Tag: Section 194A

TDS Rate Chart under Section 393 of the Income-tax Act, 2025: Rates and Thresholds for Payments to Residents (Tax Year 2026-27)

Posted on by CA Meet Dhrangadhariya

Last updated: 02 September 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • From 01/04/2026 all tax deduction at source on payments to residents is in the table in section 393(1) of the Income-tax Act, 2025: 1% or 2% for contractors, 2% or 10% for rent, 1% on property of ₹50 lakh or more, 10% for professional fees and 2% for technical services, 10% on dividend, 0.1% on goods bought above ₹50 lakh, 1% on virtual digital assets and 10% on benefits or perquisites above ₹20,000.
  • Where the table says “rates in force” (interest, lottery and game winnings, insurance commission, interest on securities), the rate comes from Part II of the First Schedule to the Finance Act 2026: 10% for interest, 30% for winnings, and 2% for insurance commission.
  • Salary is covered separately in section 392 at the average rate on estimated income; the old section letters (194C, 194J and so on) no longer exist in the Act.
  • The payer must deduct at the earlier of credit and payment, and tax is deducted on the whole amount once the threshold is crossed (section 393(1)(a) to (c)).

Tax Deducted at Source (TDS) is tax that the payer deducts when paying certain income. In the Income-tax Act, 2025 (from 01/04/2026), the sections 192 to 206AA of the old Act are gathered in Chapter XIX-B. Section 392 covers salary, and section 393(1) has one table for payments to residents. This post gives that table, with the old section numbers for reference.

How deduction works (section 393(1))

  • The payer deducts tax on the entire amount once the amount (or the total of amounts) exceeds the threshold in column D, at the rate in column D (section 393(1)(a) and (b)).
  • Tax is deducted at the earlier of the credit of the sum to the payee’s account and payment by cash, cheque, draft or any other mode (section 393(1)(c)).
  • The table is subject to the no-deduction rules, declarations and other provisions in sub-sections (4), (5), (6), (8) and (9).
  • A “specified person” is any person other than an individual or HUF, or an individual or HUF whose turnover exceeded ₹1 crore in business or ₹50 lakh in profession in the preceding tax year (section 2(37)).

The table for payments to residents

Table item Payment Old section Rate Threshold
1(i) Insurance commission 194D Rates in force (2% for a resident other than a company, per the Finance Act) ₹20,000
1(ii) Commission or brokerage (other than insurance) by a specified person 194H 2% ₹20,000
2(i) Rent by a person who is not a specified person 194-IB 2% ₹50,000 for a month or part of a month
2(ii) Rent by a specified person 194-I 2% for machinery, plant or equipment; 10% for land, building, furniture or fittings ₹50,000 for a month or part of a month
3(i) Consideration for transfer of immovable property (other than agricultural land) 194-IA 1% of the higher of consideration or stamp duty value ₹50 lakh (on consideration or stamp duty value)
3(ii) Consideration (not in kind) under a joint development agreement under section 67(14) 194-IC 10% Nil
3(iii) Compensation or consideration for compulsory acquisition of immovable property (other than agricultural land) 194LA 10% ₹5,00,000
4(i) Income in respect of units of specified mutual funds and the specified undertaking or company 194K 10% ₹10,000
4(ii) to (iv) Business trust, investment fund and securitisation trust income to unitholders and investors 194LBA, 194LBB, 194LBC 10% Nil
5(i) Interest on securities 193 Rates in force (10%) ₹10,000
5(ii) Interest (other than on securities) by a bank, co-operative bank or post office 194A Rates in force (10%) ₹1,00,000 for a senior citizen; ₹50,000 for others
5(iii) Interest (other than on securities) by other specified persons 194A Rates in force (10%) ₹10,000
6(i) Contract work, including supply of labour, by a designated person 194C 1% (individual or HUF contractor); 2% (others) ₹30,000 per sum; ₹1,00,000 in aggregate
6(ii) Contract work, professional fees, commission or brokerage by an individual or HUF who is not a specified person 194M 2% ₹50 lakh
6(iii) Fees for professional services, technical services, director’s remuneration not taxed as salary, royalty and certain other sums by a specified person 194J 10%; 2% for technical services (not professional), film royalty and call centres ₹50,000 (nil for director fees)
7 Dividend declared by a domestic company 194 10% Nil
8(i) Sum under a life insurance policy (including bonus) not exempt 194DA 2% of the income in the sum ₹1,00,000
8(ii) Purchase of goods by a buyer, on the sum exceeding ₹50 lakh 194Q 0.1% As per Note 1 (₹50 lakh)
8(iii) Total income of a specified senior citizen (75 or more with pension and interest from the same bank) by a specified bank 194P Rates in force As applicable
8(iv) Benefit or perquisite from business or profession of a resident, by a specified person 194R 10% of the value ₹20,000
8(v) Sale of goods or services by an e-commerce participant, by an e-commerce operator 194O 0.1% of the gross amount Nil
8(vi) Consideration for transfer of a virtual digital asset 194S 1% Nil

Other payments to any person (section 393(3))

Table item Payment Old section Rate Threshold
1 Winnings from a lottery, crossword puzzle, card game, gambling or betting 194B Rates in force (30%) ₹10,000 in a single transaction
2 Net winnings from an online game 194BA Rates in force (30%) As per Note 1 (net winnings in the user account)
3 Winnings from a horse race by a bookmaker or licence holder 194BB Rates in force (30%) ₹10,000 in a single transaction
4 Commission, remuneration or prize on lottery tickets 194G 2% ₹20,000
5 Cash withdrawal from accounts by a banking company, co-operative bank or post office 194N 2% ₹1 crore (₹3 crore for a co-operative society recipient)
6 Amount under the scheme for deposit-linked section 80CCA(2)(a) 194EE 10% ₹2,500
7 Salary, remuneration, commission, bonus or interest paid to a partner by a firm 194T 10% ₹20,000

Salary and provident fund (section 392)

  • Salary: the payer deducts tax at the average rate on the estimated income under the head salaries for the year, taking into account other income and losses the employee declares (section 392(1) and (4)).
  • Provident fund: the Employees’ Provident Fund Scheme trustees deduct 10% where an accumulated balance of ₹50,000 or more is taxable (section 392(7)).

Rates fixed by the Finance Act (where the table says “rates in force”)

Part II of the First Schedule to the Finance Act 2026 gives, for a person other than a company who is resident in India: 10% on interest other than interest on securities, 30% on winnings from lotteries, puzzles, card games and other games (other than online games), horse races and net winnings from online games, 2% on insurance commission, 10% on interest on listed debentures, local authority and government securities, and 10% on any other income. For a domestic company, the rate is 10% on interest and on any other income, and 30% on winnings.

Practical points

  1. Check “specified person” first. It decides whether rent is at 2% flat or at 2% and 10%, and whether the professional fee threshold or the ₹50 lakh rule applies.
  2. Property purchase: the buyer deducts 1% on the higher of the price and the stamp duty value when either is ₹50 lakh or more.
  3. Thresholds are annual (aggregate of the year) unless the table says a single payment or a month.
  4. Deposit on time and file the quarterly statement (Forms 138, 140, 144) with the due dates in the Rules.
  5. Check the no-deduction cases in section 393(4), the declaration in section 393(6) and the lower deduction certificate (Form 128).

How CSM & Co LLP can help

We handle TDS compliance for businesses and employers, including rate checks, deposit, statements, certificates and notices. Please reach out to our team and we will be happy to assist.

Frequently asked questions

Where are the TDS provisions in the 2025 Act?

In Chapter XIX-B. Section 392 deals with salary, section 393(1) with payments to residents (the table in this post), section 393(2) with payments to non-residents, section 393(3) with payments to any person (winnings, cash withdrawals, payments to partners and similar), section 393(4) to (9) with no-deduction cases, declarations and lower deduction, and sections 394 and 395 and later with collection, certificates and statements.

Is the rate for interest 10%?

Section 393(1) Table Sl. No. 5 says the rate for interest is “rates in force”. For the tax year 2026-27 Part II of the First Schedule to the Finance Act 2026 fixes it at 10% for a resident other than a company (interest other than interest on securities and interest on listed debentures, local authority securities and government securities, which are also 10%) and 10% for a domestic company.

Who is a “specified person” for TDS?

Any person other than an individual or HUF, and an individual or HUF whose total sales, gross receipts or turnover from business exceed ₹1 crore (or ₹50 lakh for profession) in the preceding tax year (section 2(37)). An individual or HUF below those limits is not a “specified person”.

What are the thresholds for contractors and professionals?

Contractors: ₹30,000 for a single payment or ₹1,00,000 in aggregate, at 1% (individual or HUF contractor) or 2% (others), when a designated person pays (Sl. No. 6(i)). Fees for professional services, technical services, royalty and director fees by a specified person: ₹50,000 (nil for director fees), at 10%, or 2% for technical services that are not professional services, certain film royalty and call centres (Sl. No. 6(iii)). An individual or HUF who is not a specified person pays 2% on contract work, professional fees and commission only when the sum exceeds ₹50 lakh in the year (Sl. No. 6(ii)).

Are the old section letters such as 194C and 194J still used?

Not in the Income-tax Act, 2025, which has table items instead (for example section 393(1), Table Sl. No. 6(i) for contract payments). The old letters are still widely used in practice and in older documents, so this post shows them as a reference..

Is there a penalty for not deducting?

Yes. Failure to deduct or pay attracts a penalty equal to the tax (section 448), and the payer can be treated as an assessee in default (section 391(3)); consult the interest, fee and disallowance provisions for the other consequences.

Official sources

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Tax on FD Interest: How to Pay Income Tax on Fixed Deposit Interest Income?

Posted on by CA Meet Dhrangadhariya

Last updated: 16 September 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • FD interest is added to your income and taxed at your slab rate, under Income from Other Sources.
  • Banks deduct 10% TDS once interest crosses ₹50,000 a year (₹1,00,000 for senior citizens) for FY 2025-26; the TDS may be less than the tax you owe.
  • Senior citizens in the old regime can claim up to ₹50,000 under section 80TTB; tax-saver FD principal qualifies under section 80C in the old regime.
  • Check Form 26AS, AIS and TIS before filing, and use Form 15G or 15H to avoid TDS if your income is below the taxable limit.

How to report FD interest in your return

1. Check FD interest in your bank statements, Form 26AS, AIS and TIS
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2. Add all FD interest to Income from Other Sources
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3. Claim section 80TTB (senior citizens, old regime) or section 80C (tax-saver FD, old regime) if eligible
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4. Compute tax on the total income at your slab rates
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5. Reduce the TDS already deducted by the bank
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6. Pay the balance as self-assessment tax, or claim a refund if TDS is more

Interest on a fixed deposit (FD) is added to your income and taxed at your normal slab rate. It is shown under “Income from Other Sources” in the return. The bank deducts TDS on the interest above a limit, but that TDS may be less than the tax you actually owe, so you may have to pay the balance yourself. Resident senior citizens in the old regime can claim a deduction of up to ₹50,000 on interest from savings accounts and deposits under section 80TTB.

Where can I check my FD interest?

Bank interest is easy to miss because it looks small, but under-reporting can lead to notices. You can check FD interest in:

  • your bank statements and interest certificates,
  • Form 26AS,
  • the Annual Information Statement (AIS), and
  • the Taxpayer Information Summary (TIS).

How to calculate tax on FD interest

  1. Add up the interest (earned or accrued in the year) from all FDs and banks for the year. Interest on a cumulative FD, where the interest is paid only at maturity, should be offered to tax every year as it accrues. Banks deduct TDS and report the interest in Form 26AS and the AIS on the same yearly basis, so offering it year by year keeps your return matching these records. Some individuals who follow the cash system of accounting offer it only on receipt. If you want to do that, speak to your professional first, because a mismatch with Form 26AS and the AIS can lead to a notice.
  2. Add it to your other income. Show it under Income from Other Sources.
  3. Claim the deductions that apply to you (see below).
  4. Tax is charged at your slab rates. The rate depends on your regime, age and residential status.
  5. Reduce the TDS shown in Form 26AS from your total tax. Pay the balance as self-assessment tax, or claim a refund if the TDS is more.

Deduction under section 80TTB (senior citizens)

  • Available to resident senior citizens (age 60 or more) in the old regime.
  • Covers interest on savings accounts, fixed deposits and recurring deposits with banks, post offices and co-operative banks.
  • The maximum deduction is ₹50,000, and it cannot exceed the interest earned.
  • Non-senior individuals can claim section 80TTA (up to ₹10,000), but only for savings account interest. It does not cover FD interest.

Deduction under section 80C (tax-saver FD)

In the old regime, the principal invested in a 5-year tax-saver FD qualifies under section 80C, within the overall limit of ₹1.5 lakh. The interest on such an FD is still taxable.

TDS on FD interest

  • Banks deduct TDS under section 194A at 10% when the interest in a year crosses the threshold. For FY 2025-26 the threshold is ₹50,000 for most depositors and ₹1,00,000 for senior citizens, applied bank by bank (branch by branch for banks with core banking).
  • If you have not given your PAN, TDS is deducted at a higher rate of 20%.
  • If your total income is below the taxable limit, you can submit Form 15G (below age 60) or Form 15H (senior citizens) to the bank so that no TDS is deducted. TDS being nil does not make the interest tax-free: it must still be reported in your return.
  • Under the Income-tax Act, 2025 the TDS provisions have new section numbers, but the rates and thresholds are carried forward unless the Finance Act changes them.

Final Word

FD interest is a regular part of most returns. Report all of it, check your 26AS and AIS before filing, and use the deductions that apply to you. Tax-saving FDs and senior citizen benefits help only in the old regime, so compare the two regimes before you choose.

Frequently asked questions

Is FD interest taxable?

Yes. FD interest is added to your income and taxed at your slab rate, whether or not TDS is deducted.

What is the TDS rate on FD interest?

Banks deduct TDS at 10% under section 194A once interest crosses the threshold, and at 20% if PAN is not provided.

What is the TDS threshold on FD interest?

For FY 2025-26 it is ₹50,000 a year for most depositors and ₹1,00,000 for senior citizens, applied bank by bank.

Can I claim a deduction on FD interest?

Resident senior citizens in the old regime can claim up to ₹50,000 under section 80TTB. Others cannot claim a deduction on FD interest; section 80TTA covers only savings account interest.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.