Interest payments are common in business, particularly when companies, firms and other entities borrow funds or maintain financial arrangements that result in interest payments.
When such interest is paid or credited, the payer may be required to deduct TDS.
TDS Code 1022 is the code used for specified interest payments covered under the “other cases” category corresponding to the earlier Section 194A, which dealt with interest other than interest on securities.
The provision is particularly relevant where the interest payment does not fall within the specific bank, co-operative bank or post-office categories covered by TDS Codes 1020 and 1021.
In this guide, we explain:
- What TDS Code 1022 means
- How Code 1022 relates to Section 194A
- The 10% TDS rate
- The ₹10,000 threshold
- When Code 1022 applies
- How Code 1022 differs from Codes 1020 and 1021
- Practical examples for businesses
Quick Summary of TDS Code 1022
| Particulars | Details |
|---|---|
| TDS Code | 1022 |
| Earlier Section | 194A |
| Nature Of Payment | Interest Other Than Interest On Securities |
| Broad Category | Other Cases |
| TDS Rate | 10% |
| Threshold Limit | ₹10,000 During The Financial Year |
| Related Codes | 1020 And 1021 |
The ₹10,000 threshold is specifically identified by the Income Tax Department for interest other than interest on securities in the “any other case” category.
What is TDS Code 1022?
TDS Code 1022 relates to specified payments of interest other than interest on securities where the payment falls within the “other cases” category under the new TDS framework. Other cases means instances where the deductor is not a bank / banking company.
The corresponding provision under the earlier Income Tax Act was Section 194A.
Section 194A broadly dealt with TDS on income by way of interest other than interest on securities. Under the new framework applicable from April 1, 2026, the earlier provision has been reorganised into the new Section 393 framework, with separate payment codes for different categories of interest.
For businesses familiar with the earlier Act, this means that simply selecting “194A” is no longer sufficient for payments made under the new framework. The appropriate payment code needs to be identified.
TDS Code 1022 and Earlier Section 194A
Before the new Income Tax Act framework came into effect, businesses generally referred to Section 194A when dealing with TDS on interest other than interest on securities.
From April 1, 2026, the corresponding provisions are structured differently.
For Code 1022, the broad mapping is:
| New TDS Code | Earlier Section | Nature Of Payment |
|---|---|---|
| 1022 | 194A | Interest Other Than Interest On Securities – Other Cases |
This is particularly important for businesses updating their accounting, ERP and TDS-return systems. The Income Tax Department has specifically stated that systems need to reflect the new section numbering and reporting requirements from April 1, 2026.
What Type of Interest Is Covered?
The starting point is to understand what “interest other than interest on securities” means.
Interest may arise from a number of business arrangements, including:
- Loans
- Advances
- Deposits
- Borrowings
- Certain financial arrangements
However, not every interest payment should automatically be reported under Code 1022.
The nature of the payer, recipient and transaction needs to be examined because the new framework contains separate categories for certain interest payments.
This is particularly important when the recipient is an individual and the interest is paid by a bank, co-operative bank or post office, because separate TDS codes and higher thresholds may apply in those cases.
Why Are There Three TDS Codes for Section 194A?
This is one of the most important points to understand when dealing with TDS Code 1022.
Under the new framework, the earlier Section 194A interest category is split into different payment codes.
| TDS Code | Broad Category | Threshold |
|---|---|---|
| 1020 | Specified bank/co-operative bank/post-office interest paid to Senior Citizens | ₹1,00,000 |
| 1021 | Specified bank/co-operative bank/post-office interest paid to Other Individuals | ₹50,000 |
| 1022 | Other Interest Cases | ₹10,000 |
The three categories have different thresholds even though the standard TDS rate is 10%.
Therefore, TDS Code 1022 should not simply be treated as another name for Section 194A.
The payer needs to determine which category applies before selecting the payment code.
TDS Rate Under Code 1022
The standard TDS rate under TDS Code 1022 is 10%.
For example, if a business is required to deduct TDS on ₹2,00,000 of interest:
TDS = ₹2,00,000 × 10% = ₹20,000
The business would therefore deduct ₹20,000 as TDS and pay the balance amount to the recipient, subject to the applicable provisions.
The 10% rate is also reflected in current TDS rate tables for Code 1022.
What Is the Threshold for TDS Code 1022?
The threshold for the Code 1022 category is ₹10,000 during the financial year.
This means that businesses should monitor the aggregate amount of relevant interest paid or credited to the recipient during the financial year.
| Particulars | Amount |
|---|---|
| Interest Paid During Financial Year | ₹8,000 |
| Threshold | ₹10,000 |
| TDS Under Code 1022 | Generally Not Triggered Merely By This Amount |
If the relevant interest exceeds the prescribed threshold, the TDS provisions need to be considered.
Example: Interest Payment of ₹25,000
Suppose a company pays ₹25,000 as applicable interest to a resident payee during the financial year.
Assuming the payment falls under the Code 1022 category and no other exemption or special provision applies:
- Interest: ₹25,000
- Threshold: ₹10,000
- TDS Rate: 10%
TDS would be calculated at the applicable rate in accordance with the provisions.
This illustrates why businesses should not look only at the individual invoice or payment. They should also consider cumulative interest payments during the financial year.
Example: Multiple Interest Payments During the Year
Suppose a company makes the following interest payments to the same recipient:
| Month | Interest Paid | Cumulative Interest |
|---|---|---|
| April | ₹4,000 | ₹4,000 |
| July | ₹3,000 | ₹7,000 |
| October | ₹4,000 | ₹11,000 |
| January | ₹5,000 | ₹16,000 |
The cumulative interest exceeds ₹10,000 during the year.
Therefore, the business needs to consider the TDS implications under Code 1022 at the point the prescribed conditions are met. In the example mentioned above, that would be from October.
This is why cumulative interest tracking is important for businesses making recurring interest payments.
TDS Code 1022 vs TDS Code 1021
The difference between these two codes is particularly important.
Code 1021 is the specific category for interest other than interest on securities paid by specified banking/co-operative/post-office entities to individuals other than senior citizens.
Code 1022, on the other hand, is the broader “other cases” category.
The threshold is therefore different:
| Particulars | Code 1021 | Code 1022 |
|---|---|---|
| Earlier Section | 194A | 194A |
| Broad Category | Specified bank/co-operative/post-office interest to other individuals | Other Interest Cases |
| Threshold | ₹50,000 | ₹10,000 |
| TDS Rate | 10% | 10% |
This distinction is important because using Code 1022 simply because the payment is “interest” could result in incorrect TDS classification.
TDS Code 1022 vs TDS Code 1020
Code 1020 relates to the specified bank/co-operative-bank/post-office interest category where the recipient is a senior citizen.
Its threshold is ₹1,00,000.
Code 1022 does not represent the senior-citizen category. It is the “other cases” category with a ₹10,000 threshold.
This makes the distinction particularly important for banks and other specified deductors.
TDS Code 1022: Practical Applicability and Compliance
TDS Code 1022 becomes particularly relevant for businesses that make interest payments outside the specific bank, co-operative bank and post-office categories covered by Codes 1020 and 1021.
For these payments, businesses need to look at the nature of the interest, the recipient, the aggregate amount during the financial year and the applicable threshold before deciding whether TDS is required.
Who Typically Uses TDS Code 1022?
TDS Code 1022 is generally relevant to other cases of interest payments, including interest payments made by entities such as:
- Companies
- Partnership Firms
- LLPs
- Other businesses
- Other persons covered by the applicable TDS provisions
The key point is that Code 1022 is not simply determined by the fact that a payment is called “interest.”
The transaction must fall within the relevant interest category and should not instead belong to the specific categories covered by Codes 1020 or 1021. Current 2026-27 TDS tables identify Code 1022 as the “other cases” category under the earlier Section 194A framework.
Examples of Interest Payments That May Require Attention
Businesses may encounter Code 1022 in situations involving:
- Interest On Loans
- Interest On Advances
- Interest On Unsecured Loans
- Interest Paid To Certain Lenders
- Other Interest Payments Covered By The Provision
For example, a company may borrow money from another company or from a person and agree to pay interest on the amount borrowed.
The business should then examine whether the payment falls under Code 1022 and whether the ₹10,000 threshold has been crossed.
Example: Interest Paid to Another Company
Suppose Company A receives an unsecured loan from Company B.
During the financial year:
- Principal amount: ₹20,00,000
- Interest payable: ₹2,00,000
- Recipient: Company B
Assuming the payment falls within the Code 1022 category, the interest exceeds the ₹10,000 threshold.
At 10%:
TDS = ₹2,00,000 × 10% = ₹20,000
Company A would therefore need to consider deduction of ₹20,000 as TDS, subject to the applicable provisions.
Example: Interest Below the Threshold
Suppose a business pays applicable interest of ₹8,000 during the financial year.
The threshold for Code 1022 is ₹10,000.
Therefore, merely because the payment is interest does not mean that TDS automatically arises at 10%.
The business should monitor the aggregate amount of relevant interest during the financial year.
Once the prescribed threshold and other conditions are satisfied, TDS applicability needs to be examined.
Why Cumulative Tracking Matters
A common mistake is to look at every interest payment separately.
Consider the following:
| Payment | Interest | Cumulative Interest |
|---|---|---|
| April | ₹4,000 | ₹4,000 |
| July | ₹3,000 | ₹7,000 |
| October | ₹5,000 | ₹12,000 |
| January | ₹6,000 | ₹18,000 |
The cumulative interest reaches ₹12,000 in October.
Therefore, the business needs to consider the TDS implications at that point rather than treating every payment independently.
This is particularly important where interest is paid periodically throughout the year.
When Is TDS Deducted Under Code 1022?
For TDS compliance, businesses should not wait until the financial year-end merely because the threshold is calculated with reference to the financial year.
The relevant TDS provisions generally operate around the credit or payment of income, whichever occurs earlier, subject to the specific rules applicable to the payment.
This means that businesses should identify the point at which the TDS obligation arises rather than simply calculating the amount retrospectively at year-end.
The Income Tax Department has specifically clarified that, for transactions from April 1, 2026 onward, the new Act applies based on when the earlier of credit or payment occurs.
Code 1022 vs Code 1021: Which One Should You Use?
This is probably the most important practical distinction in the entire article.
| Particulars | TDS Code 1021 | TDS Code 1022 |
|---|---|---|
| Earlier Section | 194A | 194A |
| Broad Category | Specified Interest Payments To Other Individuals | Other Interest Cases |
| Threshold | ₹50,000 | ₹10,000 |
| TDS Rate | 10% | 10% |
| Typical Context | Specified Bank/Co-operative Bank/Post-Office Interest | Other Applicable Interest Payments |
Code 1021 is part of the specific category for interest paid by specified banking/co-operative banking/post-office entities to individuals other than senior citizens.
Code 1022 is the other-cases category.
Therefore, a business should not select Code 1022 simply because the payment is below ₹50,000 or because the recipient is not a senior citizen.
The nature of the payer and transaction must first be considered.
Code 1022 vs Code 1020: Which One Should You Use?
Code 1020 is the specific category for qualifying interest paid by specified banking/co-operative banking/post-office entities to senior citizens.
The threshold is ₹1,00,000.
Code 1022 is different and has a ₹10,000 threshold.
| Particulars | Code 1020 | Code 1022 |
|---|---|---|
| Earlier Section | 194A | 194A |
| Broad Category | Specified Interest To Senior Citizens | Other Interest Cases |
| Threshold | ₹1,00,000 | ₹10,000 |
| TDS Rate | 10% | 10% |
This distinction is especially important for businesses and financial institutions configuring their TDS systems for the new reporting structure.
A Simple Decision Guide for Codes 1020, 1021 and 1022
The following approach can make the classification easier:
Step 1: Is the payment interest other than interest on securities?
If no, Code 1022 is not the appropriate starting point.
Step 2: Is the payment within the specific banking/co-operative banking/post-office category?
If yes, determine whether Code 1020 or 1021 applies.
Step 3: Is the recipient a senior citizen?
If the specific senior-citizen category applies, consider Code 1020.
Step 4: Is the recipient another individual?
If the specified category for other individuals applies, consider Code 1021.
Step 5: Does the payment fall into the other-cases category?
If yes, Code 1022 may apply, subject to the other conditions.
This approach is safer than selecting a code based only on the description “interest payment.”
Common Mistakes in TDS Code 1022
Businesses commonly make mistakes such as:
- Treating Every Interest Payment As Code 1022
- Ignoring The Payer Category
- Applying The Wrong Threshold
- Looking At Individual Payments Instead Of Cumulative Payments
- Using The Old Section Number For A New-Act Transaction
- Selecting Code 1022 Without Checking Codes 1020 And 1021
- Failing To Reconcile TDS With The Interest Ledger
These mistakes can result in incorrect TDS deduction and reporting.
The Income Tax Department has specifically indicated that using an old section reference for a transaction governed by the new Act can lead to processing errors in TDS returns and may require a correction statement.
TDS Return Reporting Under Code 1022
Businesses using Code 1022 should ensure that the correct payment code is used when reporting the deduction.
The accounting records should support:
- Name And PAN Of The Payee
- Nature Of Interest Payment
- Amount Of Interest
- Date Of Credit Or Payment
- TDS Amount
- Applicable TDS Code
- TDS Deposit Details
The TDS records should also reconcile with the interest expense recorded in the books.
This becomes particularly important for businesses that make recurring interest payments to multiple parties.
Why Correct TDS Code Selection Matters
The introduction of separate payment codes makes accurate classification more important.
Under the earlier system, businesses were accustomed to referring broadly to Section 194A.
Under the new framework, the relevant payment code needs to be identified more precisely.
The Income Tax Department has stated that businesses should update their ERP and other systems to reflect the new section numbering, terminology and reporting requirements.
For businesses processing large numbers of transactions, this is particularly relevant because an incorrect code can affect TDS return reporting and subsequent reconciliation.
Frequently Asked Questions
What is TDS Code 1022?
TDS Code 1022 is the payment code for the “other cases” category of interest other than interest on securities corresponding to the earlier Section 194A framework.
What is the TDS rate under Code 1022?
The standard TDS rate is 10%, subject to the applicable provisions.
What is the threshold for TDS Code 1022?
The threshold is ₹10,000 during the financial year for the relevant category.
What is the old section for TDS Code 1022?
TDS Code 1022 corresponds to the “other cases” category under the earlier Section 194A.
What is the difference between TDS Code 1021 and 1022?
Code 1021 applies to the specified bank/co-operative bank/post-office interest category for other individuals, while Code 1022 covers other applicable interest cases. The thresholds are ₹50,000 and ₹10,000 respectively.
What is the difference between TDS Code 1020 and TDS Code 1022?
Code 1020 relates to the specified interest category for senior citizens, with a ₹1,00,000 threshold. Code 1022 is the other-cases category, with a ₹10,000 threshold.
Is TDS Code 1022 applicable to interest on securities?
No. Code 1022 relates to interest other than interest on securities. Interest on securities is dealt with under separate provisions.
Does the ₹10,000 threshold apply to each interest payment?
The threshold is considered with reference to the relevant aggregate interest during the financial year, subject to the applicable provisions. Businesses making multiple payments should therefore maintain cumulative records.
Final Thoughts
TDS Code 1022 is the “other cases” category for interest other than interest on securities under the new TDS framework.
The three numbers that are easiest to remember are:
- 10%: Standard TDS rate
- ₹10,000: Threshold for the TDS Code 1022 category
- 194A: Earlier section corresponding to this interest TDS framework
However, the most important compliance point is not the rate or threshold alone.
Businesses should first determine whether the payment belongs under TDS Code 1020, TDS Code 1021 or TDS Code 1022. The three codes arise from the earlier Section 194A framework but have different applicability conditions and thresholds.
For businesses making regular interest payments, maintaining proper vendor/payee records and configuring the accounting or ERP system correctly can make TDS compliance significantly easier.
Need Help With TDS Compliance?
If your business needs help with:
- TDS Code Classification
- Interest TDS Compliance
- TDS Return Filing
- ERP And Accounting Configuration
- TDS Reconciliation
our team can help review your current process and establish a practical TDS compliance workflow.