Taxation
How to Make Your Business Compliant? The ( Section 393) TDS Master Table Every Founder Needs
Updated on: April 8, 20266 mins505 views
Quick Summary
Running a business in India comes with many compliance requirements. One critical aspect is understanding and managing Tax Deducted at Source (TDS) correctly, especially for businesses that pay salaries, rent, fees to professionals, or commissions. If you run such a business, you are legally required to deduct a small % of tax before paying. This is called TDS. Section 393 of the Income Tax Act governs TDS, and failure to comply can result in penalties, legal issues, and cash flow problems.
For founders, startups, and business owners, knowing the Section 393 TDS master table is essential. This blog shows you exactly what to deduct, when, and helps you make informed decisions, stay compliant, and avoid costly mistakes. Don’t let TDS compliance slow your growth. Get clarity with our easy guide.
Founder’s Compliance Formula
To ensure your startup stays audit-ready, apply the Rule of Three:
- Identify: Match the payment to the Sl. No. in the 393 Table.
- Verify: Check if the vendor's PAN is active and if they are a "specified person" (non-filer).
- Trigger: Deduct at the time of booking the invoice, waiting for the actual bank transfer is the main cause of interest penalties.
Pro-Tip: Interest for late deduction is 1% per month, but late deposit is 1.5 % per month. A one-day delay in depositing can cost you a full month's interest!
| Payment Nature | Ref. Sl. No. (Sec 393) | Threshold Limit | TDS Rate |
| Professional Fees (Doctors, CAs, Lawyers) | 6(iii).D(b) | ₹50,000 | 10% |
| Technical Services (IT, SaaS, Engineering) | 6(iii).D(a) | ₹50,000 | 2% |
| Contractor Payments (Individuals/HUF) | 6(i).D(a) | ₹30,000 / ₹1L | 1% |
| Contractor Payments (Companies/Firms) | 6(i).D(b) | ₹30,000 / ₹1L | 2% |
| Rent (Land & Building) | 2(ii).D(b) | ₹50,000 / month | 10% |
| Rent (Plant & Machinery) | 2(ii).D(a) | ₹50,000 / month | 2% |
| Commission or Brokerage | 1(ii) | ₹20,000 | 2% |
| Purchase of Goods (Turnover > $₹10Cr$) | 8(ii) | ₹50,00,000 | 0.1% |
| Partner Remuneration (New!) | 10 (Sl. 7) | ₹20,000 | 10% |
What is Section 393 TDS?
If you make certain payments such as salary, rent, contractor payments, professional fees, commission, or interest, you may need to deduct Tax Deducted at Source (TDS) before making the payment. Section 393 TDS requires businesses to deduct tax on specified payments like salaries, rent, and contractor fees, based on a master table of rates.
Deducting and depositing TDS on time avoids penalties and helps maintain business compliance. Here are some key points of this section 393 covers:
- Section 393 of the Income Tax Act mandates that businesses deduct tax at source on certain payments.
- TDS is a mechanism to collect tax in advance.
- It applies to payments like salaries, contractor payments, rent, professional fees, interest, and more.
- The deducted tax must be deposited with the government within specified timelines.
- This ensures businesses contribute to tax collection and maintain transparent records
Who Needs to Comply with Section 393 TDS?
- Business owners across sectors
- Startup founders managing payroll and vendor payments
- NGO founders receiving and making payments
- Entrepreneurs paying professional fees, rent, or contractors
- NRIs or foreign investors running Indian businesses
- Companies and LLPs registered in India
Eligibility Criteria for Deducting TDS under Section 393
You must deduct TDS if your payment meets these thresholds:
| Payment Type | Threshold Limit (Rs.) | TDS Deduction Required? |
| Salary | Any amount | Yes, as per the income tax slabs |
| Rent (Land/Building) | More than 2,40,000 per annum | Yes, usually 10% |
| Contractor Payments | More than 30,000 per transaction | Yes, usually 1-2% |
| Professional Fees | More than 30,000 per transaction | Yes, 10% |
| Interest on Securities | More than 5,000 per annum | Yes, 10% |
| Commission / Brokerage | More than 15,000 per annum | Yes, 5% |
*Note: Threshold limits and rates may vary based on government notifications.*
Documents Required for Section 393 TDS Compliance
| Document | Purpose |
| PAN of Deductee | To correctly report TDS and avoid higher TDS rates |
| TAN of Deductor | Required for TDS deposit and returns filing |
| Payment Vouchers / Invoices | To verify payment details and amounts |
| TDS Challan Receipt | Proof of TDS deposit |
| Form 16 / 16A | TDS certificate for employees/vendors |
| Bank Statements | To reconcile payments and TDS deductions |
Step-by-Step Guide to TDS Compliance Under the Income Tax Act
To keep your business protected from the steep penalties of the Income Tax Act, 2025, here is your stepwise roadmap curated by Taxlegit’s experts to become TDS compliant:
1. Identify the applicable payment: The first step in TDS compliance is to check whether the payment falls under any TDS provision of the Income Tax Act. Common examples include salary, rent, payments to contractors, professional fees, commission, and interest payments.
2. Check the threshold limit: Each TDS section has its own threshold limit. TDS applies only when the payment crosses the prescribed limit, which may be based on a single transaction or the total amount during the year. So, before deducting tax, always compare the payment amount with the applicable limit.
3. Deduct TDS at the correct rate: Once the payment becomes taxable under TDS rules, deduct tax at the correct rate under the relevant section. Using the correct rate is important to avoid short deductions or compliance issues.
4. Deposit TDS on time: After deducting TDS, the amount must be deposited with the government within the due date. Timely deposit helps avoid interest and late payment problems.
5. File TDS returns: TDS compliance also includes filing quarterly returns with the Income Tax Department. For salary payments, businesses usually file Form 24Q, while for other payments, they generally file Form 26Q.
6. Issue TDS certificates: After filing the return, the deductor must give the TDS certificate to the deductee. Form 16 is issued for salary, and Form 16A is issued for most other payments.
7. Maintain proper records: Keep all important documents safely, including invoices, payment vouchers, TDS challans, return acknowledgements, and issued certificates.
Important note: Your draft earlier mentioned “Section 393 TDS,” but that is not the correct reference under the Income Tax Act. If you are writing a blog, it is better to use the correct section name or keep the topic broad as TDS Compliance Under the Income Tax Act.
Common Mistakes to Avoid
- Delaying TDS deduction or deposit beyond the due date, which can lead to interest and compliance issues.
- Applying the wrong TDS rate or ignoring the applicable threshold limit before deduction.
- Entering incorrect PAN details or not collecting PAN at all, which may result in higher TDS deduction.
- Missing the due date for the quarterly TDS return filing.
- Failing to issue TDS certificates to deductees within the prescribed time.
- Keeping poor records, which can create problems during audits, assessments, or verification.
Impact of Section 393 TDS on Business Decisions
1. Cash Flow Management: Deducting TDS reduces payment amounts to vendors; plan cash accordingly.
2. Vendor Relations: Clear communication about TDS deduction builds trust and transparency.
3. Budgeting: Factor in TDS deposits and penalties (if any) into your financial planning.
4. Compliance Costs: Allocate resources for compliance tasks or hire professional help.
5. Avoiding Penalties: Non-compliance can lead to fines, interest on late deposits, and legal scrutiny.
Bottom line: Accurate record-keeping is the backbone of TDS compliance. By streamlining your documentation and seeking an expert tax consultant’s advice, you guarantee faster returns and total penalty protection.
Frequently Asked Questions ( FAQs )
Q1: When should I deduct TDS under Section 393?
A1: TDS must be deducted at the time of payment or credit to the payee, whichever is earlier.
Q2: What happens if I miss the TDS deposit deadline?
A2: You may face interest charges and penalties up to 1% per day of delay until TDS is deposited.
Q3: Can I pay TDS after the financial year ends?
A3: Yes, but interest and penalties will apply for late payment.
Q4: Is TDS applicable to all payments my business makes?
A4: No, only specified payments that meet threshold limits under Section 393.
Q5: How do I file TDS returns?
A5: TDS returns are filed quarterly online via the Income Tax Department portal using Form 24Q (salary) or 26Q (others).
Q6: What documents do I need to issue TDS certificates?
A6: You need the deductee PAN, payment details, TDS challan, and return filing confirmation.
Q7: Are NRIs subject to Section 393 TDS?
A7: Yes, if they receive payments subject to TDS within India.
Q8: Can I claim TDS deducted by my business in my income tax return?
A8: Yes, the TDS deducted can be claimed as a credit against your total tax liability.
