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.

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 Deductors: 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 Deductors

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

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:

• Commission or brokerage

• Rent

• Payment on transfer of immovable property (other than agricultural land)

• Interest income

• Dividend

• Contractor payments

• Professional and technical fees

• Capital market related income

• Certain payments relating to virtual digital assets and specified transactions under the new framework

TDS Chart for Payments to Residents

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

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

Nil or Lower TDS Certificate

Apart from Nil deduction under Section 393(6), the law also allows a lower deduction certificate.

Where a taxpayer believes that the normal TDS rate is higher than actual tax liability, an application can be made to the department. Under the new framework, Form 121 is relevant for Nil or lower deduction requests.

Once the certificate is issued, the deductor may deduct tax at:

• Nil rate, or

• lower specified rate

This helps avoid excess deduction and unnecessary refund claims later.

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.