TDS on Advertising & Marketing FY 2026-27: Section 393 Classification Guide

For FY 2026-27, TDS on advertising and marketing expenditure is governed by the Income-tax Act, 2025, mainly through Section 393. The familiar old references—Sections 194C, 194I, 194J and 194R—remain useful for understanding legacy contracts and search terminology, but payments made from 1 April 2026 should be classified using the current Section 393 tables.

1. Advertising contracts: current contractor-payment rule

Section 393 Table 6(i) covers sums paid for carrying out work, including supply of labour, under a contract between a contractor and a designated person. The current rates are:

The old Section 194C definition of “work” expressly included advertising, and the current law preserves the contractor-payment framework. For practical purposes, agency execution, printing-and-installation, fabrication, display execution and similar work contracts should be reviewed under the current contractor item unless the payment is more appropriately classified as a professional/technical service or another category.

2. Hoarding fabrication vs hoarding-space rent

These two transactions are often wrongly treated the same.

Fabrication, printing and installation

If a vendor is engaged to fabricate, print, install and execute an advertising display, the substance is normally a works/advertising contract. Review Section 393 Table 6(i).

Pure rent of billboard/hoarding space

If the business merely rents land, a wall, building surface, billboard structure or similar space, the rent provisions should be examined instead.

For a hoarding arrangement, read the agreement carefully: renting display space is different from commissioning a vendor to create and execute an advertising installation.

3. Professional, creative and technical marketing services

Section 393 Table 6(iii) covers professional services, technical services, certain director payments, royalty and specified other sums. The threshold for professional/technical-service categories is ₹50,000.

The rate is generally:

• 2% for fees for technical services other than professional services, specified cinematographic-film royalty, and qualifying call-centre cases; and
• 10% for other covered professional/technical/royalty categories.

Therefore, payments for specialist legal, accountancy, architecture, consultancy, technical or other services falling within the statutory definitions should not be pushed into the lower contractor rate merely because they relate to a marketing campaign.

4. Common marketing-spend scenarios

5. Dealer benefits and old Section 194R concept

The old Section 194R concept is now reflected in Section 393 Table 8(iv). A specified person providing a benefit or perquisite arising from business or profession of a resident must examine TDS at 10% where the value or aggregate value exceeds ₹20,000 during the tax year.

Examples requiring review can include dealer incentive articles, sponsored trips, valuable promotional benefits, free products not falling within an exclusion, or other non-cash/mixed benefits. Whether a particular marketing item is a taxable benefit depends on facts and the applicable guidance.

6. GST and TDS are separate classifications

Do not assume the GST SAC automatically determines the TDS category. GST classifies the supply for indirect-tax purposes; TDS classification under the Income-tax Act depends on the nature of income/sum and the payer/payee conditions. The two analyses should be documented separately.

7. Invoice value and material component

Section 393 specifically provides a rule for certain work specified in Section 402(47)(e): where the invoice separately identifies the value of material, TDS is deducted on the invoice value excluding that material value; where it is not separately specified, TDS applies on the whole invoice value. Apply this rule only where the statutory work definition and facts fit.

8. Month-end marketing TDS checklist

1. Review the purchase order, agreement and scope of work.
2. Separate rent, advertising execution, professional services and dealer benefits.
3. Confirm payee constitution and PAN.
4. Apply the current Section 393 threshold and rate.
5. Do not use old section numbers as the operative code for a post-1-April-2026 payment where the current return/ERP requires the new classification.
6. Reconcile expense ledger, vendor ledger and TDS register before return filing.
7. Document unusual classifications such as influencer campaigns, bundled media contracts and dealer schemes.

9. Common mistakes

• Using FY 2025-26 thresholds in a FY 2026-27 article.
• Applying contractor TDS to pure rent of hoarding space.
• Applying rent TDS to fabrication/installation work.
• Using 1%/2% contractor rate for a payment that is actually a professional/technical service.
• Ignoring dealer-benefit TDS because the benefit is non-cash.
• Assuming the invoice label or GST SAC settles the income-tax classification.

Frequently asked questions

Official references

• Income Tax Department — Section 393, Income-tax Act, 2025
• Income Tax Department — TDS rates reference