TDS Section 393 under the Income Tax Act, 2025

05 May, 2026

Introduction

The Income Tax Act, 2025 introduces several structural reforms to simplify tax compliance in India, and one of the most important changes is the introduction of Section 393, which consolidates multiple Tax Deducted at Source (TDS) provisions under one comprehensive section.

Earlier, taxpayers and deductors had to navigate through several individual TDS sections under the Income Tax Act, 1961, making compliance complex and time-consuming. Section 393 simplifies this framework by bringing these provisions together in a more structured and user-friendly format.

This change is expected to improve clarity, reduce compliance errors, and make TDS deduction and reporting easier for businesses, professionals, and taxpayers.

What is Section 393?

Section 393 is the central provision dealing with tax deduction at source (TDS) on non-salary payments under the new law.

Under the earlier tax framework, different types of payments such as rent, commission, contractor payments, interest, and professional fees were covered under separate provisions. The new law groups these into a single umbrella section for easier reference.

In simple terms, if a specified payment is made to a resident or certain other persons, tax may need to be deducted at source under Section 393 at the prescribed rate and deposited with the government. Salary-related TDS is covered separately under Section 392.

Applicability of Section 393

Section 393 becomes effective from 1 April 2026.

It applies to specified payments credited or paid on or after 1 April 2026. For transactions where the taxable event occurs on or before 31 March 2026, the old law continues to apply.

A practical point to remember is that TDS generally applies at the earlier of credit or payment. Therefore, if an expense is credited before 1 April 2026, the old provisions may still apply even if payment happens later.

Payments Covered under Section 393

Section 393 covers a wide range of non-salary payments, mainly grouped under payments to residents, payments to non-residents, and certain common provisions.

Major payments to residents include:

● Payment to residents

● Commission or brokerage

● Rent

● Payment on transfer of certain immovable property other than agricultural land

● Income from the capital market

● Interest income

● Payments to contractors, fees for professional and technical services, etc.

● Dividend

● Others

● Payment to non-residents

● Common provisions related to payments made to any person

TDS Chart for Payments to Residents

Below is a simplified overview of common payments covered under Section 393:

S. No.	Classification	Section	Threshold Limit	TDS Rate (Company / Firm / Co-op)	TDS Rate (Individual / HUF)
1	Commission / Brokerage (Insurance & Others)	393(1) T1	₹20,000 p.a.	2%	2%
2	Rent (Specified Individual/HUF cases)	393(1) T1	₹50,000 per month	2%	2%
	Rent – Plant & Machinery	393(1) T1	₹50,000 per month	2%	2%
	Rent – Land & Building	393(1) T1	No specific threshold	10%	10%
3	Transfer of Immovable Property (other than agri land)	393(1) T1	≤ ₹50 lakh	1%	1%
	Joint Development Agreement (JDA)	393(1) T1	No limit	10%	10%
	Compensation on compulsory acquisition	393(1) T1	≤ ₹5 lakh	10%	10%
4	Capital Market Income	393(1) T1	—	—	—
5	Interest on Securities	393(1) T1	₹10,000 p.a.	10%	10%
	Interest (Bank/Co-op/Post Office)	393(1) T1	₹1,00,000 (SC) / ₹50,000 others	10%	10%
	Other Interest	393(1) T1	₹10,000 p.a.	10%	10%
6	Payments to Contractors	393(1) T1	₹30,000 per contract / ₹1,00,000 yearly	2%	1%
	Certain Individual/HUF Payments (not liable u/s above)	393(1) T1	≤ ₹50 lakh	2%	2%
	Professional / Technical Fees / Royalty	393(1) T1	₹50,000	2% (specified cases) / 10%	Same
7	Dividend	393(1) T1	No limit	10%	10%
8	Life Insurance Policy Payment	393(1) T1	₹1,00,000	2%	2%
	Purchase of Goods	393(1) T1	₹50 lakh (on excess)	0.10%	0.10%
	Specified Senior Citizen	393(1) T1	—	Slab Rates	Slab Rates
	Benefit / Perquisite (Business/Profession)	393(1) T1	₹20,000	10%	10%

Note: Actual thresholds and rates may be notified by the government and should be verified from official notifications.

Section 393(6) – Nil TDS Certificate

Section 393(6) provides relief to taxpayers whose total tax liability is expected to be nil.

Under this provision, the recipient of income can apply to the Assessing Officer for a Nil TDS Certificate, allowing the payer to deduct no tax on specified payments.

Who can apply?

A taxpayer can apply if:

● Estimated total income is below taxable limits

● Tax liability is expected to be nil

● Excess TDS deduction is likely to occur

Benefits of Nil TDS Certificate

● Prevents unnecessary tax deduction

● Improves cash flow

● Reduces refund dependency

● Simplifies tax planning

The certificate is issued after verification by the tax authorities.

TDS Deposit Due Date

After deducting TDS under Section 393, the deductor must deposit it with the government within the prescribed due dates.

For Non-Government Diductors: TDS deducted in a month must generally be deposited by the 7th of the following month.

For March Deductions: The due date is generally 30 April.

For Government Diductors

Deposit timelines may differ depending on the mode of payment.

Timely deposit is essential because delays may attract:

● Interest charges

● Late fees

● Penalties

● Disallowance of expenditure in certain cases

Conclusion

Section 393 is one of the most practical compliance reforms introduced by the Income Tax Act, 2025.

Instead of dealing with multiple scattered TDS provisions, taxpayers now get a single consolidated section covering most non-salary TDS payments. While the rates and thresholds are largely familiar, the new presentation improves clarity, simplifies compliance, and makes tax administration more technology-friendly.

For businesses, professionals, and deductors, understanding Section 393 before 1 April 2026 will be important to ensure accurate deduction, timely deposit, and smooth compliance.