How TDS Rates and Thresholds Work under Section 393
Section 393 of the Income-tax Act 2025 consolidates the erstwhile TDS provisions of the 1961 Act (Sections 192 to 194-something and beyond) into a single restructured framework, but the underlying mechanics remain the same: a specified 'deductor' must withhold tax at a prescribed percentage from specified payments at the time of credit or payment, whichever is earlier, and remit it to the government within the statutory timeline (generally the 7th of the following month, or 30 April for March deductions).
Each payment category — salary, interest on securities, dividend, contractor payments, rent, professional/technical fees, commission/brokerage, and non-resident payments — carries its own rate and its own minimum threshold below which no deduction is required. For example, contractor payments under the relevant clause attract 1% (individual/HUF payee) or 2% (other payees) TDS above a per-transaction threshold of ₹30,000 or an aggregate annual threshold of ₹1,00,000, whichever triggers first.
Failure to deduct or a short deduction of TDS makes the deductor liable for interest under Section 399(3) (1% per month for late deduction, 1.5% per month for late deposit after deduction) and can result in disallowance of the corresponding expense under Section 39(4) (successor to Section 40(a)(ia)) when computing the deductor's own taxable income — a compounding cost beyond the TDS amount itself.
This chart is maintained against the latest CBDT rate notifications and Finance Act amendments so you can quickly confirm the correct rate and threshold for a payment before processing it, rather than relying on memory or an outdated reference sheet.
Reference Snapshot: Common TDS Categories for FY 2026-27
A sample of frequently used TDS categories and their FY 2026-27 rates and thresholds (see the full chart tool for the complete list).
Frequently Asked Questions (FAQs)
What is the TDS rate on payments to a contractor for individual payees?
1% for individual and HUF payees, and 2% for all other payees (companies, firms, etc.), applicable once payments cross ₹30,000 in a single transaction or ₹1,00,000 in aggregate for the financial year.
Is there a threshold below which no TDS is required?
Yes, every TDS category carries its own minimum threshold — for example ₹2,40,000 per annum for rent, ₹30,000 for professional fees, ₹15,000 for commission. Payments below the relevant threshold do not attract TDS, but once the threshold is crossed, deduction typically applies on the entire amount, not just the excess.
What happens if TDS is not deducted at all?
The deductor is liable for interest under Section 399(3) at 1% per month from the date deduction was due until actual deduction, plus a further 1.5% per month for late deposit after deduction. In addition, 30% of the underlying expense can be disallowed under Section 39(4) when computing the deductor's own business income.
Does TDS on salary use a fixed rate like other categories?
No. Salary TDS under Section 192 is computed at the employee's applicable slab rate based on estimated annual income and the tax regime they have opted for, recalculated periodically through the year — it is not a flat percentage like most other TDS categories.
Are TDS rates different for non-resident payees?
Yes, payments to non-residents are governed by a separate set of provisions (successor to Section 195) with rates that can be higher and are subject to applicable Double Taxation Avoidance Agreement (DTAA) benefits, which this general rate chart does not cover — non-resident payments require a distinct assessment.