TL;DR — Section 393 of the new Income-tax Act, 2025 consolidates every TDS provision into one place. This guide breaks down every rate, threshold and exemption into plain-English tables you can scan in under five minutes. If you'd rather skip the homework, file your ITR with a real Chartered Accountant from ₹999 →
1. What is TDS Section 393 — and why does it matter to you?
If you've ever earned salary, rent, interest, professional fees, or sold a property in India — somebody has deducted "TDS" before paying you. Section 393 of the Income-tax Act, 2025 is the new master section that lists who must deduct tax, how much, when, and on what kind of income.
In simple words:
TDS = the government collects a slice of your income at the source itself — before the money even reaches your bank account.
Section 393 replaces the old sections 192 to 196D of the Income-tax Act, 1961 and merges them into three big tables:
- Table 1 — Payments made to residents (you, me, most Indians)
- Table 2 — Payments made to non-residents (NRIs, foreign companies)
- Table 3 — Payments to anyone (lottery, online gaming, horse race winnings, etc.)
Plus, sub-sections (4), (5) and (6) tell us when TDS should NOT be deducted.
Quick win: If your total tax for FY 2025-26 will be NIL, you can file Form 15G / 15H to stop your bank or tenant from deducting TDS. Talk to a CA →
2. TABLE 1 — TDS on Payments to Residents (the one most of us care about)
This is the table that applies to 95% of Indian taxpayers. Read the row that applies to your situation.
| # | Type of Payment | Who Must Deduct | TDS Rate | Threshold (no TDS below this) |
|---|---|---|---|---|
| 1 | Insurance commission (agents, brokers) | Anyone paying it | Rates in force | ₹20,000 |
| 2 | General commission or brokerage | Specified persons (businesses) | 2% | ₹20,000 |
| 3 | Rent paid by a normal person | Any individual / HUF (not under audit) | 2% | ₹50,000 / month |
| 4 | Rent — Plant & Machinery | Specified persons (companies, firms) | 2% | ₹50,000 / month |
| 5 | Rent — Land / Building / Furniture | Specified persons | 10% | ₹50,000 / month |
| 6 | Sale of immovable property (except agri.) | Buyer | 1% on sale price or stamp duty value, whichever is higher | ₹50 Lakh |
| 7 | Joint Development Agreement (JDA) | Any person paying monetary consideration | 10% | NIL |
| 8 | Compulsory acquisition of property | Government / acquirer | 10% | ₹5,00,000 |
| 9 | Mutual fund / UTI units income | Any payer | 10% | ₹10,000 |
| 10 | Income from Business Trust units (REIT) | Business Trust | 10% | NIL |
| 11 | Interest on securities (bonds, debentures) | Any payer | Rates in force | ₹10,000 |
| 12 | Interest from bank / co-op bank / post office | Bank / Co-op / Post Office | Rates in force | ₹1,00,000 (senior citizens) ₹50,000 (others) |
| 13 | Interest from other lenders (NBFCs, etc.) | Specified person | Rates in force | ₹10,000 |
| 14 | Contractor / Sub-contractor payments | Designated persons (companies, govt, firms) | 1% (Individual / HUF contractor) 2% (other contractors) |
₹30,000 single / ₹1,00,000 aggregate |
| 15 | Contractor / Professional / Commission (paid by individual/HUF for business) | Individual / HUF in business | 2% | ₹50,00,000 |
| 16 | Fees for Professional Services (CA, doctor, lawyer, architect) | Specified persons | 10% | ₹50,000 |
| 17 | Fees for Technical Services | Specified persons | 2% | ₹50,000 |
| 18 | Royalty (films) | Specified persons | 2% | ₹50,000 |
| 19 | Royalty (other) | Specified persons | 10% | ₹50,000 |
| 20 | Director's fees / sitting fees | The company | 10% | NIL |
| 21 | Call centre operations | Specified persons | 2% | ₹50,000 |
| 22 | Dividend (incl. preference shares) | Domestic company | 10% | ₹10,000 (individual, non-cash) |
| 23 | Life insurance maturity (taxable portion) | Any insurer | 2% on income portion | ₹1,00,000 |
| 24 | Purchase of goods (B2B) | Buyer (with turnover > ₹10 Cr last year) | 0.1% | ₹50,00,000 |
| 25 | TDS on senior citizen's pension (70+) | Specified bank | Rates in force | Applicable slab |
| 26 | Benefits / Perquisites in business | Specified person providing it | 10% | ₹20,000 |
| 27 | E-commerce participant sales / services | E-commerce operator (Amazon, Flipkart, Swiggy etc.) | 0.1% | NIL |
| 28 | Sale of Virtual Digital Assets (crypto/NFT) | Buyer / Exchange | 1% | NIL |
Real-life example: You're a freelance graphic designer billing ₹80,000 to an IT company. They will deduct ₹8,000 (10%) as TDS under row 16 and pay you ₹72,000. The ₹8,000 reflects in your Form 26AS — you claim it back when filing ITR. Get TDS mismatch resolved by a CA →
3. Got a TDS Mismatch in Your Form 26AS / AIS?
A TDS mismatch is the #1 reason ITRs get notices in India. Wrong PAN, late deposit, mis-classified section — every quarter, lakhs of taxpayers lose refunds because of it.
Our CAs reconcile every TDS entry against Form 26AS, AIS and TIS — before your return is filed.
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4. TABLE 2 — TDS on Payments to Non-Residents (NRIs & Foreign Companies)
If you're paying money to someone outside India — rent, contract fees, interest, royalty — these rates apply.
| # | Nature of Income | Who Receives | TDS Rate |
|---|---|---|---|
| 1 | Payment to non-resident sportsman / entertainer / sports body | Non-resident sportsperson / body | 20% |
| 2 | Interest on foreign currency borrowings (pre–July 2023 loans/bonds) | Non-resident / Foreign company | 5% |
| 3 | Interest on rupee-denominated bonds (pre–July 2023) | Non-resident / Foreign company | 5% |
| 4 | Interest on IFSC-listed long-term bonds | Non-resident / Foreign company | 4% (pre Jul-23) / 9% (post Jul-23) |
| 5 | Interest from Infrastructure Debt Fund | Non-resident / Foreign company | 5% |
| 6 | Income from Business Trust units | Non-resident unitholder | 5% or 10% (depending on income type) |
| 7 | Income from Investment Fund / Securitisation Trust | Non-resident unitholder | Rates in force |
| 8 | Mutual fund / UTI income | Non-resident | 20% or DTAA rate (whichever is lower) |
| 9 | Offshore fund income / GDR interest / dividends | Offshore fund / Non-resident | 10% |
| 10 | Long-term capital gains on offshore fund units / GDRs | Offshore fund / Non-resident | 12.5% |
| 11 | FII income from Indian securities | Foreign Institutional Investor | 20% or DTAA rate |
| 12 | Specified fund income (IFSC) | Specified IFSC fund | 10% |
| 13 | Any other interest / sum chargeable (residual) | Non-resident / Foreign company | Rates in force |
NRI tip: Most countries have a Double Taxation Avoidance Agreement (DTAA) with India — the TDS rate can drop to 5–15% if you furnish a valid Tax Residency Certificate (TRC) + Form 10F. A CA can help you claim this. Talk to a CA →
5. TABLE 3 — TDS on Payments to Anyone (Winnings, Cash, Partners, Lotteries)
These rules apply regardless of whether the recipient is a resident or non-resident.
| # | Type of Payment | Who Must Deduct | TDS Rate | Threshold |
|---|---|---|---|---|
| 1 | Lottery / crossword / card games / gambling / betting | Any payer | Rates in force (currently 30%) | ₹10,000 per transaction |
| 2 | Online gaming winnings (Dream11, MPL, RummyCircle, etc.) | Gaming platform | Rates in force (currently 30%) | NO threshold — every rupee taxed |
| 3 | Horse race winnings | Bookmaker / licence holder | Rates in force | ₹10,000 per transaction |
| 4 | Commission to lottery ticket sellers | Lottery distributor | 2% | ₹20,000 |
| 5 | Cash withdrawal from bank / co-op / post office | Bank / Co-op / Post Office | 2% | ₹3 Cr (co-op) / ₹1 Cr (others) |
| 6 | National Savings Scheme withdrawal | Any payer | 10% | ₹2,500 |
| 7 | Partner's salary / interest / commission / bonus from firm | The firm | 10% | ₹20,000 |
Online gaming alert: Unlike old lottery TDS (with a ₹10,000 floor), online gaming has NO threshold. Won ₹500 on Dream11? 30% TDS applies. Filing ITR is the only way to claim any refund. File ITR with our CAs →
6. TABLE 4 — When TDS Should NOT Be Deducted (Exemptions)
Section 393(4) lists situations where TDS is completely exempt. Knowing these can save you from unnecessary deductions.
| Payment Type | When TDS is NOT Required |
|---|---|
| Commission to BSNL/MTNL PCO franchisees | Always exempt |
| Rent paid to a REIT | When REIT directly owns the asset |
| Compulsory land acquisition compensation | If exempt under Section 96 of RFCTLARR Act, 2013 |
| Interest on Govt. / RBI bonds | National Development Bonds, most Govt. securities (except 8% / 7.75% / Floating Rate Savings Bonds) |
| Interest paid to banks / LIC / insurers | No TDS when payer pays interest to these institutions |
| Co-op society interest to members | Exempt unless co-op turnover > ₹50 Cr |
| Goods carriage contractor | If contractor owns ≤10 goods carriages AND files declaration with PAN |
| Professional fees by individual/HUF | If for personal (non-business) use |
| Dividend to individual (non-cash) | If dividend ≤ ₹10,000 in a year |
| Small e-commerce participants | If Individual/HUF, turnover ≤ ₹5,00,000 AND PAN/Aadhaar furnished |
| Crypto transfer by small individuals/HUF | ≤ ₹50,000 (small business) or ≤ ₹10,000 (others) per year |
| Payments to Govt / RBI / Mutual Funds | Always exempt |
7. TABLE 5 — Special "Zero TDS" Declarations (Form 15G / 15H equivalent)
Under Section 393(6), if your estimated total tax for the year is NIL, you can submit a declaration in duplicate to the deductor and they will skip TDS.
| Who Can File the Declaration | For Which Income Types? |
|---|---|
| Resident individual (any age) | EPF withdrawal, Insurance commission, Rent (specified), MF income, Interest, Life insurance, Dividend |
| Resident senior citizen (60+) | All of the above — even if income exceeds basic exemption (special carve-out) |
| HUFs / Trusts / AOPs | Same list (except specifically excluded items) |
Caution: False declarations attract penalty under Section 277. A CA can verify your eligibility before you sign. Get expert review →
8. How TDS Affects Your ITR Filing — The 4-Step Flow
- Income earned
- TDS deducted by the payer
- Reflects in Form 26AS / AIS
- Claim credit in ITR — refund if excess, pay balance if short
Where things go wrong:
- PAN error — TDS shows under wrong name — you can't claim
- Section mis-classified by deductor — mismatch notice
- Late deposit by deductor — 26AS not updated in time
- Multiple Form 16 (job switch) — both TDS entries overlooked
- Wrong regime (old vs new) — excess TDS not refunded
FirstReports fixes all of this — before you file.
The standard deduction of ₹75,000 available under the new tax regime also reduces the TDS your employer deducts from salary at source — making it important to declare your regime preference to your employer at the start of the year. Similarly, the Section 87A rebate can wipe out your entire tax liability up to ₹12 lakh net income, which means TDS deducted above that amount becomes fully refundable when you file your ITR.
9. The Smart Way to Handle TDS This Year
Filing your ITR isn't just about pressing "submit" on the income tax portal. It's about:
- Reconciling every TDS entry in Form 26AS, AIS and TIS
- Picking the better regime (old vs new) — your CA decides
- Claiming the right rebate under Section 87A
- Resolving mismatches before they become notices
- Filing the right ITR form (ITR-1, 2, or 3)
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10. Penalty for Non-Deduction or Late Deposit of TDS
Just so you know what's at stake on the deductor's side:
| Default | Consequence |
|---|---|
| TDS not deducted | Interest @ 1% per month + disallowance of 30% of expense |
| TDS deducted but not deposited | Interest @ 1.5% per month |
| Late filing of TDS return | Late fee ₹200/day under Section 271H of new Act |
| Wrong PAN of deductee | TDS @ 20% (higher of normal rate or 20%) |
11. Related Reading from FirstReports
- Form 16 Explained — What It Is & How to Read It →
- How to File ITR Online — Step-by-Step Guide (FY 2025-26) →
- New vs Old Tax Regime — Which Saves You More? →
- Capital Gains from Zerodha / Groww — ITR Filing Guide →
12. Final Word — Don't Let TDS Eat Into Your Refund
Section 393 looks intimidating, but the principle is simple:
Earn → TDS gets deducted → File ITR → Claim refund OR pay balance.
The catch is in the details: PAN errors, mismatched sections, wrong regime, late deposits — every one of these can cost you money or trigger a notice.
A qualified Chartered Accountant fixes all of this in 3-5 working days, for as little as ₹999. Deadline: 31 July 2026 for most salaried individuals. Use code LAUNCH20 for 20% off your first filing. View all plans →
Disclaimer: This blog is for general information and does not constitute legal or tax advice. Rates and thresholds are based on the Income-tax Act, 2025 as published by the Government of India. Always consult a qualified Chartered Accountant for advice specific to your situation. Source: Section 393, Income-tax Act, 2025.
Frequently Asked Questions
What is the difference between TDS and Income Tax?
TDS is tax collected upfront at the source of income — like an advance payment to the government. Income Tax is the final liability computed when you file your ITR. If TDS deducted is more than your actual liability, you get a refund. If less, you pay the difference. See our step-by-step ITR filing guide →
Is Section 393 of the Income-tax Act 2025 the same as Section 194 of the old Act, 1961?
Section 393 of the Income-tax Act, 2025 is a consolidated replacement of sections 192 to 196D of the old Income-tax Act, 1961. The rates and thresholds are largely the same, but everything now lives in one master section with three clear tables, making it easier to navigate. The new Act applies from FY 2026-27 onwards (AY 2027-28); FY 2025-26 transitions are being notified by CBDT.
What is the TDS rate on rent in 2025?
| Who Pays Rent | TDS Rate | Threshold |
|---|---|---|
| Individual / HUF (not under audit) | 2% | ₹50,000 / month |
| Business / company — for plant & machinery | 2% | ₹50,000 / month |
| Business / company — for land/building/furniture | 10% | ₹50,000 / month |
Is TDS deducted on salary covered under Section 393?
No. Salary TDS is covered separately under Section 392 of the Income-tax Act, 2025 (which replaces old Section 192). Section 393 covers everything other than salary. For salary TDS details, see: Understanding Form 16 — your salary TDS certificate →
What is the TDS rate on professional fees for a CA, doctor or lawyer?
10% under Section 393(1) Row 16 of Table 1, with a threshold of ₹50,000 per financial year. For technical services, the rate is only 2%.
How do I claim a refund of TDS deducted?
You claim TDS credit by filing your ITR. The TDS shown in your Form 26AS / AIS is auto-populated in the return. If your total tax liability is less than the TDS deducted, the difference comes as a refund directly to your bank account within 15-60 days of processing.
Is TDS deducted on crypto / virtual digital assets in 2025?
Yes. Under Section 393(1) Row 28, 1% TDS applies on transfer of virtual digital assets (cryptocurrency, NFTs). There is no threshold for normal taxpayers — even a ₹100 trade attracts TDS. Small individual/HUF traders get a relief of ₹50,000/year.
What is the TDS rate on dividend income in 2025?
10% under Section 393(1) Row 22 for any dividend paid by a domestic company. Exemption: If you're an individual receiving dividend by non-cash mode and the annual amount is ≤ ₹10,000, no TDS applies.
How does TDS work for capital gains from stocks?
Capital gains on listed shares are not subject to TDS for residents — you pay tax when filing your ITR. For non-residents and foreign portfolio investors, TDS applies under Section 393(2). Holding period rules (STCG vs LTCG) determine the tax rate. See our capital gains from Zerodha / Groww — complete ITR guide →
Should I choose the new tax regime or old tax regime?
It depends on your deductions. If your 80C + 80D + HRA + home loan interest combined exceeds roughly ₹3.75 lakh, the old regime usually wins. Otherwise, the new regime is simpler and often cheaper. A CA can run both calculations for you. See our full comparison: New vs Old Tax Regime — which one saves you more? →