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 is the single section of the Income-tax Act, 2025 that tells a payer when tax must be deducted at source, on which payments, at what rate and from which amount. This article is an overview of the section as per the Income-tax Act, 2025 as amended by the Finance Act, 2026; the rows of each Table are explained in the Table-wise articles linked below.
Later amendments, rules and notifications should be checked before you act. The Act came into force on the 1st April, 2026, save as otherwise provided (section 1(3)).
Section 393 has eleven sub-sections and four Tables. Sub-section (1) covers payments to residents, (2) payments to non-residents, (3) payments to "any person" such as winnings, and (4) lists cases where no tax is deducted. Sub-sections (5) to (11) deal with payees who are never subject to deduction, declarations of nil tax, interest of Offshore Banking Units, the pension trust, grossing up and credits to suspense accounts. Where a rate is shown as "Rates in force", the section itself prints no figure.
How the section is built
Each of sub-sections (1), (2) and (3) opens with a rule and then a Table. The rule says the person responsible for paying must deduct income-tax on the income or sum named in column B of the Table, at the rate in the Table, at the time of credit to the payee's account or at the time of payment in cash, cheque, draft or any other mode, whichever is earlier.
| Sub-section | What it covers | Table-wise article |
|---|---|---|
| 393(1) serial numbers 1 to 3 | Commission or brokerage, rent, transfer of certain immovable property | TDS on commission, rent and property |
| 393(1) serial numbers 4 and 5 | Income from the capital market, interest income | TDS on capital market income and interest |
| 393(1) serial numbers 6 and 7 | Contractors, professional and technical fees, dividend | TDS on contractors, professional fees and dividend |
| 393(1) serial number 8 | Other cases: life insurance sums, purchase of goods, specified senior citizens, benefits and perquisites, e-commerce, virtual digital assets | TDS on insurance payouts, goods, perquisites, e-commerce and virtual digital assets |
| 393(2) | Payments to non-residents (serial numbers 1 to 17) | TDS on payments to non-residents |
| 393(3) | Winnings, lottery commission, cash withdrawals, partners (serial numbers 1 to 7) | TDS on winnings, cash withdrawals and partners |
| 393(4) | Cases of no deduction (serial numbers 1 to 19) | Cases where tax is not deducted |
| 393(5) to (11) | Exempt payees, declarations, other rules | Declaration for no deduction and other rules |
If you deduct tax at source for your business, our TDS compliance service can map each payment you make to the right row.
Sub-section (1): payments to residents
The Table has columns A (serial number), B (nature of income or sum), C (payer) and D (rate and threshold limit). Three points in the opening words matter:
- Tax is deducted on the entire amount of the income or sum, not only on the excess, where the amount or the aggregate of amounts exceeds the threshold limit in column D. The one stated variation is serial number 8(ii), where Note 1 says tax is deducted on the sum exceeding fifty lakh rupees.
- The rate is the one in column D. Several rows read "Rates in force"; the Act prints no number there, so none is stated here.
- Deduction is subject to sub-sections (4), (5), (6), (8) and (9).
Examples of what the Table prints: for serial number 1(ii) the rate is 2% with a threshold of Rs. 20,000; for serial number 3(i) (transfer of immovable property other than agricultural land) the rate is 1% of the higher of the consideration and the stamp duty value, with a threshold of fifty lakh rupees and Note 3; for serial number 7 (dividend declared by a domestic company) the rate is 10% and the threshold is nil. Serial numbers 6(ii) and 6(iii) and 8(ii) to 8(vi) carry the "specified person", "designated person", buyer, e-commerce operator and similar payers named in column C.
Notes follow the rows. Note 1 to serial number 5 changes how the threshold is computed where a payer has not adopted core banking solutions; Note 2 lets a payer adjust an excess or shortfall of earlier deduction in the same tax year; the Notes to serial number 8 deal with precedence between rows, payments that are wholly or partly in kind and the duty to ensure that tax is paid before releasing the consideration.
The Finance Act, 2026 substituted "serial number 3(i)" for "serial number 3(iii)" in Note 3 to serial number 3, with effect from 1-4-2026.
Sub-section (2): payments to non-residents
Here the Table has five columns: nature of income or sum, payee, payer and rate. The rule applies to a non-resident named in column C and is subject to sub-sections (4), (8) and (9). Seventeen rows are printed. Some give a fixed percentage (for example 20% for serial number 1, 5% for serial numbers 2, 3 and 5, 12.5% for serial numbers 12 and 14), some say "Rates in force" (serial numbers 7, 8, 9 and 17) and two (serial numbers 10 and 15) refer to Note 2, which provides a 20% rate unless a tax agreement referred to in section 159 gives a lower rate and the payee has furnished the certificate. Note 3 to serial number 17 states that the duty to deduct extends to every person, resident or not, whether or not the non-resident has a place of business or presence in India. The detail of each row is in the non-resident article.
Sub-section (3): payments to any person
The Table of seven rows covers winnings from lotteries, crosswords, card games and gambling (serial number 1), online games (2), horse races (3), commission on lottery tickets (4), cash withdrawals from banks, co-operative banks or post offices (5), a reference to section 80CCA(2)(a) of the Income-tax Act, 1961 (6, quoted as printed) and payments to a partner by a firm (7). Net winnings are the base for online games under Note 1. Tax is deducted when payment is made, "or as specified therein".
Sub-section (4): cases of no deduction
The Table lists, against the provision in column B, the condition in column C on which tax is not deducted: nineteen rows ranging from commission paid by two named telecom companies to public call office franchisees, to payments to heirs of an assessee. The Finance Act, 2026 inserted words about co-operative societies engaged in banking in serial number 7(a)(i) and substituted item (iv) of serial number 7(c) (interest on compensation awarded by a Motor Accidents Claims Tribunal), both with effect from 1-4-2026.
Sub-sections (5) to (11)
| Sub-section | Rule |
|---|---|
| (5) | No tax is deducted from amounts payable to the Government, the Reserve Bank of India, a corporation under a Central Act that is exempt on its income, or a specified mutual fund, for interest, dividend or other income |
| (6) | A written declaration in duplicate that the payee's estimated total income of the tax year will give nil tax stops deduction for the provisions in the declaration Table; the Note bars it when income of that kind exceeds the maximum amount not chargeable to tax (except for a resident aged sixty or more) |
| (7) | The payer delivers the declaration to the prescribed income-tax authority on or before the seventh day of the month after the end of each quarter in which it is received |
| (8) | No deduction from interest paid by an Offshore Banking Unit on borrowing or deposits made on or after 1st April, 2005 by a non-resident or a person not ordinarily resident |
| (9) | No deduction from a payment for or on behalf of the New Pension System Trust |
| (10) | Where the payer bears the tax under an agreement, the income is increased to an amount that, after deduction, equals the net amount payable |
| (11) | A credit to a "suspense account" or any other account is a credit to the payee's account |
Sub-section (6) is renumbered (6)(a) with effect from 1-4-2027, when a clause (b) is to be inserted allowing the declaration to be furnished electronically to a depository for units, interest on securities or dividends held there; until that date, only the text of clause (a) applies. Sub-section (7) was substituted by the Finance Act, 2026, with effect from 1-4-2026.
A worked example
All figures are assumed; names are invented. Anand Mills Limited, a domestic company, declares a dividend of Rs. 8,000 to a resident shareholder. Serial number 7 of the sub-section (1) Table has a nil threshold and a rate of 10%, so tax of Rs. 800 is deducted before the dividend is paid. Separately, a payer owes Rs. 25,000 of income on units of a Mutual Fund under serial number 4(i), where the threshold is Rs. 10,000 and the rate is 10%. Because Rs. 25,000 exceeds the threshold, tax of Rs. 2,500 is deducted on the entire amount, not on Rs. 15,000. The Table-wise articles show the payer and threshold for each such row.
Need help with TDS?
Choosing the right row, tracking thresholds and filing statements is where most errors arise. See our TDS return filing service for support, and our guides on section 392 (TDS on salary) and section 394 (collection of tax at source).
Key takeaways
- Section 393 is one section with four Tables: resident payees, non-resident payees, "any person" and no-deduction cases.
- Tax is generally deducted on the whole amount once the threshold is crossed; rows marked "Rates in force" print no percentage.
- Time of deduction is credit or payment, whichever is earlier.
- A nil-tax declaration under sub-section (6) works only within the limits of its Note.
- Check section 397 (statements) and section 395 (certificates) alongside this section.
Read next
- Section 392: TDS on salary
- Section 394: collection of tax at source
- Section 395: lower and nil TDS certificates
- Section 397: compliance and reporting for tax deducted or collected
- Section 398: assessee in default
- Where the earlier Act's TDS sections sit in the 2025 Act
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.