Section 393 Income Tax 2025: TDS Rates, Payments & Due Dates

Section 393 of the Income Tax Act, 2025 consolidates the provisions for tax deduction at source (TDS) for transactions other than salary into a single section. It replaces the older structure where TDS rules were spread across many sections in the old Act, making reference and insertion of new TDS provisions easier. The section groups common TDS rules for payments to residents and non-residents and covers a wide range of payments such as commission, rent, interest, dividend, payments to contractors and fees for professional or technical services. Salary-related TDS continues to be covered separately under Section 392 of the 2025 Act.

Section 393 applies to specified transactions taking place on or after 1 April 2026. Transactions undertaken up to 31 March 2026 remain governed by the provisions of the old Income Tax Act, 1961. This means taxpayers and deductors must follow the new consolidated TDS rules under Section 393 for payments made or credited from 1 April 2026 onwards. Transitional issues for payments spanning the date should be checked against the Act and any transitional guidance.

Section 393 covers a wide range of payments, including commission or brokerage, rent, payments on transfer of certain immovable property (other than agricultural land), income from the capital market, interest income, payments to contractors, fees for professional or technical services, and dividend. It also includes payments to both residents and non-residents and contains common provisions that apply to payments to any person. The consolidated list is meant to capture most non-salary transactions where TDS may be required to be deducted by the payer.

Section 393(4) lists specific situations where no TDS is required to be deducted. Examples include commission or brokerage payable by BSNL or MTNL to their public call office franchisees, rent payable to a REIT for a real estate asset, compensation on acquisition of certain immovable property exempt under the RFCTLA 2013, capital-gains-type income from mutual fund units, and certain categories of interest on securities and interest other than interest on securities paid to banks, insurance companies and specified institutions. The provision also exempts payments such as insurance commission, life insurance policy payments, accumulated PF balance payments to heirs, and specified cash payments to government entities, banks and white label ATMs as detailed in the statutory list.

Interest other than interest on securities is exempt from TDS under Section 393 when credited or paid to specified entities such as banking companies (including co-operative banks), financial corporations established under Central/State/Provincial Acts, Life Insurance Corporation of India, Unit Trust of India, companies or co-operative societies carrying on insurance business, and other prescribed institutions. Additionally, interest paid by a co-operative society to its member or to another co-operative society, and interest on deposits with primary agricultural credit societies or primary credit societies, is also within the nil-TDS list. These specific institutional and co-operative-route payments are carved out from TDS to avoid cascading withholding on institutional flows.

Yes, Section 393 exempts certain contractor and professional payments from TDS in defined circumstances. Payments for plying, hiring or leasing goods carriages governed by presumptive taxation provisions and sums credited or paid by individuals or Hindu Undivided Families (HUFs) for personal purposes are specifically excluded from TDS. These carve-outs prevent obliging small taxpayers or personal transactions to undergo TDS where the underlying law treats such receipts under presumptive or personal-expenditure rules.

Section 393(6) provides for the issuance of a nil-TDS certificate by tax authorities, allowing a payer to not deduct TDS or to deduct at a lower rate where appropriate. A nil-TDS certificate is typically granted after an application showing why deduction should not be made (for example, insufficient tax liability at source or specific exemptions), and once granted it relieves the payer from deducting TDS for the period and payments covered by the certificate. Taxpayers should apply as per the procedure in the Act and maintain the certificate to show correct withholding compliance to third parties and auditors.

Section 393 consolidates the numerous TDS provisions that were previously scattered across multiple sections of the old Income Tax Act, 1961 into a single, organized section for non-salary transactions. The reorganization was done to make reference easier and to facilitate insertion of new TDS provisions without disrupting numbering and flow of the statute; salary TDS remains separately located in Section 392 of the 2025 Act. For transactions up to 31 March 2026, the old 1961 Act provisions continue to apply, and taxpayers should check transitional rules where payments span the cutoff date.