the header is repeated; the Note under serial number 6(i) is also split by the break. Each cell above was rebuilt from the lines on either side, and none depends on a figure not printed at the pointer. The cell for the threshold in serial number 6(i) prints two limits side by side (a Rs. 30,000 limit "for any such sum" and a Rs. 1,00,000 limit "in case of aggregate of such sums"); the text does not spell out in a separate sentence how the two combine, so the exact wording is kept.
The Notes
Note under serial number 6(i). If any sum is paid or credited for carrying out any work specified in section 402(47)(e), tax shall be deducted at source:
- (a) on the invoice value excluding the value of material, if such value is specified separately in the invoice; or
- (b) on the whole of the invoice value, if the value of material is not specified separately in the invoice.
Note under serial number 7. The tax shall be deducted at source before making any distribution or payment of dividend.
Definitions that decide the row (section 402)
- Designated person (section 402(11)), for serial number 6(i): the Central or a State Government; a local authority; a corporation established by an Act; any company; any co-operative society; certain housing and development authorities; a society registered under the Societies Registration Act, 1860 or a corresponding law; any trust; certain universities and institutions; the Government of a foreign State, a foreign enterprise or an association or body established outside India; any firm; and an individual, Hindu undivided family, association of persons or body of individuals not otherwise covered whose total sales, gross receipts or turnover from business or profession exceeded one crore rupees (business) or fifty lakh rupees (profession) in the immediately preceding tax year.
- Work (section 402(47)) includes advertising; broadcasting and telecasting; carriage of goods or passengers other than by railways; catering; and manufacturing or supplying a product to a customer's specification using material purchased from the customer or its associate (but not material purchased from others, and not a sum covered by serial number 6(iii)).
- Contract includes sub-contract (section 402(10)).
- Professional services (section 402(28)): services in the course of carrying on legal, medical, engineering or architectural profession, or the profession of accountancy, technical consultancy, interior decoration or advertising, or such other profession as the Board notifies.
- Fees for technical services and royalty have the meanings in section 9(7)(b) and section 9(6)(b) (section 402(15) and (30)).
- Specified person (section 402(37)): any person other than 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.
The clause in 6(iii)(e) refers to a sum in section 26(2)(h) of the Act; see our post on section 26 for the section's context.
Worked examples
Contractor, 6(i). Meridian Builders Private Limited (invented), a company and so a designated person, pays Mr. Patel (invented), an individual contractor, a single bill of Rs. 40,000. The rate is 1% (the contractor is an individual) and the single sum exceeds Rs. 30,000: tax = 1% of Rs. 40,000 = Rs. 400. If the contractor is Patel Infra LLP (invented), a person other than an individual or Hindu undivided family, the rate is 2%: 2% of Rs. 40,000 = Rs. 800.
Aggregate limit, 6(i). The same company pays a contractor firm five bills of Rs. 25,000 each in the tax year. No single bill exceeds Rs. 30,000, but the aggregate is Rs. 1,25,000, which exceeds Rs. 1,00,000. On the figure printed in the threshold cell for aggregate sums, tax is deducted at 2% on the entire aggregate: 2% of Rs. 1,25,000 = Rs. 2,500. This example applies the cell as printed.
Material, Note. A contractor makes a product to the specification of Meridian Builders Private Limited using material bought from Meridian, and invoices Rs. 3,00,000, showing the value of material separately as Rs. 1,00,000. This is work specified in section 402(47)(e). Under clause (a) of the Note tax is deducted on Rs. 2,00,000 (the invoice value excluding material): at 2% for a contractor who is not an individual or Hindu undivided family, that is Rs. 4,000. If the value of material is not specified separately in the invoice, clause (b) applies and tax is deducted on the whole Rs. 3,00,000: Rs. 6,000 at 2%.
Professional fees, 6(iii). Kiran and Associates (invented), a firm and so a specified person, pays an advocate fees for professional services of Rs. 80,000. The threshold is Rs. 50,000, exceeded. The rate is 10% (professional services are not in (a)): 10% of Rs. 80,000 = Rs. 8,000. For fees for technical services of Rs. 80,000 (not professional services), the rate is 2%: Rs. 1,600.
Director, 6(iii)(c). Zenith Components Private Limited (invented), a company and so a specified person, pays one of its directors a commission, not salary, of Rs. 15,000. The threshold for clause (c) is Nil, so tax is deducted at 10% (not in (a)): Rs. 1,500.
Individual payer, 6(ii). Mr. Sen (invented), an individual not required to deduct under 6(i), 6(iii) or 1(ii), pays professional fees of Rs. 60,00,000 in the tax year. The threshold is fifty lakh rupees, exceeded: 2% of Rs. 60,00,000 = Rs. 1,20,000.
Dividend, 7. A domestic company (invented) declares a dividend of Rs. 1,00,000 to a resident shareholder. The threshold is Nil: tax = 10% of Rs. 1,00,000 = Rs. 10,000, deducted before the distribution or payment.
Need help with TDS on contractors, professionals and dividends?
If you are unsure whether a payer is a designated person or a specified person, how to read the threshold cell in serial number 6(i), or how to treat material in an invoice, our team can help. Please contact us through the page for TDS compliance.
Key takeaways
- Serial number 6(i): designated person; 1% (individual or Hindu undivided family contractor) or 2%; Rs. 30,000 for any such sum and Rs. 1,00,000 in aggregate.
- Serial number 6(ii): individual or Hindu undivided family payer; 2%; fifty lakh rupees.
- Serial number 6(iii): specified person; 2% for technical fees, film royalty and call-centre payees, otherwise 10%; Rs. 50,000, and Nil for director's remuneration.
- Serial number 7: dividend by a domestic company; 10%; Nil; deducted before distribution or payment.
- The Note to 6(i) decides whether tax is on the invoice value net of material or on the whole invoice.
Read next
- Section 393 on capital market income and interest (serial numbers 4 and 5)
- Section 393 on other cases (serial number 8)
- 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.