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A small business owner does not know which of the firm's regular payments require TDS and which do not.
Map each payment to one of about ten everyday TDS types, check the type of limit (per bill, yearly or monthly), then apply the current rate.
Vendor master tagged by payment type, with PAN, deductee type and the section or Section 393 payment code.
A short list of which bills need TDS each month and which can be paid in full.
Most TDS (tax deducted at source) in a small business comes from about ten everyday payments: contractors, professional fees, rent, commission, interest, large goods purchases, e-commerce payouts, business benefits, payments to non-residents and buying property. Each has its own trigger, its own type of limit and its own section. This page maps them in plain language.
From 1 April 2026, these sit in Section 393 of the Income-tax Act 2025, with a payment code for each. The old Section 194 numbers still apply to deductions made up to 31 March 2026, and most people still use them in conversation, so both appear below.
Which everyday payments attract TDS?
| Payment | Everyday example | What triggers TDS | Often surprises | Old section |
|---|---|---|---|---|
| Contractor work | Freight, housekeeping, printing, repairs | Bill above ₹30,000 or year above ₹1,00,000 | Freight and AMC bills | 194C |
| Professional or technical fees | CA, lawyer, consultant, IT support | Year above ₹50,000 | Small monthly retainers adding up | 194J |
| Rent | Office, godown, machinery hire | Above ₹50,000 per month or part of a month | Machinery hire counts as rent | 194-I |
| Commission or brokerage | Sales agents, brokers | Year above ₹20,000 | Gateway and agent fees | 194H |
| Interest (non-bank payer) | Interest on a loan from a director or another firm | Year above ₹10,000 | Unsecured loans | 194A |
| Purchase of goods | Raw material from one big supplier | Purchases from one seller above ₹50 lakh, buyer turnover above ₹10 crore | Only large buyers | 194Q |
| E-commerce payouts | Amazon or Flipkart paying a seller | Platform deducts 0.1% | Seen from the seller’s side | 194O |
| Business benefits | Dealer trips, free gifts to distributors | Year above ₹20,000 | Gifts in kind | 194R |
| Payments to non-residents | Foreign software or consultants | Most payments; rates vary | Overseas subscriptions | 195 |
| Buying property | Office purchase | Price ₹50 lakh or more, 1% | One-off, easy to miss | 194-IA |
Rates and limits change in the Budget. Check the current figures in the payment code reference before you deduct.
How do I tell a contract from a purchase, and fees from commission?
Three quick tests help.
- Who supplied the material? If the supplier sells you finished goods off the shelf, it is a purchase. If they make or do something to your specification, it is usually a contract.
- Is it skill or labour? Fees for a professional skill (legal, medical, accounting, engineering) or technical know-how are fees. Routine labour or work is a contract.
- Is someone acting for you? If an agent earns a cut for selling or buying on your behalf, it is commission. If they provide a service to you directly, it is not.
Worked example: a trading firm’s month
A small electrical goods trader (a company) paid these bills in July 2026. Its turnover last year was ₹8 crore.
| Payment | Amount | TDS? | Illustrative TDS |
|---|---|---|---|
| Consultant, first bill of the year | ₹60,000 | Yes, above ₹50,000 yearly; 10% | ₹6,000 |
| Rent for the shop | ₹2,50,000 | Yes, above ₹50,000 a month; 10% | ₹25,000 |
| Freight, one bill, transport company | ₹85,000 | Yes, above ₹30,000; 2% | ₹1,700 |
| Raw material from a supplier | ₹4,00,000 | No, turnover below ₹10 crore | ₹0 |
| Total | ₹7,95,000 | ₹32,700 |
The firm deposits ₹32,700 by 7 August 2026. It pays out ₹7,95,000 − ₹32,700 = ₹7,62,300.
Where do I check the current rate and limit?
Use two sources together: the site’s payment code reference for the current code and rate, and the section mapping article to see where each old section moved. Recheck after each Budget, usually presented on 1 February.
What to read next
- Next: how to choose the right TDS section for a vendor bill.
- Reference: TDS payment codes 1001 to 1092.
- Old to new: Income-tax Act 2025 TDS section mapping.
TransactIG reconciles TDS deducted and deposited against your books and bank, so a bill paid without the right deduction shows up in the exception queue.