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TDS & Tax · TDS lesson 3 of 7
Sections, rates and limits
Each type of payment has its own rule: a section number, a limit below which no TDS is needed, and a rate.
How to read the chart
- Threshold — if the payment stays under this limit, TDS is not needed. Once it is crossed, TDS applies.
- Rate — the percentage deducted for a resident who has given a valid PAN.
- Section — we show the older (1961 Act) number that people still use. From 1 April 2026, the Income-tax Act 2025 collects most non-salary TDS into a single section, 393, with a table inside it. Salary is in section 392. The rates and limits below were largely carried over; the main change is how things are numbered and grouped.
Common payments (FY 2026-27)
| Older section | Payment | Limit before TDS applies | Rate |
|---|---|---|---|
| 192 | Salary | Depends on the employee's total income | Slab rates for that employee |
| 194 | Dividend | ₹10,000 a year | 10% |
| 194A | Interest from banks and post office | ₹50,000 a year (₹1,00,000 for senior citizens) | 10% |
| 194B | Lottery, game show or gambling winnings | ₹10,000 | 30% |
| 194C | Payment to a contractor or sub-contractor | ₹30,000 in one payment, or ₹1,00,000 in a year | 1% if paid to an individual or HUF; 2% for others |
| 194H | Commission or brokerage | ₹20,000 a year | 2% |
| 194I(a) | Rent of plant and machinery | ₹6 lakh a year (about ₹50,000 a month) | 2% |
| 194I(b) | Rent of land, building or furniture | ₹6 lakh a year (about ₹50,000 a month) | 10% |
| 194IA | Buying immovable property (not farm land) | ₹50 lakh or more | 1% |
| 194J(a) | Technical services, call-centre services and some royalty | ₹50,000 a year | 2% |
| 194J(b) | Other professional fees | ₹50,000 a year | 10% |
| 194Q | Buying goods from one seller (by larger buyers) | Purchases above ₹50 lakh in the year | 0.1% on the amount above ₹50 lakh |
| 194T | Payments by a partnership firm to its partners | ₹20,000 a year | 10% |
Chart prepared from public FY 2026-27 rate charts (including ClearTax) and rechecked against other 2026 sources. Limits and rates are changed from time to time — confirm on the Income Tax portal before real use.
Rent: a note on the limit
You may see rent limits written two ways: ₹6 lakh a year or ₹50,000 a month. They are the same idea. Rent paid by an individual or HUF that is not subject to a tax audit follows a slightly different rule with its own form and rate, so do not assume one rule covers every landlord.
Contractors: why two limits?
For contractor payments there are two tests. TDS applies if any single payment goes above ₹30,000 or if the total for the year goes above ₹1,00,000. Either one is enough.
GST on the bill
If GST is shown separately on an invoice, TDS is normally calculated on the amount without GST. If GST is not shown separately, TDS is calculated on the whole amount. Check the current official guidance before applying this at work.
Old section numbers and new ones
A new Act does not mean old habits vanish. Accountants, software and bank statements will use both for a while. A good beginner habit is to write both numbers next to each other in your notes, for example “194C (now under section 393)”.
Check yourself
1. A company pays a contractor (a partnership firm) ₹20,000 once. Earlier this year it has paid that contractor nothing else. Is TDS needed?
A single payment of ₹20,000 is below ₹30,000, and the year's total is below ₹1,00,000.
2. What is the usual rate for professional fees under 194J(b)?
Professional fees are generally 10%. Technical services are 2%.
3. Under the Income-tax Act 2025, most non-salary TDS is grouped in which section?
Section 393 collects most non-salary TDS. Section 392 is for salary.
4. What is the contractor rate when paying an individual?
1% for individuals and HUFs, 2% for others.
Learning material for beginners, checked in October 2026. It is not tax or legal advice. Tax rules, rates and due dates change, and different websites sometimes show different details. Always confirm on the Income Tax Department portal (incometax.gov.in) or with a Chartered Accountant before applying anything in real work. All names and amounts in the examples are made up.