Section 393 — Tax to be deducted at source. Successor to s.193, s.194, s.194A, s.194B, s.194BA, s.194BB, s.194C, s.194D, s.194DA, s.194E, s.194EE, s.194G, s.194H, s.194J, s.194K, s.194LA, s.194LB, s.194LBA, s.194LBB, s.194LBC, s.194LC, s.194M, s.194N, s.194P, s.194Q, s.194R, s.194S, s.194T, s.195, s.195A, s.196, s.196A, s.196B, s.196C, s.196D, s.197A of the 1961 Act.
Section 393 is in Chapter XIX — Collection and Recovery of Tax, which runs from section 390 to section 430.
The section is the whole of the deduction-at-source code for payments other than salary, and it works through five Tables spread over eleven sub-sections. Sub-section (1) carries the Table for payments to a resident: eight serial numbers — commission or brokerage, rent, transfer of immovable property, income from the capital market, interest income, payments to contractors and fees for professional or technical services, dividend, and a residual "other cases" head covering life insurance sums, purchase of goods, specified senior citizens, business benefits or perquisites, e-commerce payments and virtual digital assets — with the nature of the sum in column B, the payer in column C and the rate and threshold in column D, and with Notes under most serial numbers that alter the timing, the base or the ordering. Deduction is on the entire amount once the threshold is crossed, at the time of credit or payment whichever is earlier, and subject to sub-sections (4), (5), (6), (8) and (9). Sub-section (2) carries a seventeen-row Table for payments to a non-resident, identifying payee and payer separately and running from 20% on sportspersons and entertainers through the concessional 5%, 4% and 9% rates on foreign currency and International Financial Services Centre bond interest to a residual row 17 covering any interest or other sum chargeable under the Act other than salary. Sub-section (3) carries a seven-row Table for payments to any person — lottery and other winnings, online game winnings, horse race winnings, lottery ticket commission, large cash withdrawals from banks, post offices and co-operative banks, amounts under section 80CCA(2)(a) of the 1961 Act, and salary, remuneration, commission, bonus or interest paid by a firm to a partner. Sub-section (4) is a nineteen-row Table of situations in which no deduction is to be made at all, keyed to the row of the earlier Tables it disapplies; sub-section (5) exempts payments to the Government, the Reserve Bank of India, statutory corporations exempt from income-tax and specified mutual funds; and sub-section (6) allows a resident individual (and, for most of the same items, a person other than a company or firm) to stop deduction by furnishing a written declaration in duplicate that his estimated total income will bear nil tax, with sub-section (7) requiring the payer to deliver those declarations to the prescribed income-tax authority by the seventh day of the month following each quarter. Sub-sections (8) and (9) exclude Offshore Banking Unit interest to non-residents and payments for or on behalf of the New Pension System Trust; sub-section (10) requires grossing up where the payer bears the tax; and sub-section (11) deems a credit to a suspense account or any similarly named account to be a credit to the payee.
The section collects tax at the point where money changes hands, putting the obligation on the payer and fixing, row by row, what is caught, who must deduct, at what rate and above what amount. The elaborate exclusions in sub-sections (4) to (9) exist because a flat obligation would otherwise deduct from persons whose income is not taxable at all, from institutions exempt by statute, and from transactions already covered by another deduction provision.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Commission or brokerage other than insurance commission | 2%, threshold Rs. 20,000 | Payer must be a specified person; insurance commission sits in row 1(i) at rates in force with the same Rs. 20,000 threshold | 393(1), Table Sl. No. 1 |
| Rent paid by a person other than a specified person | 2%, threshold Rs. 50,000 for a month or part of a month | The threshold is monthly, not annual; Note 1 requires deduction only at credit or payment for the last month of the tax year or the last month of the tenancy | 393(1), Table Sl. No. 2(i) |
| Rent paid by a specified person | 2% for machinery, plant or equipment; 10% for land, building, land appurtenant to a building, furniture or fittings | Same Rs. 50,000 for a month or part of a month threshold for both rates | 393(1), Table Sl. No. 2(ii) |
| Transfer of immovable property other than agricultural land | 1% of consideration or stamp duty value, whichever is higher; threshold fifty lakh rupees | Note 3 requires deduction where the consideration or the stamp duty value is equal to or greater than fifty lakh rupees; Note 1 aggregates the amounts paid or payable by all transferees to all transferors for the threshold | 393(1), Table Sl. No. 3(i) |
| Compensation or enhanced compensation on compulsory acquisition | 10%, threshold Rs. 5,00,000 | Immovable property other than agricultural land; no deduction where the award or agreement is exempt under section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 | 393(1), Table Sl. No. 3(iii), with 393(4) Table Sl. No. 3 |
| Income in respect of mutual fund and specified units | 10%, threshold Rs. 10,000 | No deduction if the income is in the nature of capital gain | 393(1), Table Sl. No. 4(i), with 393(4) Table Sl. No. 4 |
| Interest on securities | Rates in force, threshold Rs. 10,000 | A long list of securities and payees, including specified Government savings bonds and insurers, is excluded by the no-deduction Table | 393(1), Table Sl. No. 5(i), with 393(4) Table Sl. No. 6 |
| Interest other than on securities paid by a bank, banking co-operative society or post office | Rates in force; threshold Rs. 1,00,000 for a senior citizen and Rs. 50,000 for anyone else | Where the payer has not adopted core banking solutions, the threshold is computed branch by branch for the deposits listed in Note 1 | 393(1), Table Sl. No. 5(ii) |
| Interest other than on securities paid by a specified person | Rates in force, threshold Rs. 10,000 | Applies to specified persons other than those in row 5(ii) | 393(1), Table Sl. No. 5(iii) |
| Payments to contractors by a designated person | 1% where the contractor is an individual or Hindu undivided family, 2% otherwise; thresholds Rs. 30,000 for any single sum and Rs. 1,00,000 for the aggregate | Either threshold being crossed brings the payment in; for work specified in section 402(47)(e), tax is on the invoice value excluding material only if material is separately stated | 393(1), Table Sl. No. 6(i) |
| Contract payments, professional fees, commission or brokerage paid by an individual or Hindu undivided family | 2%, threshold fifty lakh rupees | Only where that individual or Hindu undivided family is not already required to deduct under Sl. No. 6(i) or 6(iii) or Sl. No. 1(ii) | 393(1), Table Sl. No. 6(ii) |
| Professional and technical fees, director's remuneration, royalty and section 26(2)(h) sums paid by a specified person | 2% for fees for technical services that are not professional services, for royalty for sale, distribution or exhibition of cinematographic films, and where the payee is engaged only in call centre operations; 10% in all other cases | Threshold Rs. 50,000, except for a director's remuneration, fees or commission where the threshold is nil | 393(1), Table Sl. No. 6(iii) |
| Dividend declared by a domestic company | 10%, threshold nil | Tax must be deducted before making any distribution or payment; no deduction for an individual shareholder where the dividend is paid other than in cash and the amount for the tax year does not exceed Rs. 10,000 | 393(1), Table Sl. No. 7, with 393(4) Table Sl. No. 10(f) |
| Sum under a life insurance policy | 2% on the income comprised in the sum, threshold Rs. 1,00,000 | Excludes an amount not includible in total income under Schedule II, Table Sl. No. 2; the base is the income component, not the whole sum | 393(1), Table Sl. No. 8(i) |
| Purchase of goods by a buyer | 0.1% on the sum exceeding fifty lakh rupees | Unlike the other rows, deduction is only on the excess over fifty lakh rupees, and the row does not apply at all where tax is deductible or collectible under any other provision of the Act | 393(1), Table Sl. No. 8(ii), with Note 1 |
| Benefit or perquisite arising from business or profession | 10% of the value or aggregate value, threshold Rs. 20,000 | Applies to a benefit or perquisite in cash or in kind or partly both; where it is wholly or partly in kind and the cash is insufficient, the payer must ensure the tax has been paid before providing it | 393(1), Table Sl. No. 8(iv), with Notes 2 and 6 |
| E-commerce operator's payment to an e-commerce participant | 0.1% of the gross amount of the sale or services, threshold nil | No deduction where the participant is an individual or Hindu undivided family, the gross amount for the year does not exceed Rs. 5,00,000, and the Permanent Account Number or Aadhaar number has been furnished | 393(1), Table Sl. No. 8(v), with 393(4) Table Sl. No. 11 |
| Consideration for transfer of a virtual digital asset | 1%, threshold nil in the charging row | The exemption is in the no-deduction Table: value up to Rs. 50,000 where the payer is a qualifying individual or Hindu undivided family within the turnover limits, and up to Rs. 10,000 for any other payer | 393(1), Table Sl. No. 8(vi), with 393(4) Table Sl. No. 12 |
| Income of a non-resident sportsman, entertainer or sports association referred to in section 211 | 20% | Payee must not be a citizen of India in the case of a sportsman or entertainer | 393(2), Table Sl. No. 1 |
| Interest on foreign currency borrowings and specified bonds paid by an Indian company or business trust | 5% for rows 2, 3 and 5; 4% for International Financial Services Centre listed bonds issued on or after 1 April 2020 but before 1 July 2023, and 9% for those issued on or after 1 July 2023 | For rows 2, 3 and 4 the concessional treatment extends only to interest not exceeding the rate approved by the Central Government having regard to the terms of the loan or bond and its repayment | 393(2), Table Sl. Nos. 2 to 5, with Note 1 |
| Income of a non-resident from units of specified mutual funds and Foreign Institutional Investor income from section 210 securities | 20%, or the lower treaty rate | The treaty rate applies only where an agreement under section 159(1) or 159(2) applies to the payee and the payee has furnished the certificate referred to in section 159(8), and only if that rate is lower than 20% | 393(2), Table Sl. Nos. 10 and 15, with Note 2 |
| Winnings from lotteries, crossword puzzles, card and other games, gambling or betting, and from horse races | Rates in force, threshold Rs. 10,000 in case of a single transaction | The threshold is per transaction, not per year; winnings from online games are separately dealt with in row 2 on net winnings | 393(3), Table Sl. Nos. 1 and 3 |
| Cash withdrawals from bank, banking co-operative society or post office accounts | 2%; threshold three crore rupees where the recipient is a co-operative society and one crore rupees for any other recipient | Aggregated across one or more accounts maintained by the person; payments to the Government, banks, business correspondents and white label atm operators are outside it | 393(3), Table Sl. No. 5, with 393(4) Table Sl. No. 18 |
| Salary, remuneration, commission, bonus or interest paid by a firm to a partner | 10%, threshold Rs. 20,000 | Includes amounts credited to the partner's account, including his capital account | 393(3), Table Sl. No. 7 |
| Goods carriage contractor exemption | Ten or less goods carriages | Owned at any time during the tax year, in the business of plying, hiring or leasing goods carriages, and only if the contractor furnishes a declaration with his Permanent Account Number and the payer files the prescribed particulars | 393(4), Table Sl. No. 8(a) |
| Co-operative society interest exception | Fifty crore rupees | The no-deduction relief for interest paid by a co-operative society falls away where its total sales, gross receipts or turnover exceeded fifty crore rupees in the preceding tax year and the interest exceeds the Sl. No. 5(ii) threshold | 393(4), Table Sl. No. 7(b) |
| Delivery of nil-tax declarations to the prescribed income-tax authority | On or before the seventh day of the month immediately following the end of each quarter | As substituted by Act No. 4 of 2026 with effect from 1 April 2026; the earlier sub-section (7) required delivery monthly to the Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner | 393(7) |
This section is used by row, not by section number: the answer to "what is the rate" depends on which serial number of which Table the payment falls in, who the payer is, and which Note sits under that row. Work in four steps — find the row in the sub-section (1), (2) or (3) Table; apply the threshold in column D, remembering that once it is crossed the deduction is on the entire amount and not merely the excess, except at Sl. No. 8(ii) where the text deducts only on the sum exceeding fifty lakh rupees; check the sub-section (4) Table for a row that disapplies that entry, and sub-sections (5), (8) and (9) for the blanket exclusions; and then check the Notes for timing, base and precedence. Precedence matters where two rows could apply: Sl. No. 8(v) takes priority over the rest of the Chapter, but Sl. No. 8(vi) takes priority over Sl. No. 8(v), Sl. No. 8(iii) takes priority over the Chapter, and where both Sl. No. 3(i) and 3(ii) fit, deduction is under 3(ii) only. Timing is credit or payment, whichever is earlier, for the resident and non-resident Tables, but payment for the sub-section (3) Table, and a credit to a suspense account counts as credit to the payee under sub-section (11). Where the payer has agreed to bear the tax, sub-section (10) requires the income to be grossed up so that the net after deduction equals the amount agreed.
Two buyers together purchase a flat for Rs. 48 lakh, Rs. 24 lakh each, where the stamp duty value is Rs. 52 lakh. Neither the total consideration nor either buyer’s share touches fifty lakh rupees, but Note 1 to Sl. No. 3 aggregates the amounts paid by all the transferees, and Note 3 brings the row in where the consideration or the stamp duty value is equal to or greater than fifty lakh rupees — which the stamp duty value is. Tax is therefore deducted at 1% of the higher of the two figures, Rs. 52,000, and on that whole amount, not on the excess over fifty lakh, because sub-section (1)(a) deducts on the entire sum once the threshold is crossed. The one row where that is not so is Sl. No. 8(ii), purchase of goods, where Note 1(b) deducts only on the sum exceeding fifty lakh rupees.
On the payer’s side at the moment of credit or payment, whichever is earlier, and then in the statement of deduction he has to deliver; on the payee’s side, as the credit appearing against his account. A payee who expects to bear nil tax meets sub-section (6) instead, by giving the payer a written declaration in duplicate, which the payer must deliver to the prescribed income-tax authority on or before the seventh day of the month following the end of the quarter.
on the entire amount of such income or sum, where the amount or aggregate of amounts exceeds the threshold limit specified in column D
| 1961 provision | What changed in the move |
|---|---|
| s.194C | 1. The section disappears as a section. What was s.194C is now one row of a Table inside s.393, so citations, certificates and correspondence have to refer to 'section 393(1), Table, Sl. No. 6(i)'. 2. 'specified person' becomes 'designated person', and the twelve-limb Explanation to s.194C listing who that is - Central and State Government, local authority, corporation, company, co-operative society, housing or development authority, registered society, trust, university, foreign Government or enterprise, firm, and an individual, HUF, aop or boi above the one crore / fifty lakh turnover line - is not reproduced in s.393. The definition now sits in s.402. 3. The definition of 'work' - advertising, broadcasting and telecasting, carriage of goods or passengers other than by railways, catering, and manufacturing to a customer's specification using the customer's material, with the two exclusions - is likewise moved out of the charging provision into s.402(47). 4. Rates and thresholds are unchanged. 5. A new row, Sl. No. 6(ii), catches contract work, professional fees and commission paid by an individual or HUF outside the main net at 2% above fifty lakh rupees - the 1961 Act did this in a separate section, s.194M. |
| s.194J | 1. As with s.194C, the provision becomes a Table row - 'section 393(1), Table, Sl. No. 6(iii)'. 2. The threshold is stated once for four heads instead of separately for each. Section 194J set fifty thousand rupees head by head, in four numbered sub-clauses; the 2025 Table gives a single figure 'for (a), (b), (d) and (e) of Col. B', read with the opening words of s.393(1)(a), 'where the amount or aggregate of amounts exceeds the threshold limit'. On the face of the Table the heads are no longer obviously tested separately. 3. The definitions of 'professional services' (legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, advertising, and notified professions), 'fees for technical services' and 'royalty', which s.194J carried in its own Explanation, are not in s.393; they are in s.402. 4. The second proviso to s.194J, which brought an individual or HUF above the one crore / fifty lakh turnover line into the section, is replaced by the definition of 'specified person' in s.402 as the payer for this row. 5. The dead first proviso (sums credited or paid before 1 July 1995) is dropped. 6. Rates are unchanged. |
How we established this. Read s.393(1) Table Sl. No. 6(i) of the 2025 Act against s.194C of the 1961 Act. The charging description is the same phrase: 1961 - 'any sum to any resident (hereafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a specified person'; 2025 - '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'. The two rates are identical and turn on the same distinction - one per cent where the payee is an individual or HUF, two per cent otherwise. The two thresholds are identical - s.194C(5) barred deduction where the single sum did not exceed thirty thousand rupees, with a proviso bringing the payer in once the aggregate for the financial year exceeded one lakh rupees; column D of Sl. No. 6(i) reads 'Rs. 30,000; for any such sum; and Rs. 1,00,000 in case of aggregate of such sums'. S.194C(3), the material-value rule for works contracts under sub-clause (e) of the definition of 'work', reappears verbatim in structure as the Note to Sl. No. 6, with s.402(47)(e) substituted for the Explanation. S.194C(6) and (7), the goods-carriage exemption on a declaration with PAN plus the payer's reporting obligation, reappear as s.393(4) Table Sl. No. 8(a) with the same four conditions. S.194C(4), the personal-purposes exclusion for an individual or HUF, reappears as Sl. No. 8(b). S.194C(2), the suspense-account deeming, is generalised for the whole Chapter in s.393(11).; Read s.393(1) Table Sl. No. 6(iii) of the 2025 Act against s.194J of the 1961 Act. Column B lists the same five heads in the same order as s.194J(1)(a), (b), (ba), (c) and (d): fees for professional services; fees for technical services; remuneration, fees or commission to a director of a company other than those on which tax is deductible under s.192 (s.392 in the 2025 Act); royalty; and the sum referred to in s.28(va) of the 1961 Act, which is s.26(2)(h) of the 2025 Act. The rate structure is reproduced word for word in substance: 1961 - 'two per cent of such sum in case of fees for technical services (not being a professional services), or royalty where such royalty is in the nature of consideration for sale, distribution or exhibition of cinematographic films and ten per cent of such sum in other cases', with a further proviso substituting two per cent for ten per cent 'in the case of a payee, engaged only in the business of operation of call centre'; column D of Sl. No. 6(iii) states exactly those three 2% cases and 10% otherwise. The threshold pattern also matches: s.194J's proviso (B) set fifty thousand rupees for professional fees, technical fees, royalty and the s.28(va) sum and said nothing about director's remuneration, so that head had no threshold; column D reads 'Rs. 50,000' for (a), (b), (d) and (e) and 'Nil' for (c). The third proviso to s.194J, excluding an individual or HUF paying professional fees exclusively for personal purposes, reappears as s.393(4) Table Sl. No. 9. The Explanation (c) suspense-account rule reappears as s.393(11).
All of them are in the Rules 2026 index.
See every circular and notification on this section, or the circulars index.
See every circular and notification on this section, or the notifications index.
