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The 2-Minute Summary
Section 393(1) Sl. No. 6(ii) applies to any individual or HUF who is not already required to deduct TDS under Sl. 6(i) (contractor payments by designated persons), Sl. 6(iii) (professional/technical fees by specified persons), or Sl. 1(ii) (commission/brokerage by specified persons).
Put simply, this catches individuals and HUFs who fall outside those categories but make large payments for contract work, professional services, or commission. The trigger is Rs. 50 lakh in aggregate to a single person in a Tax Year. The rate is 2%. No TAN is needed.
Example: A wealthy individual pays Rs. 30 lakh to an architect and Rs. 25 lakh to a contractor for building a private bungalow. Total = Rs. 55 lakh. Since this exceeds Rs. 50 lakh, TDS of 2% on Rs. 55 lakh = Rs. 1,10,000 must be deducted and deposited via Form 26QD.
Under Income Tax Act 1961: Section 194M of the Income Tax Act 1961. Now Section 393(1) Sl. No. 6(ii) of the Income Tax Act 2025. Rate and threshold unchanged.
At a Glance
| Item | Details |
| New Act Reference | Section 393(1), Sl. No. 6(ii) of Income Tax Act 2025 |
| Old Act Reference | Section 194M of Income Tax Act 1961 |
| Payer covered | Any individual or HUF not required to deduct under Sl. 6(i), 6(iii) or Sl. 1(ii) |
| Rate | 2% |
| Threshold | Rs. 50 lakh aggregate in the Tax Year to a single payee |
| Payments covered | (a) Contract work (including supply of labour); (b) Professional fees; (c) Commission or brokerage (other than insurance commission) |
| TAN Required | No |
| Form to Deposit TDS | Form 26QD |
| Due Date | 30 days from end of month of deduction |
| TDS Certificate | Form 16D to payee within 15 days of filing Form 26QD |
Exact Provision from the Act
Section 393(1) Sl. No. 6(ii) reads: Any sum (a) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract; or (b) by way of fees for professional services; or (c) by way of commission (not being insurance commission referred to in Sl. No. 1(i)) or brokerage.
Payer: Any person being an individual or Hindu undivided family other than those required to deduct income-tax as per Sl. No. 6(i) and (iii) or Sl. No. 1(ii).
Rate: 2%. Threshold: Rs. 50 lakh.
Who This Applies To
Sl. 6(ii) applies to an individual or HUF who is not any of the following:
- A designated person under Sl. 6(i) (which includes companies, firms, trusts, government bodies, and individuals or HUFs with turnover exceeding Rs. 1 crore in business or Rs. 50 lakh in profession in the preceding Tax Year).
- A specified person under Sl. 6(iii) (same definition as designated person for that purpose).
- A specified person under Sl. 1(ii) for commission and brokerage purposes.
In practical terms, this covers high-net-worth individuals and HUFs who are not liable to tax audit and are making large personal or investment-related payments for services.
Threshold: Rs. 50 Lakh Aggregate
The threshold is aggregate payments of the same nature to the same payee in the Tax Year. Payments for contract work, professional services, and commission are aggregated together. Once the cumulative total crosses Rs. 50 lakh, TDS at 2% applies on the entire amount from the crossing point.
Example: A doctor (professional receipts below Rs. 50 lakh, not a specified person) pays Rs. 20 lakh to a contractor, Rs. 15 lakh to an architect, and Rs. 18 lakh to an interior designer. Total = Rs. 53 lakh. TDS of 2% on Rs. 53 lakh = Rs. 1,06,000 must be deducted.
No TAN: Use Form 26QD
Section 397(1)(c) of the Act exempts persons making payments under Sl. 6(ii) from the requirement of obtaining a TAN. TDS is deposited using Form 26QD on the income tax portal, using the deductor’s PAN and the payee’s PAN.
Practical Compliance Checklist
- Track cumulative payments to each contractor, professional, and commission agent during the year. Once any single payee’s total crosses Rs. 50 lakh, deduct 2% TDS on the crossing amount and all subsequent payments.
- File Form 26QD within 30 days from the end of the month in which TDS was deducted. No TAN required.
- Issue Form 16D to the payee within 15 days of filing Form 26QD.
- This provision applies even to purely personal payments. Building a home with aggregate contractor and architect payments above Rs. 50 lakh triggers Sl. 6(ii).
Sl. 6(ii) closed the gap that previously allowed individuals below the tax audit threshold to make crore-level payments without any TDS obligation. The Rs. 50 lakh threshold keeps routine household payments outside the provision while ensuring large transactions are tracked.
