Section 402 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.
This article continues the interpretation section of Chapter XIX. It covers clauses (27) to (47) of section 402: who is the "person responsible for paying", what "professional services", "rent", "seller", "specified person" and "work" mean, and the smaller definitions that complete the list. Clauses (1) to (26) are in our first article on section 402. The text is read as per the Income-tax Act, 2025 as amended by the Finance Act, 2026. For help applying these terms to your payments, see our TDS compliance service.
The "person responsible for paying" varies by kind of payment: the employer for salary, the payer or company for most other sums, the drawing and disbursing officer for Government payments, and the authorised person for certain payments to non-resident Indians. Rent for the first rent row means only land, buildings and land appurtenant to a building. A seller and a specified person are tested against one crore rupees (business) or fifty lakh rupees (profession) of turnover in the preceding tax year. Work now includes supply of manpower. Section 402 was amended by section 90 of the Finance Act, 2026.
Clause (27): person responsible for paying
| Kind of payment | Person responsible for paying |
|---|---|
| (a) Income under the head "Salaries", other than payments by the Central or State Government | The employer himself; if a company, the company itself including the principal officer |
| (b) Income under "Interest on securities", other than payments made by or on behalf of the Central Government, State Government, local authority, corporation or company | The clause as printed names no person: after the list of excluded payments it ends with the words "including the principal officer thereof". The text is unclear on who is meant; read the official text |
| (c) Any sum payable to a non-resident Indian representing consideration for transfer of a foreign exchange asset which is not a short-term capital asset | The authorised person, referred to in clause (c) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999), responsible for remitting the sum to the non-resident Indian or for crediting it to his Non-resident (External) Account |
| (d) Furnishing information on payment to a non-resident (not a company) or a foreign company of any sum, whether or not chargeable under the Act | The payer; if a company, the company itself including the principal officer |
| (e) Credit or payment of any other sum chargeable under the Act | The payer; if a company, the company including the principal officer |
| (f) Credit or payment of a sum made by or on behalf of the Central or State Government | The drawing and disbursing officer, or any other person, by whatever name called, responsible for crediting or paying the sum |
| (g) In the case of a person not resident in India | The person himself, any person authorised by him, or his agent in India including any person treated as an agent under section 306 |
In clause (c) the words "authorised person, referred in clause (c) of section 2 of the Foreign Exchange Management Act, 1999, responsible" were substituted for "authorised person responsible" by the Finance Act, 2026, with effect from 1 April 2026. Check the 1999 Act for the meaning carried by its own term.
Why this matters: the person described here is the one who must deduct, pay, and file statements under section 397 and who is exposed to section 398 for default. Our article on section 397 covers the duties.
Clauses (28) to (32): professional services, rent, royalty, scrap, securities
| Clause | Term | Meaning |
|---|---|---|
| (28) | Professional services | Services rendered by a person 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 may notify for the purposes of this section or of section 62 |
| (29) | Rent | Any payment, by whatever name called, under any lease, sub-lease, tenancy or other agreement or arrangement for the use (separately or together) of (a) land; (b) building (including factory building); (c) land appurtenant to a building; (d) machinery; (e) plant; (f) equipment; (g) furniture; (h) fittings, whether or not owned by the payee. For section 393(1) (Table: serial number 2(i)), only payments for assets in (a), (b) and (c) are treated as rent |
| (30) | Royalty | As in section 9(6)(b) |
| (31) | Scrap | Waste and scrap from the manufacture or mechanical working of materials which is definitely not usable as such because of breakage, cutting up, wear and other reasons |
| (32) | Securities | As in section 2(h) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) |
Clause (29) draws a line that readers often miss. Rent of machinery or furniture is "rent" under the general definition, but the narrower rule for serial number 2(i) of section 393(1) covers only land, building and land appurtenant to a building. Which professions the Board has notified under clause (28) is not in the text consulted.
Example (amounts assumed). Neha Constructions pays Rs. 20,000 a month for an office building and Rs. 8,000 a month for a generator. For the rule at serial number 2(i), only the building payment is "rent". The generator payment is machinery or plant, so clause (29) does not treat it as rent for that row; how it is dealt with otherwise is for the other rows of section 393.
Clause (33): seller
| Purpose | Seller means |
|---|---|
| (a) Section 394(1) (Table: serial numbers 1 to 6) | (i) the Central Government; (ii) a State Government; (iii) a local authority or corporation or authority established by or under a Central, State or Provincial Act; (iv) a company, firm or co-operative society; (v) an individual or Hindu undivided family whose total sales, gross receipts or turnover from business or profession exceed one crore rupees (business) or fifty lakh rupees (profession) in the tax year immediately preceding the tax year in which the goods are sold |
| (b) Section 394(1) (Table: serial number 8) | A person who sells an overseas tour programme package |
Clauses (34) to (38): services, specified bank, specified company, specified person, special purpose vehicle
| Clause | Term | Meaning |
|---|---|---|
| (34) | Services | For section 393(1) (Table: serial number 8(v)), includes "fees for technical services" and fees for "professional services" as defined in this section |
| (35) | Specified bank | A banking company that the Central Government specifies by notification |
| (36) | Specified company | For section 393(1) (Table: serial number 4(i)) and 393(2) (Table: serial number 10), a company as referred to in section 2(h) of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002) |
| (37) | Specified person | (a) any person other than an individual or Hindu undivided family; or (b) an individual or Hindu undivided family whose turnover exceeds one crore rupees (business) or fifty lakh rupees (profession) in the tax year immediately preceding the tax year in which the income or sum is credited or paid |
| (38) | Special purpose vehicle | As in Schedule V (Note 2) |
Clauses (39) to (46)
| Clause | Term | Meaning |
|---|---|---|
| (39) | Specified senior citizen | A resident individual (a) aged seventy-five years or more at any time during the tax year; (b) having pension income and no other income except interest from an account in the same specified bank in which he receives the pension; and (c) who has furnished a declaration to the specified bank in the prescribed form and manner |
| (40) | Specified undertaking | As in section 2(i) of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (the copy prints the Act number as "58 of 2022", while clause (43) and clause (1) print "58 of 2002") |
| (41) | Time deposits | Deposits (including recurring deposits) repayable on the expiry of fixed periods |
| (42) | Unit | For section 393(1) (Table: serial number 4(iii)) and 393(2) (Table: serial number 8), as in section 224(10)(c) |
| (43) | Unit Trust of India | As referred to in the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002) |
| (44) | University | For section 392(4): a University established or incorporated by or under a Central, State or Provincial Act, including an institution declared under section 3 of the University Grants Commission Act, 1956 (3 of 1956) to be a University for the purposes of that Act |
| (45) | User | Any person who accesses or avails any computer resource of an online gaming intermediary |
| (46) | User account | The account of a user registered with an online gaming intermediary |
The printing slip in clause (40) ("58 of 2022") is flagged, not corrected. The declaration for a specified senior citizen is made in the form and manner "as may be prescribed", which is left to the Income-tax Rules, 2026.
Example (facts assumed). Mr. Bhatt, a resident, is seventy-six. He receives only a pension in his account at one specified bank and the interest on that same account, and has given the bank the declaration. He fits clause (39). If he also earned rent from a flat, clause (39)(b) would fail because he would have other income.
Clause (47): work
"Work" shall include:
- advertising;
- broadcasting and telecasting, including production of programmes for such broadcasting or telecasting;
- carriage of goods or passengers by any mode of transport other than by railways;
- catering;
- manufacturing or supplying a product according to the requirement or specification of a customer using material purchased from (i) the customer, or (ii) its associate, being a person placed similarly in relation to the customer as the person is placed in relation to the assessee under section 36(3), but not including (A) such a product made with material purchased from a person other than the customer or the customer's associate, or (B) any sum referred to in section 393(1) (Table: serial number 6(iii)); and
- (f) supply of manpower to a person to work under his supervision, control or direction.
Item (f) is printed in brackets and was inserted by the Finance Act, 2026, with effect from 1 April 2026.
Example (facts assumed). Sharma Staffing supplies five workers to a factory, who work under the factory's supervision and control. After the insertion this is "work" under clause (47)(f). The deduction rate for contract payments is read from the relevant Table row in section 393, not from section 402.
Need help with who must deduct tax?
Deciding who is the "person responsible for paying", whether a payment is "rent" or "work", and whether a payee is a "specified person" shapes every TDS return. Our TDS compliance team checks each payer's position against the Chapter before returns are filed.
Key takeaways
- The person responsible for paying differs by kind of payment: employer, payer, drawing and disbursing officer or authorised person.
- Rent for the first rent row of section 393(1) covers only land, building and land appurtenant to a building.
- Seller and specified person tests use one crore rupees (business) and fifty lakh rupees (profession) of turnover in the preceding tax year.
- A specified senior citizen must be resident, seventy-five or more, with pension and bank interest only, and a declaration to the specified bank.
- Work includes supply of manpower under the payer's supervision, control or direction, as inserted by the Finance Act, 2026.
- Clause (40) prints an Act number as "58 of 2022"; the other references print "58 of 2002".
Read next
- Section 402 (clauses 1 to 26): buyer, designated person and other definitions
- Sections 396, 399, 400 and 401
- Section 393: the single TDS section
- Section 392: TDS on salary
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.