It uses the FY 2026-27 thresholds, including ₹50,000 a year for professional fees, ₹20,000 for commission and ₹50,000 a month for rent. Under the Income-tax Act, 2025 these provisions sit in section 393; the familiar old section numbers are shown for clarity.
How TDS is calculated
TDS = Payment × Rate (only when the threshold is crossed)
- 194J
- Professional fees 10%, technical services 2%, above ₹50,000 a year
- 194C
- Contractors 1% (individual) or 2% (others), above ₹30,000 single or ₹1 lakh a year
- 194H
- Commission 2%, above ₹20,000 a year
- 194I
- Rent 10% (building) or 2% (machinery), above ₹50,000 a month
TDS is deducted on the amount excluding GST when GST is shown separately on the invoice. Once the yearly threshold is crossed, TDS applies to the payment that crosses it and later payments.
If the payee does not provide a valid PAN, TDS is deducted at 20% or the normal rate, whichever is higher. TDS must be deposited by the 7th of the following month (30 April for March) and reported in quarterly returns.
TDS compliance checklist for small businesses
Missing TDS can disallow 30% of the expense and attract interest and penalties.
- Get a TAN before you make your first TDS deduction.
- Collect PAN from every vendor at onboarding.
- Deposit TDS monthly and file quarterly returns (Form 26Q) on time.
- Issue TDS certificates to vendors after each quarter.