Tax to be deducted at source.
393. (1) Where any income or sum of the nature specified in column B of the Table below, is credited or paid or distributed by the person specified in column C during the tax year, to a resident, the person responsible for paying such income or sum shall deduct income-tax,—
- on the entire amount of such income or sum, where the amount or aggregate of amounts exceeds the threshold limit specified in column D, or on sum as per Note 1 for serial number 8(ii), as the case may be;
- at the rate specified in column D;
- at the time of credit of such income or sum to the account of the payee or at the time of its payment in cash or by way of a cheque or a draft or by any other mode, whichever is earlier; and
- subject to the provisions of sub-sections (4), (5), (6), (8) and (9).
TABLE: FOR PAYMENTS TO RESIDENT
| Sl. No. (A) | Nature of Income or sum (B) | Payer (C) | Rate & Threshold Limit (D) |
|---|---|---|---|
| 1 |
(i) Any income by way of remuneration or reward, whether by way of commission or otherwise, for soliciting or procuring insurance business (including business relating to the continuance, renewal or revival of insurance policies).
(ii) Any income by way of commission [not being insurance commission referred to in serial number 1(i)] or brokerage.
|
Any person.
Specified person.
|
Rate: Rates in force.
Threshold: ₹ 20,000
Rate: 2%
Threshold: ₹ 20,000 |
| 2 |
(i) Any income by way of rent.
(ii) Any income by way of rent.
|
Person other than specified person.
Specified person.
|
Rate: 2%
Threshold: ₹ 50,000 for a month or part of a month.
Rate:
(a) 2% for machinery, plant, or equipment; (b) 10% for land, building, furniture, or fittings. Threshold: ₹ 50,000 for a month or part of a month. |
| 3 |
(i) Any consideration for transfer of any immovable property (other than agricultural land).
(ii) Any consideration, not being consideration in kind, under the agreement referred to in section 67(14).
(iii) Any sum, being in the nature of compulsory acquisition compensation/consideration under any law of any immovable property (other than agricultural land).
|
Person other than required to deduct under Sl. No. 3(iii).
Any person.
Any person.
|
Rate: 1% of higher of Consideration or Stamp Duty value.
Threshold: Fifty lakh rupees (See Note 1 & 3).
Rate: 10%
Threshold: Nil.
Rate: 10%
Threshold: ₹ 5,00,000. |
| 4 |
(i) Income from Mutual Fund units (Schedule VII), units from Administrator of specified undertaking, or specified company.
(ii) Distributed income ref to sec 223 payable to a unitholder of a Business Trust.
(iii) Income (not exempt under Schedule V) from units of an investment fund specified in sec 224.
(iv) Income from investment in a securitisation trust specified in sec 221.
|
Any person.
Any Business Trust.
Any Investment fund specified in section 224.
Any securitisation trust specified in section 221.
|
Rate: 10% | Threshold: ₹ 10,000
Rate: 10% | Threshold: Nil
Rate: 10% | Threshold: Nil
Rate: 10% | Threshold: Nil
|
| 5 |
(i) Interest on securities.
(ii) Interest other than interest on securities.
(iii) Interest other than interest on securities.
|
Any person.
Banking company, co-operative banking society, or notified Post Office scheme.
Specified person [other than Sl. No. 5(ii)].
|
Rate: Rates in force | Threshold: ₹ 10,000
Rate: Rates in force
Threshold: (a) ₹ 1,00,000 for Senior Citizens; (b) ₹ 50,000 for others. Rate: Rates in force | Threshold: ₹ 10,000
|
| 6 |
(i) Sum for carrying out any work under a contract with a designated person.
(ii) Work contract sum, professional fees, or non-insurance brokerage/commission.
(iii) Professional/technical fees, non-sec 392 director fees, royalty, or sec 26(2)(h) sum.
|
Any designated person.
Individual / HUF [other than those in 6(i), 6(iii), or 1(ii)].
Specified person.
|
Rate: (a) 1% if Individual/HUF; (b) 2% for others.
Threshold: ₹ 30,000 per single sum / ₹ 1,00,000 aggregate. Rate: 2% | Threshold: Fifty lakh rupees.
Rate: (a) 2% for technical services, film royalties, or call center ops; (b) 10% for others.
Threshold: ₹ 50,000 [Nil for director fees 6(iii)(c)]. |
| 7 | Any dividend declared (including preference shares). | Any domestic company. | Rate: 10% | Threshold: Nil. |
| 8 |
(i) Life Insurance Policy sum (including bonus) non-exempt under Schedule II.
(ii) Purchase of any goods exceeding fifty lakh rupees.
(iii) Total income of a specified senior citizen (post deductions/rebates).
(iv) Business/professional benefit or perquisite to a resident.
(v) E-commerce participant sales/services facilitated by operator.
(vi) Consideration for transfer of a virtual digital asset.
|
Any person.
Any person, being a buyer.
Specified bank.
Specified person.
Any e-commerce operator.
Any person.
|
Rate: 2% on income component | Threshold: ₹ 1,00,000
Rate: 0.1% | Threshold: As per Note 1
Rate: Rates in force | Threshold: As applicable
Rate: 10% of value | Threshold: ₹ 20,000
Rate: 0.1% of gross amount | Threshold: Nil
Rate: 1% | Threshold: Nil
|
Note 1 (Sl No. 2(i)): Tax shall be deducted at the time of credit or payment, whichever is earlier, for the last month of the tax year or the last month of tenancy.
Note 1 (Sl No. 3(i)): Consideration includes the aggregate of amounts paid/payable by all transferees to all transferors for the property threshold limit computations.
Note 2 (Sl No. 3): If both 3(i) and 3(ii) apply, tax shall be deducted under 3(ii) only.
Note 3 (Sl No. 3(iii)): Deduct where consideration or stamp duty value is equal to or greater than fifty lakh rupees.
Note 1 (Sl No. 5): If CBS (Core Banking Solutions) is not adopted, threshold computed per branch.
Note 2 (Sl No. 5): Payer may adjust excess/deficiency from previous periods during the tax year.
Note (Sl No. 6(i)): For work specified under sec 402(47)(e), tax is deducted on invoice value excluding materials if shown separately, else on the full invoice value.
Note (Sl No. 7): Tax must be deducted before making any distribution or payment of dividend.
Note 1 (Sl No. 8(ii)): (a) Does not apply if tax is deductible/collectible under other provisions. (b) Tax is deducted on the sum exceeding ₹50 Lakhs.
Note 2 (Sl No. 8(iv)): Applies to cash, kind, or mixed benefits. Payer must ensure deduction before providing the benefit.
Note 3 (Sl No. 8(v)): E-commerce provisions take precedence over this chapter. Direct client-to-seller payments facilitated by platforms are deemed operator payments. Exceptions apply for hosting advertisements or non-connected items.
Note 4 (Sl No. 8): If both 8(v) and 8(vi) apply, deduction must happen under 8(vi) only.
Note 5 (Sl No. 8(iii)): Senior citizen bank provisions take structural precedence over this entire chapter.
Note 6 (Sl No. 8(iv) & (vi)): For transactions in kind or mixed formats where cash isn’t enough, the provider must ensure tax has been paid before releasing the assets.
(2) Where any income or sum of the nature specified in column B of the Table below, is credited or paid by the person specified in column D during the tax year, to a non-resident specified in column C, the person responsible for paying shall such income or sum shall deduct income-tax on the amount of such income or sum,—
- at the rate specified in column E;
- at the time of credit of income or sum to the account of the payee or at the time of its payment in cash or by way of a cheque or a draft or by any other mode, whichever is earlier; and
- subject to the provisions of sub-sections (4), (8) and (9).
TABLE: FOR PAYMENTS TO NON-RESIDENT
| Sl. No. (A) | Nature of income or sum (B) | Payee (C) | Payer (D) | Rate (E) |
|---|---|---|---|---|
| 1 | Any income referred to in section 211. | (a) Non-resident non-citizen sportsman/entertainer; or (b) Non-resident sports association. | Any person. | 20% |
| 2 | Interest on foreign currency loans approved by Central Govt (Loan/bonds issued between 1st July 2012 and 1st July 2023, or long-term bonds between 1st Oct 2014 and 1st July 2023). | Any non-resident (non-company) or foreign company. | Any Indian company or business trust. | 5% |
| 3 | Interest on foreign currency borrowings via Rupee Denominated Bonds before 1st July 2023. | Any non-resident (non-company) or foreign company. | Any Indian company or business trust. | 5% |
| 4 | Interest on foreign currency borrowings via long-term or Rupee Denominated Bonds listed exclusively on an IFSC stock exchange. | Any non-resident (non-company) or foreign company. | Any Indian company or business trust. | (a) 4% (Bonds Apr 2020 – July 2023) (b) 9% (Bonds on/after 1st July 2023) |
| 5 | Any income by way of interest. | Any non-resident (non-company) or foreign company. | Any infrastructure debt fund (Schedule VII). | 5% |
| 6 | Distributed income (Sec 223) under Schedule V (Table Sl. 3). | Any non-resident/foreign company unitholder. | Any business trust. | (a) 5% for Sl. 3.B(a) (b) 10% for Sl. 3.B(b) |
| 7 | Distributed income (Sec 223) under Schedule V (Table Sl. 4). | Any non-resident/foreign company unitholder. | Any business trust. | Rates in force. |
| 8 | Units income (non-exempt under Schedule V) from an investment fund under sec 224. | Any non-resident/foreign company unitholder. | Any investment fund (Sec 224). | Rates in force. |
| 9 | Income from investment in a securitisation trust (Sec 221). | Any non-resident/foreign company investor. | Any securitisation trust (Sec 221). | Rates in force. |
| 10 | Income from Mutual fund units (Sched VII) or specified company units. | Any non-resident/foreign company. | Any person. | As per Note 2. |
| 11 | Income from units referred to in section 208. | Any offshore fund. | Any person. | 10% |
| 12 | Long-term capital gains from transfer of sec 208 units. | Any offshore fund. | Any person. | 12.5% |
| 13 | Interest or dividends from bonds or GDRs (Sec 209). | Any non-resident. | Any person. | 10% |
| 14 | Long-term capital gains from transfer of sec 209 bonds or GDRs. | Any non-resident. | Any person. | 12.5% |
| 15 | Income from securities in section 210(1). | Any Foreign Institutional Investor. | Any person. | As per Note 2. |
| 16 | Income from securities in section 210(1). | A specified fund (Schedule VI). | Any person. | 10% |
| 17 | Any interest (except Sl 2-5) or any other sum chargeable under the Act (excluding Salaries). | Any non-resident/foreign company. | Any person. | Rates in force. |
Note 1: For Sl. Nos 2, 3 and 4, the interest is taxable up to the limits calculated at rates approved by Central Government.
Note 2: For Sl. Nos 10 and 15, the tax deduction rate is 20%, or lower if covered by lower tax agreements under section 159(1)/(2)/(8).
Note 3 (Sl No. 17): (a) Government/PSU bank interest is deducted strictly at payment timeline. (b) Obligation covers all residents/non-residents whether or not the non-resident payee has a PE (permanent establishment), residence, or business connection in India.
(3) Where any income or sum of the nature specified in column B of the Table below, is credited or paid by the person specified in column C during the tax year, to any person, the person responsible for making payment of such income or sum, shall deduct income-tax—
- on the entire amount of such income or sum, where the amount or aggregate of amounts exceed the threshold limit specified in column D, or on net winnings as per Note 1 of the Table;
- at the rate specified in column D;
- at the time of payment thereof in cash or by way of a cheque or a draft or by any other mode, or as specified therein; and
- subject to the provisions of sub-sections (4), (5), (6), (8) and (9).
TABLE: FOR PAYMENTS TO ANY PERSON
| Sl. No. (A) | Nature of income or sum (B) | Payer (C) | Rate & Threshold Limit (D) |
|---|---|---|---|
| 1 | Winnings from lottery, crossword puzzles, card games, or gambling/betting of any sort (excluding online games). | Any person. | Rate: Rates in force Threshold: ₹ 10,000 per single transaction |
| 2 | Winnings from online games. | Any person. | Rate: Rates in force Threshold: As per Note 1 |
| 3 | Winnings from horse racing. | Bookmakers or licensed racecourse operator personnel. | Rate: Rates in force Threshold: ₹ 10,000 per single transaction |
| 4 | Commission, remuneration, or prize to lottery ticket stockists, distributors, or agents. | Any person. | Rate: 2% Threshold: ₹ 20,000 |
| 5 | Cash withdrawals from accounts maintained by a recipient. | Banking company, co-operative banking society, or post office. | Rate: 2% Threshold: (a) Three crore rupees for co-operative societies; (b) One crore rupees for others. |
| 6 | Amounts referred to in section 80CCA(2)(a) of the IT Act, 1961. | Any person. | Rate: 10% Threshold: ₹ 2,500 |
| 7 | Salary, remuneration, commission, bonus, or interest paid/credited to a partner of the firm. | Any person, being a firm. | Rate: 10% Threshold: ₹ 20,000 |
Note 1 (Sl No. 2): Online game winnings are taxed on (a) net winnings at the end of the tax year; (b) at withdrawal on the net winnings comprised in such withdrawal alongside final year-end calculations.
Note 2 (Sl Nos 1 & 2): If winnings are wholly or partially in kind, the payer must ensure tax has been recovered/paid before releasing the items.
Note 3 (Sl No. 4): Deduction must occur at the earlier of credit or payment tracking modes.
(4) The deduction of tax at source shall not be made under the provisions referred to in column B of the Table below, in respect of the income or sum along with the conditions, specified in column C:
TABLE: FOR NO DEDUCTION AT SOURCE
| Sl. No. (A) | Provisions for tax deduction at source (B) | Condition for no deduction on income or sum (C) |
|---|---|---|
| 1 | Commission/Brokerage [Sec 393(1) Table Sl. 1(ii)]. | Payable by BSNL or MTNL to their public call office (PCO) franchisees. |
| 2 | Rent [Sec 393(1) Table Sl. 2(ii)]. | Paid/credited to a REIT (Real Estate Investment Trust) for assets owned directly by the trust. |
| 3 | Property Acquisition Compensation [Sec 393(1) Table Sl. 3(iii)]. | Exempted under section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. |
| 4 | Mutual Fund Units [Sec 393(1) Table Sl. 4(i)]. | If the income is fundamentally of the nature of Capital Gains. |
| 5 | Business Trust Units [Sec 393(1) Table Sl. 4(ii)]. | Income under Sched V (Sl 3.B(b)) if the SPV (Special Purpose Vehicle) hasn’t exercised options under section 200. |
| 6 | Interest on Securities [Sec 393(1) Table Sl. 5(i)]. |
|
| 7 | Other Interest [Sec 393(1) Table Sl. 5(ii) and 5(iii)]. |
|
| 8 | Contractor Payments [Sec 393(1) Table Sl. 6(i)]. |
|
| 9 | Professional/Technical Fees [Sec 393(1) Table Sl. 6(iii)]. | Sums paid by an Individual or HUF strictly for personal/household purposes. |
| 10 | Dividends [Sec 393(1) Table Sl. 7]. | Dividend income credited or paid directly to LIC, GIC (or its 4 core entities), or any other insurer. |
For the purposes of this Chapter, “specified person” means—
- any person, not being an individual or Hindu undivided family; or
- an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed one crore rupees in case of business or fifty lakh rupees in case of profession during the tax year immediately preceding the tax year in which such income or sum is credited or paid.
Collection of tax at source.
394. (1) Every person, as specified in column C of the Table below shall collect tax—
- on receipts specified in column B;
- at the rate as specified in column D; and
- at the time of debiting of the amount payable by the buyer or licensee or lessee to the account of the buyer or licensee or lessee or at the time of receipt of such amount from the said buyer or licensee or lessee in cash or by way of a cheque or a draft or by any other mode, whichever is earlier.
TABLE: TAX COLLECTION AT SOURCE
| Sl. No. (A) | Nature of receipt (B) | Person (C) | Rate of Tax Collected at Source (D) |
|---|---|---|---|
| 1 | Sale of alcoholic liquor for human consumption. | Seller. | 2% |
| 2 | Sale of tendu leaves. | Seller. | 2% |
| 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% |
| 4 | Sale of scrap. | Seller. | 2% |
| 5 | Sale of minerals, being coal or lignite or iron ore. | Seller. | 2% |
| 6 |
Sale consideration exceeding ten lakh rupees in case of—
|
Seller. | 1% |
| 7 | Remittance under the Liberalised Remittance Scheme of an amount or aggregate of the amounts exceeding ten lakh rupees— | Authorised dealer. |
(a) 2% for purposes of education or medical treatment; (b) 20% for purposes other than education or medical treatment. |
| 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% |
| 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% |
(2) Irrespective of anything contained in sub-section (1) (Table: Sl. Nos. 1 to 5), the collection of tax shall not to be made in respect of receipts specified in sub-section (1) (Table: Sl. Nos. 1 to 5) in respect of the buyer, who is a resident in India, if he furnishes a written declaration in duplicate in such form and manner, as may be prescribed, to the person responsible for collecting tax, mentioning that such 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.
(3) Where no collection of tax is to be made under sub-section (2), the person responsible for collecting tax shall deliver or cause to be delivered, one copy of the declaration referred to in that sub-section, to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, on or before the seventh day of the month following the month of receipt of that declaration.
(4) LRS Exemption Conditions (Sl. No.7): The collection of tax shall not be made by the authorised dealer in respect of receipt specified in sub-section (1) (Table: Sl. No.7),—
- on such amount on which tax has been collected by the seller in respect of receipt referred to in sub-section (1) (Table: Sl. No. 8);
- if the amount being remitted out is a loan obtained from any financial institution as defined in section 129(3)(b), for the purpose of pursuing any education.
(5) Double-Taxation Overlap Guard: The collection of tax shall not be made by the authorised dealer or seller, in respect of receipt specified in sub-section (1) (Table: Sl. Nos. 7 and 8), if the buyer is liable to deduct tax at source under any other provisions of this Act and he has deducted such tax.
(6) Definitions: For the purposes of this section, “forest produce” shall have the same meaning as defined in any State Act for the time being in force, or in the Indian Forest Act, 1927 (16 of 1927).
Certificates.
(1) Lower or No Deduction of Tax at Source
395. (1) Where tax is required to be deducted on any income or sum under this Chapter, then subject to the rules made under this Act,—
- the payee may make an application before the Assessing Officer for deduction of income-tax at a lower rate or no deduction of income-tax, as the case may be; and
- the Assessing Officer on being satisfied that the total income of the payee justifies deduction of income-tax at a lower rate or no deduction of income-tax, as the case may be, shall issue to him a certificate as appropriate; and
- when a certificate is issued under clause (b), the person responsible for paying the income or sum shall deduct the tax at the rate specified in such certificate, or deduct no income-tax, as the case may be, till its validity.
(2) Determination of Chargeable Proportion for Non-Residents
- The person responsible for paying to a non-resident any sum as mentioned in section 393(2) (Table: Sl. No. 17), may make an application to the Assessing Officer in such form and manner as may be prescribed, where he considers that the whole of such sum would not be chargeable in the case of the recipient;
- the application under clause (a) shall be for determination of the appropriate proportion of the sum chargeable to tax, by the Assessing Officer in the manner as may be prescribed; and
- when the determination is made by the Assessing Officer as per clause (b), the tax shall be deducted under section 393(2) (Table: Sl. No. 17) only on that proportion of sum which is chargeable to tax under the Act.
(3) Lower Collection of Tax at Source
(3) Where tax is required to be collected on any amount under this Chapter, then subject to the rules made under this Act,—
- the buyer or licensee or lessee may make an application before the Assessing Officer for collection of tax at a lower rate;
- the Assessing Officer on being satisfied that the total income of the buyer or licensee or lessee justifies collection of tax at a lower rate, shall issue to him a certificate as may be appropriate; and
- when a certificate is issued under clause (b), the person responsible for collecting tax shall collect it at the rates specified in such certificate till its validity.
(4) Issuance of Certificate to Deductee / Collectee / Employee
-
Every person deducting or collecting tax shall issue a certificate to the deductee or collectee, as the case may be, within such period as may be prescribed, specifying—
- the amount of tax that has been deducted or collected;
- the rate at which tax has been deducted or collected; and
- any other particulars, as may be prescribed.
-
An employer referred to in section 392(2)(a) shall issue a certificate to the employee, in respect of whose income payment of tax has been made by the employer, that the tax has been paid to the Central Government, within such period, as may be prescribed, and specify—
- the amount of tax so paid;
- the rate at which tax has been paid; and
- any other particulars, as may be prescribed.
(5) Power to Cancel Certificates
(5) The Assessing Officer may cancel the certificate granted under sub-section (1) or (3) after giving reasonable opportunity to the applicant.
All applications and certificates issued under Section 395 are strictly bound by the rules prescribed under this Act. Lower or Nil deduction/collection rates are applicable only within the specified periods of validity noted on the Assessing Officer’s certified document unless canceled prematurely under sub-section (5).
For the purposes of this Chapter, “specified person” means—
- any person, not being an individual or Hindu undivided family; or
- an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed one crore rupees in case of business or fifty lakh rupees in case of profession during the tax year immediately preceding the tax year in which such income or sum is credited or paid.