Section 394(1), Table "Tax collection at source"
The Section 394(1) Table, Sl. No. 1 to 9
The person in column C collects tax on the receipt in column B at the rate in column D, at the time of debiting the amount payable by the buyer, licensee or lessee to his account or at the time of receipt of the amount, whichever is earlier. The rates below are those in force from 1 April 2026, the date on which both the Act and the Finance Act, 2026 amendments took effect.
| Sl. No. | Nature of receipt | Collector | Rate | Rate before the Finance Act, 2026 |
|---|---|---|---|---|
| 1 | Sale of alcoholic liquor for human consumption | Seller | 2% | 1%, changed by FA 2026 s. 85(a) |
| 2 | Sale of tendu leaves | Seller | 2% | 5%, changed by FA 2026 s. 85(b) |
| 3 | Sale of timber whether obtained under a forest lease or otherwise; or any other forest produce (not being timber or tendu leaves) obtained under a forest lease | Seller | 2% | No change |
| 4 | Sale of scrap | Seller | 2% | 1%, changed by FA 2026 s. 85(c) |
| 5 | Sale of minerals, being coal or lignite or iron ore | Seller | 2% | 1%, changed by FA 2026 s. 85(d) |
| 6 | Sale consideration exceeding ten lakh rupees in case of (a) motor vehicle; or (b) any other goods, as may be notified by the Central Government | Seller | 1% | No change |
| 7(a) | Remittance under the Liberalised Remittance Scheme of an amount or aggregate of the amounts exceeding ten lakh rupees, for purposes of education or medical treatment | Authorised dealer | 2% | 5%, changed by FA 2026 s. 85(e) |
| 7(b) | Remittance under the Liberalised Remittance Scheme of an amount or aggregate of the amounts exceeding ten lakh rupees, for purposes other than education or medical treatment | Authorised dealer | 20% | No change |
| 8 | Sale of overseas tour programme package, including expenses for travel or hotel stay or boarding or lodging or any such similar or related expenditure | Seller | 2% | 5% of amount or aggregate of amounts up to ten lakh rupees and 20% of the amount exceeding ten lakh rupees, changed by FA 2026 s. 85(f) |
| 9 | Use of parking lot or toll plaza or mine or quarry for the purpose of business, excluding mining and quarrying of mineral oil (including petroleum and natural gas) | Licensor or lessor | 2% | No change |
No rows match — clear the filter to see all.
Forest produce has the meaning given in any State Act for the time being in force or in the Indian Forest Act, 1927 (section 394(6)).
Section 394(2), (4), (5) and section 402(6)
Where Tax Is Not Collected
| Provision | Entry | No collection where |
|---|---|---|
| s. 394(2) | Sl. No. 1 to 5 | The buyer is resident in India and furnishes a written declaration in the prescribed form that the goods are to be utilised for the purposes of manufacturing, processing or producing articles or things or for generating power, and not for trading purposes. |
| s. 394(4)(a) | Sl. No. 7 | The amount is one on which tax has already been collected by the seller of an overseas tour programme package under Sl. No. 8. |
| s. 394(4)(b) | Sl. No. 7 | The amount being remitted out is a loan obtained from a financial institution as defined in section 129(3)(b) for the purpose of pursuing any education. |
| s. 394(5) | Sl. No. 7 and 8 | The buyer is liable to deduct tax at source under any other provision of the Act and has deducted such tax. |
| s. 402(6), Sl. No. 2 | Sl. No. 1 to 5 | The person buying is a public sector company; the Central or a State Government, or an embassy, High Commission, legation, commission, consulate or trade representation of a foreign State; a club; or a buyer in the retail sale of such goods purchased by him for personal consumption. |
| s. 402(6), Sl. No. 3 | Sl. No. 6 | The person buying is the Central or a State Government or a foreign mission as above; a local authority as defined at Schedule III (Table: Sl. No. 22); or a public sector company engaged in the business of carrying passengers. |
| s. 402(6), Sl. No. 4 and 5 | Sl. No. 7 and 8 | The remitter or purchaser is a public sector company, a local authority as above, or any other person the Central Government may notify. |
Under section 394(3) the collector delivers one copy of the section 394(2) declaration to the Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner on or before the seventh day of the month following the month of its receipt.
Section 402(33)
Who Is the Seller
- For Sl. No. 1 to 6 the seller is the Central Government, a State Government, a local authority, a corporation or authority established under a Central, State or Provincial Act, a company, a firm or a co-operative society.
- An individual or Hindu undivided family is a seller for Sl. No. 1 to 6 only if the total sales, gross receipts or turnover from business or profession exceeded one crore rupees in case of business or fifty lakh rupees in case of profession in the tax year immediately preceding the tax year of sale.
- For Sl. No. 8 the seller is a person who sells an overseas tour programme package.
Section 397(2) and Finance Act, 2026, section 3
No PAN, Surcharge and Cess
| Point | Rule | Source |
|---|---|---|
| Person paying does not furnish a valid Permanent Account Number | Tax is collected at the higher of twice the rate specified in the provision or 5%, not exceeding 20%. | ITA 2025, s. 397(2)(b)(ii) |
| Non-resident without a permanent establishment in India | The higher rate for a missing PAN does not apply. | ITA 2025, s. 397(2)(d) |
| Surcharge on TCS | The collection is made at the section 394(1) rates. The surcharge Table names only non-resident persons and companies other than domestic companies. | FA 2026, s. 3(9) |
| Health and Education Cess on TCS | 4% on tax and surcharge, but not where the amount is paid to a domestic company or any other person who is resident in India. | FA 2026, s. 3(16) and 3(17)(i) |
| Failure to collect | The person responsible for collecting remains liable to pay the tax to the credit of the Central Government. | ITA 2025, s. 397(3)(h) |
Practical
How to Use This Chart
- For Sl. No. 1 to 5, check whether the buyer has given the section 394(2) declaration before collecting.
- For Sl. No. 6 and Sl. No. 7 the ten lakh rupee figure is part of the description of the receipt in column B.
- For a remittance that pays for an overseas tour package, tax is collected once: by the seller under Sl. No. 8, not again by the authorised dealer under Sl. No. 7.
Not shown on this page
- Whether tax under Sl. No. 6 and 7 is computed on the whole amount or only on the part above ten lakh rupees is not stated separately in the Table, so it is not stated here.
- Goods notified by the Central Government under Sl. No. 6(b) are not listed.
- Lower collection certificates under section 395(3) are not shown.
- Surcharge rates for non-resident buyers in section 3(9) of the Finance Act, 2026 are not reproduced.
- Due dates for deposit, the quarterly statement and the certificate are prescribed by the Income-tax Rules, 2026 and are not covered.
Official documents behind this page
- Income-tax Act, 2025 (30 of 2025), as enacted, Gazette of India ExtraordinarySection 394(1), Table "Tax collection at source", Sl. No. 1 to 9; section 394(2) to (6); section 397(2)(b)(ii), 397(2)(d) and 397(3)(h); section 402(6) (buyer, Sl. No. 2 to 5) and 402(33) (seller); section 1(3) (commencement on 1 April 2026).
- Finance Act, 2026 (4 of 2026), Gazette of India Extraordinary, 30 March 2026Section 85, clauses (a) to (f): substitution of the rates against Sl. No. 1, 2, 4, 5, 7(a) and 8 of the section 394(1) Table; section 1(2)(a) (sections 2 to 129 in force from 1 April 2026); section 3(9), 3(16) and 3(17).
- Income-tax Act, 2025 as amended by the Finance Act, 2026 (consolidated copy)Used as a second reading of the amended Table: footnotes 86 to 89 record the substituted rates with effect from 1 April 2026.
Disclaimer: This guide is general information based on the law and notifications in force when it was last updated. It is not professional advice for your case — rates, thresholds and due dates change, so check the current position or speak to our CA team before you act on it.