New TDS Rates FY 2026-27: Complete Section-Wise Chart

Dhanush Prabha
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Reviewed by Industry Experts & Startup Specialists.
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New TDS rates for FY 2026-27 bring significant changes for every business owner, salaried professional, and investor in India. With the Income Tax Act, 2025 replacing the six-decade-old Income Tax Act, 1961 from 1 April 2026, and the Finance Act, 2025 rationalizing thresholds across multiple sections, understanding the updated TDS rate chart is no longer optional. This guide covers all 35+ TDS sections with rates, thresholds, Budget 2025-26 changes, return filing deadlines, and penalty provisions, so you can deduct, deposit, and report correctly through the financial year.

  • Section 194T (NEW): 10% TDS on payments to firm partners exceeding ₹20,000 per year, effective from April 2025
  • Section 194D threshold reduced from ₹20,000 to ₹15,000; Section 194H threshold also reduced to ₹15,000
  • Section 196A rate reduced from 20% to 10% for income from units paid to NRIs
  • Section 194K (mutual fund income) threshold reduced from ₹10,000 to ₹5,000
  • Quarterly TDS return deadlines: 31 July, 31 October, 31 January, and 31 May

What is TDS (Tax Deducted at Source)?

Tax Deducted at Source (TDS) is a method of collecting income tax at the point where income is generated. Under TDS, the payer (deductor) deducts a prescribed percentage of tax before making a payment to the payee (deductee), and deposits the deducted amount with the Central Government. TDS is governed by Chapter XVII-B of the Income Tax Act, 2025 (which replaces the Income Tax Act, 1961, effective 1 April 2026).

The purpose of TDS is straightforward: collect tax in advance, spread the tax burden across the year, and reduce the possibility of tax evasion. Every person responsible for making specified payments (salary, interest, rent, professional fees, contract payments, etc.) is required to deduct TDS at the rates prescribed for each section. The deducted tax is credited to the payee's account and reflected in Form 26AS and the Annual Information Statement (AIS) on the Income Tax e-Filing portal.

TDS provisions are codified under Sections 192 to 206AB of the Income Tax Act, 2025. The Central Board of Direct Taxes (CBDT) administers TDS through the TRACES portal (TDS Reconciliation Analysis and Correction Enabling System) for return processing, certificate generation, and compliance verification.

Key Changes in TDS Rates for FY 2026-27

The Finance Act, 2025 (Budget 2025-26) introduced targeted changes to rationalise TDS provisions. Here is a consolidated summary of every change that impacts FY 2026-27 deductions.

SectionNature of ChangeOld ProvisionNew Provision (FY 2026-27)
194T (NEW)New section introducedNot applicable10% TDS on partner payments exceeding ₹20,000
194DThreshold reduced₹20,000₹15,000
194HThreshold reduced₹20,000₹15,000
194KThreshold reduced₹10,000₹5,000
196ARate reduced20%10% (or treaty rate, whichever lower)
192ARate reduced20%10% on premature EPF withdrawal
194OThreshold increased₹5 lakh₹5,00,000 (rationalised language)
194MThreshold increased₹50 lakh₹50,00,000 aggregate (rationalised language)

The overarching intent of Budget 2025-26 is rate rationalisation and threshold adjustment to reduce compliance friction for small and medium businesses while broadening the TDS net through Section 194T for partnership firms. Each of these changes is reflected in the complete section-wise chart below.

Complete Section-Wise TDS Rate Chart for FY 2026-27

The following table is the comprehensive TDS rate chart applicable from 1 April 2026 to 31 March 2027. Rates shown are for payees with a valid PAN; without PAN, TDS is deducted at 20% or the applicable rate, whichever is higher (Section 206AA).

SectionNature of PaymentThreshold (₹)TDS Rate
192SalaryBasic exemption limitSlab rates
192APremature EPF Withdrawal50,00010%
193Interest on SecuritiesNil (listed debentures: ₹5,000)10%
194Dividend5,00010%
194AInterest (other than securities)40,000 (bank); 50,000 (senior citizen); 10,000 (others)10%
194BLottery / Crossword / Puzzle Winnings10,00030%
194BAOnline Gaming WinningsNo threshold (net winnings)30%
194BBHorse Race Winnings10,00030%
194CContractor Payments30,000 (single); 1,00,000 (aggregate)1% (individual/HUF); 2% (others)
194DInsurance Commission15,0005%
194DALife Insurance Maturity1,00,0005%
194EPayment to NR SportspersonsNil20%
194EENSS Deposits2,50010%
194FRepurchase of MF/UTI UnitsOmittedOmitted
194GLottery Commission / Brokerage15,0005%
194HCommission / Brokerage15,0005%
194IRent - Plant & Machinery2,40,0002%
194IRent - Land / Building / Furniture2,40,00010%
194IAProperty Purchase50,00,0001%
194IBRent by Individuals/HUF50,000/month5%
194ICJDA PaymentsNil10%
194JTechnical Services / Call Centre30,0002%
194JProfessional Services / Royalty30,00010%
194KMutual Fund Income5,00010%
194LACompensation for Land Acquisition2,50,00010%
194LBInfrastructure Debt Fund InterestNil5%
194LCForeign Borrowing InterestNil5%
194LBAREIT/InvIT IncomeNil10% / 5% / 30%
194MContract/Commission to Residents50,00,000 (aggregate)5%
194NCash Withdrawal20 lakh (filer); 1 crore (non-filer)2% / 5%
194OE-Commerce Transactions5,00,0001%
194PSenior Citizen (75+) IncomeBasic exemption limitSlab rates
194QPurchase of Goods50 lakh0.1%
194RPerquisites / Benefits in Kind20,00010%
194SVirtual Digital Assets (Crypto)50,000 (specified); 10,000 (others)1%
194TPayments to Partners (NEW)20,00010%
195Payment to NRIsNilRates as applicable / DTAA
196AIncome from Units to NRIsNil10% (or treaty rate)
196BForeign Company Income (GDR)Nil10%
196CForeign Currency Bonds/GDR InterestNil10%
196DFII IncomeNil20%
206ABHigher TDS for Non-FilersAs per sectionDouble rate or 5% (whichever higher)

If the deductee does not furnish a valid PAN (or furnishes an invalid PAN), TDS is deducted at 20% or the prescribed rate, whichever is higher, under Section 206AA. For non-residents, the rate is 20% or the rate in the Act, whichever is higher, unless a tax treaty applies.

Budget 2025-26 TDS Changes Explained

Section 194T: TDS on Payments to Partners

The most significant addition in Budget 2025-26 is Section 194T, which requires partnership firms (including LLPs) to deduct TDS at 10% on payments made to partners. This covers salary, remuneration, commission, bonus, and interest on capital when the aggregate payment during a financial year exceeds ₹20,000. Before this section, payments to partners were not subject to TDS, creating a gap in tax collection. Section 194T was effective from 1 April 2025 and continues into FY 2026-27.

For firms with multiple partners earning remuneration above ₹20,000, this means additional compliance: the firm must obtain a Tax Deduction Account Number (TAN), deduct TDS before disbursing payments, deposit TDS by the 7th of the following month, and include these deductions in quarterly TDS returns using Form 26Q.

Threshold Adjustments

Budget 2025-26 adjusted multiple thresholds to reflect inflationary changes and reduce the compliance burden on small-value transactions:

  • Section 194D (insurance commission): Threshold reduced from ₹20,000 to ₹15,000, bringing more commission agents into the TDS net
  • Section 194H (commission/brokerage): Threshold reduced from ₹20,000 to ₹15,000
  • Section 194K (mutual fund income): Threshold reduced from ₹10,000 to ₹5,000, ensuring TDS on smaller dividend distributions
  • Section 192A (premature EPF withdrawal): Rate reduced from 20% to 10%, providing relief to employees withdrawing EPF before 5 years of service
  • Section 196A (income from units to NRIs): Rate reduced from 20% to 10% or the applicable treaty rate

Rate Rationalisation

The Finance Act, 2025 merged and rationalised overlapping TDS provisions. The government's stated goal is to reduce the number of distinct TDS rates from the existing 37+ to a more manageable set, cut down compliance time for deductors, and align TDS rates more closely with actual tax liabilities. For businesses filing income tax returns, accurate TDS deduction reduces the mismatch between advance tax paid and actual tax liability.

TDS on Salary: Section 192 in Detail

Section 192 is the most widely applicable TDS provision, affecting every salaried individual in India. Unlike other sections with flat rates, TDS on salary is computed at applicable income tax slab rates based on the employee's estimated annual income under the chosen tax regime.

How Employers Calculate TDS on Salary

  1. Estimate annual gross salary: Include basic salary, DA, HRA, special allowances, bonuses, and other perquisites
  2. Deduct exemptions: HRA exemption (Section 10(13A)), LTA, standard deduction of ₹75,000 (new regime) or ₹50,000 (old regime)
  3. Deduct Chapter VI-A: Section 80C (₹1.5 lakh), 80D (health insurance), 80CCD(1B) (NPS ₹50,000), and other applicable deductions under the old regime
  4. Apply tax slab rates: Calculate tax on net taxable income using the applicable slab (old or new regime as chosen by the employee via Form 12BBA)
  5. Divide by 12: Monthly TDS = Annual tax liability / 12 (or remaining months)

Salary TDS Calculation Example

Consider an employee with annual gross salary of ₹12,00,000 under the new tax regime for FY 2026-27:

  • Gross Salary: ₹12,00,000
  • Less: Standard Deduction: ₹75,000
  • Net Taxable Income: ₹11,25,000
  • Tax Computation (New Regime): ₹0 on first ₹4,00,000 + ₹20,000 (₹4,00,001 to ₹8,00,000 at 5%) + ₹40,000 (₹8,00,001 to ₹12,00,000 at 10%) = ₹60,000
  • Less: Rebate under Section 87A (if applicable) or cess at 4%: Tax + Cess = ₹62,400
  • Monthly TDS: ₹62,400 / 12 = ₹5,200 per month

Employees must intimate their preferred tax regime (old or new) to the employer via Form 12BBA at the start of the financial year. If no intimation is given, the employer deducts TDS based on the new tax regime by default. The employee can switch between regimes when filing the income tax return.

TDS on Interest Payments: Section 194A

Section 194A covers TDS on interest payments other than interest on securities (which falls under Section 193). This section applies to banks, co-operative societies, post offices, NBFCs, and any other person paying interest.

Threshold Limits for Section 194A

Payer TypeThreshold (₹ per FY)TDS Rate
Banks / Co-operative Society / Post Office40,00010%
Banks / Post Office (Senior Citizens 60+)50,00010%
All Other Persons (NBFCs, companies, individuals)10,00010%

Form 15G and Form 15H

Individuals whose total income falls below the basic exemption limit can submit Form 15G (for individuals below 60 years) or Form 15H (for senior citizens aged 60+) to the bank or payer. Upon receiving a valid form, the payer does not deduct TDS on the interest payment. The payer must upload these forms to the TRACES portal quarterly. If you receive interest income from multiple bank accounts, submit the form to each bank separately.

TDS on Contractor Payments: Section 194C

Any person making a payment to a resident contractor for carrying out any work (including supply of labour) must deduct TDS under Section 194C. "Work" includes advertising, broadcasting, carriage of goods, catering, manufacturing, and any contract for supplying labour.

Rates and Thresholds

  • Payment to Individual/HUF contractor: 1% TDS
  • Payment to other entities (company, firm, co-operative, AOP/BOI): 2% TDS
  • Single payment threshold: ₹30,000
  • Aggregate annual threshold: ₹1,00,000

If either threshold is breached, TDS applies on the entire payment amount, not just the excess. For example, if you pay a contractor ₹35,000 for a single job, TDS is deducted on ₹35,000, not on ₹5,000 exceeding the threshold.

Contractor TDS Example

A private limited company hires a freelance website developer (individual) and pays ₹80,000 for a project. Since the single payment exceeds ₹30,000:

  • TDS Rate: 1% (payment to individual)
  • TDS Amount: ₹80,000 x 1% = ₹800
  • Net Payment to Developer: ₹79,200
  • TDS Deposit Deadline: 7th of the following month

TDS on Professional and Technical Fees: Section 194J

Section 194J is unique because it prescribes two different rates based on the nature of payment:

  • 2% TDS: Technical services, payments to call centres, and royalty for sale/distribution/exhibition of cinematographic films
  • 10% TDS: Professional services (legal, medical, engineering, architectural, accountancy, interior decoration, advertising, sports commentary), royalties (other than films), and director's fees/remuneration

The threshold for both categories is ₹30,000 per annum. Professional services include any service that requires specialised knowledge, training, or expertise. If your business engages a tax professional for income tax advisory and pays ₹40,000 for the year, you must deduct ₹4,000 as TDS (10% of ₹40,000).

A common error businesses make is applying the 10% rate to IT services (software development, cloud services, technical support). These payments qualify as "fees for technical services" and attract only 2% TDS, not 10%. Misclassification leads to excess deduction and cash flow issues for the vendor. Verify the nature of service before applying the rate.

TDS on Rent: Section 194I and Section 194IB

Rent payments in India have two TDS provisions depending on who is making the payment:

Section 194I: TDS by Businesses

Any person (other than individual/HUF not liable for tax audit) paying rent exceeding ₹2,40,000 per annum must deduct TDS at:

  • 2%: Rent for plant, machinery, or equipment
  • 10%: Rent for land, building, furniture, or fittings

The ₹2,40,000 threshold is calculated across all rental payments to a single payee during the financial year, not per property.

Section 194IB: TDS by Individuals and HUFs

If an individual or HUF (not covered by Section 194I) pays rent exceeding ₹50,000 per month, they must deduct TDS at 5%. Unlike Section 194I, the deductor does not need a TAN. TDS is deposited using Form 26QC within 30 days from the end of the month, and the deductor issues Form 16C to the landlord.

Rent TDS Example

A salaried individual renting an apartment for ₹55,000 per month:

  • Section applicable: 194IB (individual tenant, rent > ₹50,000/month)
  • TDS Rate: 5%
  • TDS per month: ₹55,000 x 5% = ₹2,750
  • Annual TDS: ₹2,750 x 12 = ₹33,000
  • Deposit via: Form 26QC (no TAN required)

TDS on Property Purchase: Section 194IA

When purchasing immovable property (other than agricultural land) where the sale consideration or stamp duty value equals or exceeds ₹50 lakh, the buyer must deduct TDS at 1% on the total consideration. The buyer does not need a TAN for this deduction.

Form 26QB Process

  1. Calculate TDS: 1% of sale consideration or stamp duty value, whichever is higher
  2. Deposit TDS: File Form 26QB on the Income Tax e-Filing portal within 30 days from the end of the month of deduction
  3. Issue Form 16B: Download from TRACES and provide to the seller within 15 days of filing Form 26QB

For a property purchased at ₹75 lakh, the buyer deducts ₹75,000 (1% of ₹75,00,000) and pays the seller ₹74,25,000. The ₹75,000 is deposited with the government through Form 26QB.

TDS on E-Commerce Transactions: Section 194O

E-commerce operators facilitating the sale of goods or provision of services through their platform must deduct TDS at 1% on the gross amount credited or paid to the e-commerce participant (seller). Budget 2025-26 increased the threshold to ₹5,00,000 per financial year.

The e-commerce operator is responsible for deducting TDS at the time of credit to the seller's account or at the time of payment, whichever is earlier. If the e-commerce participant is an individual or HUF earning below ₹5,00,000 through the platform and has furnished PAN/Aadhaar, no TDS is deducted. This section applies to resident sellers only; for non-resident sellers, Section 195 applies.

TDS on Virtual Digital Assets (Crypto): Section 194S

Any person paying consideration for the transfer of a Virtual Digital Asset (VDA), including cryptocurrency, NFTs, and other digital tokens, must deduct TDS at 1% under Section 194S. The thresholds are:

  • ₹50,000 per financial year: For specified persons (exchanges, brokers operating within regulatory frameworks)
  • ₹10,000 per financial year: For all other persons

This provision, introduced from 1 July 2022, works alongside the 30% flat tax on VDA income (Section 115BBH). No deduction for acquisition cost is allowed beyond the original purchase price, and losses from one VDA cannot be set off against gains from another. If you trade crypto through Indian exchanges, the exchange typically handles TDS deduction automatically.

Higher TDS for Non-Filers: Section 206AB

Section 206AB is a compliance enforcement measure that mandates higher TDS rates for "specified persons" who have failed to file income tax returns. A specified person under this section is someone who:

  • Has not filed income tax returns for the two assessment years immediately preceding the financial year in which TDS is to be deducted
  • Had aggregate TDS and TCS of ₹50,000 or more in each of those two years
  • Is not a non-resident who does not have a permanent establishment in India

For specified persons, TDS is deducted at the higher of: double the rate specified in the applicable section, or 5%. For example, if the normal rate under Section 194C is 1%, a non-filer would face TDS at 5% (since double the rate would be 2%, which is lower than 5%).

Deductors can verify whether a payee is a specified person using the "Compliance Check for Section 206AB/206CCA" functionality on the Income Tax e-Filing portal. Checking this before every high-value payment is a best practice to avoid penalties for under-deduction.

If you have not filed returns for the last 2 years and your annual TDS/TCS exceeds ₹50,000, every payer must deduct TDS at double the normal rate or 5%, whichever is higher. This can significantly reduce your cash inflow. File your pending income tax returns to avoid elevated TDS deductions.

TDS on Payments to Partners: Section 194T (New)

Section 194T is the most consequential addition from Budget 2025-26 for partnership firms and LLPs. Before this section, no TDS obligation existed on payments from firms to their partners, creating a significant gap in tax compliance tracking.

What Section 194T Covers

  • Salary, remuneration, and wages paid to partners
  • Commission and bonus credited to partners
  • Interest on capital or any other payment by whatever name called

Key Parameters

  • Rate: 10%
  • Threshold: ₹20,000 aggregate per financial year (per partner)
  • Effective from: 1 April 2025
  • Deductor: The firm (partnership firm or LLP)

If a partner receives ₹5 lakh as annual remuneration and ₹1,20,000 as interest on capital (total ₹6,20,000), the firm deducts TDS of ₹62,000 (10% of ₹6,20,000) across the year. The partner claims this TDS credit when filing their personal income tax return. Firms must report these deductions in Form 26Q quarterly and issue Form 16A to each partner.

TDS Return Filing Due Dates for FY 2026-27

Deductors must file TDS returns quarterly using the appropriate form based on the type of payment. Here are the deadlines:

QuarterPeriodDue DateForm 24Q (Salary)Form 26Q (Non-Salary)Form 27Q (NRI)
Q1Apr - Jun 202631 July 2026YesYesYes
Q2Jul - Sep 202631 October 2026YesYesYes
Q3Oct - Dec 202631 January 2027YesYesYes
Q4Jan - Mar 202731 May 2027YesYesYes

Form 27EQ (for Tax Collected at Source / TCS) follows the same quarterly deadlines. Government deductors have the option to file using book adjustments (Treasury/PAO challans). All returns are filed through the TRACES portal or the Income Tax e-Filing portal.

TDS Certificates: Form 16 and Form 16A

Form 16 (Salary TDS Certificate)

Every employer deducting TDS on salary must issue Form 16 to employees by 15 June following the financial year. Form 16 has two parts:

  • Part A: Generated from TRACES, contains TAN, PAN, quarterly TDS details, and challan information
  • Part B: Prepared by the employer, contains detailed salary breakup, deductions claimed, and tax computation

Form 16A (Non-Salary TDS Certificate)

For all non-salary TDS deductions (interest, rent, professional fees, contractor payments), the deductor issues Form 16A within 15 days from the due date of filing the TDS return for each quarter. Form 16A is downloaded from TRACES after the TDS return is processed. If you receive payments from multiple deductors, each issues a separate Form 16A.

Penalties for TDS Non-Compliance

TDS non-compliance carries financial and legal consequences across three stages: deduction, deposit, and return filing.

DefaultProvisionConsequence
Failure to deduct TDSSection 201(1)Deductor treated as assessee-in-default; liable to pay TDS + interest
Interest on late/non-deductionSection 201(1A)1% per month from the date TDS was deductible to the date of actual deduction
Interest on late deposit after deductionSection 201(1A)1.5% per month from the date of deduction to the date of deposit
Penalty for non-deductionSection 271CPenalty equal to the amount of TDS not deducted
Late filing fee for TDS returnSection 234E₹200 per day until filed (maximum: TDS amount)
Penalty for late/incorrect TDS returnSection 271H₹10,000 to ₹1 lakh (at AO's discretion)

Interest under Section 201(1A) is calculated for every month or part of a month. Even a 1-day delay into the next month triggers a full month's interest. For a TDS amount of ₹1 lakh deposited 3 months late, the interest alone is ₹4,500 (1.5% x 3 months). Set up automated reminders for the 7th of every month to avoid this cost.

Practical TDS Examples for FY 2026-27

Example 1: TDS on Professional Fees

A private limited company engages a legal consultant for contract drafting and pays ₹75,000 during the year:

  • Section: 194J (professional services)
  • Rate: 10%
  • TDS: ₹75,000 x 10% = ₹7,500
  • Net payment: ₹67,500

Example 2: TDS on Rent by a Business

An IT company pays office rent of ₹3,00,000 per annum to a landlord:

  • Section: 194I (land/building rent, exceeds ₹2,40,000 threshold)
  • Rate: 10%
  • Annual TDS: ₹3,00,000 x 10% = ₹30,000
  • Monthly TDS: ₹2,500 (deposited by 7th of following month)

Example 3: TDS on Partner Remuneration (Section 194T)

A partnership firm pays two partners ₹4,00,000 and ₹3,50,000 as annual remuneration:

  • Partner A: TDS = ₹4,00,000 x 10% = ₹40,000
  • Partner B: TDS = ₹3,50,000 x 10% = ₹35,000
  • Total TDS liability: ₹75,000 per year
  • Filing: Form 26Q quarterly; issue Form 16A to each partner

Example 4: TDS on Property Purchase

A buyer purchases a flat for ₹90 lakh:

  • Section: 194IA (exceeds ₹50 lakh threshold)
  • Rate: 1%
  • TDS: ₹90,00,000 x 1% = ₹90,000
  • Deposit via: Form 26QB within 30 days from month-end
  • Issue: Form 16B to seller within 15 days of filing Form 26QB

How to Check TDS Status Online

Verifying that TDS deducted from your income has been deposited with the government is critical. Here are the three ways to check:

1. Form 26AS on the Income Tax Portal

Log in to incometax.gov.in using your PAN and password. Navigate to e-File > Income Tax Returns > View Form 26AS. Select the assessment year (AY 2027-28 for FY 2026-27). Form 26AS shows all TDS credited against your PAN, organised by deductor name, TAN, section, and amount.

2. Annual Information Statement (AIS)

The AIS is a more detailed version of Form 26AS, available on the same portal under Services > Annual Information Statement. It includes TDS information alongside other financial data: savings account interest, property transactions, mutual fund purchases, foreign remittances, and GST turnover data. The AIS also allows you to submit feedback if any transaction is incorrect.

3. TRACES Portal

Deductors and deductees can both access TRACES (tdscpc.gov.in) for detailed TDS tracking. Deductees can download Form 26AS, view TDS certificates (Form 16/16A), and raise grievances for TDS mismatches. Deductors can file correction returns, download consolidated files, and verify challan status.

Summary

TDS rates for FY 2026-27 reflect the government's push toward rationalisation under the new Income Tax Act, 2025, while the Finance Act, 2025 addresses specific gaps through provisions like Section 194T for partnership firm payments. Whether you are an employer deducting salary TDS, a business paying rent or contractor fees, or an individual purchasing property, the rates and thresholds in this section-wise chart apply from 1 April 2026. Staying compliant means deducting at the correct rate, depositing by the 7th of the following month, filing quarterly returns on time, and issuing TDS certificates promptly. For end-to-end assistance with TDS return filing and compliance management, professional support can help you avoid penalties and ensure every deduction is reported accurately.

Frequently Asked Questions

What are the new TDS rates for FY 2026-27?
TDS rates for FY 2026-27 are governed by the Income Tax Act, 2025 (effective 1 April 2026) and incorporate all changes from the Finance Act, 2025. Key rates include 10% on dividends (Section 194), 5% on insurance commission (Section 194D with ₹15,000 threshold), and a new 10% TDS on payments to partners under Section 194T with a ₹20,000 threshold.
What is TDS under the Income Tax Act?
Tax Deducted at Source (TDS) is a mechanism under the Income Tax Act where the payer deducts tax at prescribed rates before making specified payments. The deducted amount is deposited with the government and credited to the recipient's tax account. TDS ensures regular tax collection and reduces evasion by collecting tax at the point of income generation.
What is Section 194T and when does it apply?
Section 194T is a new provision introduced in Budget 2025-26 that mandates TDS at 10% on payments made by a firm to its partners, including salary, remuneration, commission, bonus, and interest on capital. It applies when the aggregate payment exceeds ₹20,000 in a financial year. This section is effective from 1 April 2025.
What is the TDS rate on salary for FY 2026-27?
TDS on salary under Section 192 is deducted at the applicable income tax slab rates based on the employee's estimated annual income. The employer calculates TDS after considering deductions under Chapter VI-A, HRA exemptions, and the chosen tax regime (old or new). There is no flat rate; the effective TDS depends on total taxable salary.
What is the threshold for TDS on rent under Section 194I?
For TDS on rent under Section 194I, the threshold is ₹2,40,000 per annum. The rate is 2% for plant and machinery rent and 10% for land, building, or furniture rent. TDS must be deducted when the total rent payment exceeds ₹2,40,000 during the financial year.
How is TDS calculated on professional fees under Section 194J?
Section 194J prescribes two rates: 2% for technical services and call centre payments, and 10% for professional services and royalties. TDS is deducted when the payment exceeds ₹30,000 per annum. Professional services include legal, medical, engineering, architectural, and accountancy services, as well as interior decoration and advertising.
What is the TDS rate on property purchase above ₹50 lakh?
Under Section 194IA, a buyer must deduct TDS at 1% on the total sale consideration when purchasing immovable property (other than agricultural land) valued at ₹50 lakh or more. The buyer deposits TDS using Form 26QB within 30 days from the end of the month in which the deduction is made.
What is Section 206AB and who does it apply to?
Section 206AB mandates higher TDS on specified persons who have not filed income tax returns for the two preceding assessment years and whose aggregate TDS/TCS exceeds ₹50,000 in each of those years. The applicable rate is the higher of: double the prescribed rate, or 5%. This does not apply to non-residents without a permanent establishment in India.
What is the TDS rate on cryptocurrency or virtual digital assets?
Under Section 194S, TDS on transfer of Virtual Digital Assets (including cryptocurrency and NFTs) is deducted at 1%. The threshold is ₹50,000 per financial year for specified persons (exchanges, brokers) and ₹10,000 for all other persons. This provision was introduced from FY 2022-23.
What are the quarterly TDS return filing due dates?
TDS return filing deadlines for FY 2026-27 are: Q1 (Apr-Jun): 31 July 2026, Q2 (Jul-Sep): 31 October 2026, Q3 (Oct-Dec): 31 January 2027, and Q4 (Jan-Mar): 31 May 2027. Form 24Q covers salary TDS, Form 26Q covers non-salary deductions, and Form 27Q covers payments to non-residents.
What is the penalty for late TDS deduction or deposit?
Late deduction attracts interest at 1% per month under Section 201(1A) from the date tax was deductible. Late deposit after deduction attracts interest at 1.5% per month from the date of deduction to the date of actual deposit. Additionally, Section 271C imposes a penalty equal to the amount of TDS not deducted.
What changes did Budget 2025-26 make to TDS rates?
Budget 2025-26 introduced key TDS changes: Section 194T (new, 10% on partner payments), reduced threshold for Section 194D to ₹15,000, increased Section 194M threshold to ₹50 lakh aggregate, reduced Section 194K threshold to ₹5,000, reduced Section 196A rate from 20% to 10%, and rationalized the overall TDS rate structure to reduce compliance burden.
How to check TDS status online using Form 26AS?
You can verify TDS credits through Form 26AS on the Income Tax e-Filing portal or the TRACES portal (tdscpc.gov.in). Log in using PAN credentials, navigate to 'View Form 26AS', and select the relevant assessment year. The Annual Information Statement (AIS) also provides detailed TDS information along with other financial transactions.
What is the difference between Form 16 and Form 16A?
Form 16 is a TDS certificate issued by employers for salary income (Section 192), containing Part A (TDS details) and Part B (income computation). Form 16A is issued for all non-salary TDS deductions (interest, rent, professional fees, etc.). Employers must issue Form 16 by 15 June following the financial year; Form 16A is issued quarterly within 15 days of the TDS return due date.
Is TDS applicable on fixed deposit interest?
Yes, under Section 194A, TDS at 10% applies on interest from fixed deposits when interest exceeds ₹40,000 per financial year for bank/co-operative society/post office deposits. For senior citizens (60+), the threshold is ₹50,000. For non-banking deposits, the threshold is ₹10,000. Submitting Form 15G/15H can avoid TDS if total income is below the taxable limit.
What is the TDS rate on contractor payments under Section 194C?
Section 194C prescribes TDS at 1% for payments to individual or HUF contractors and 2% for payments to other entities (companies, firms, co-operatives). TDS applies when a single payment exceeds ₹30,000 or when aggregate payments during the year exceed ₹1,00,000. This covers all works contracts, labour contracts, and sub-contractor payments.
Can TDS be avoided by submitting Form 15G or 15H?
Yes, Form 15G (for individuals below 60 years) and Form 15H (for senior citizens aged 60+) can be submitted to the payer to request nil or lower TDS if the individual's total income is below the basic exemption limit. These forms apply to interest on bank deposits (Section 194A), dividend income (Section 194), and insurance maturity proceeds (Section 194DA).
What is the TDS on e-commerce transactions under Section 194O?
Under Section 194O, e-commerce operators must deduct TDS at 1% on the gross amount of sales facilitated through their platform. The threshold is ₹5,00,000 per financial year (increased from ₹5 lakh in Budget 2025-26). This applies to resident e-commerce participants who sell goods or provide services through the platform.
What is the TDS rate on lottery and game show winnings?
TDS on lottery, crossword puzzles, and game show winnings is deducted at 30% under Section 194B when the winnings exceed ₹10,000. For online gaming income (Section 194BA), TDS at 30% applies on net winnings at the time of withdrawal or at the end of the financial year, with no minimum threshold since FY 2023-24.
What is the TDS threshold for Section 194M?
Section 194M requires individuals and HUFs (not subject to tax audit) to deduct TDS at 5% on payments to resident contractors or professionals when aggregate payments exceed ₹50 lakh in a financial year (threshold increased from ₹50 lakh in Budget 2025-26). This covers payments for contracts, commission, brokerage, and professional fees by non-business individuals.
Do NRIs face TDS on income earned in India?
Yes, under Section 195, all payments to Non-Resident Indians (NRIs) are subject to TDS at rates specified in the Income Tax Act or the applicable Double Taxation Avoidance Agreement (DTAA), whichever is lower. The payer must obtain a Tax Deduction Account Number (TAN) and file Form 27Q quarterly. NRI payments for property purchase, professional services, and interest are all covered.
What is the TDS rate on mutual fund income for FY 2026-27?
Under Section 194K, TDS at 10% is deducted on mutual fund income (including dividends) when the amount exceeds ₹5,000 per financial year. Budget 2025-26 reduced this threshold from ₹10,000 to ₹5,000. This applies to income distributed by mutual funds, UTI, and specified companies to resident unit holders.
What is the TDS on rent paid by individuals under Section 194IB?
Under Section 194IB, individuals and HUFs not covered under Section 194I must deduct TDS at 5% on rent payments exceeding ₹50,000 per month. The tenant deducts TDS on the last month's rent or at the time of vacating the property, whichever is earlier. TDS is deposited using Form 26QC and the tenant issues Form 16C to the landlord.
How many days does a deductor have to deposit TDS with the government?
TDS deducted during any month (except March) must be deposited by the 7th of the following month. For TDS deducted in March, the due date is 30 April. Government deductors can deposit TDS on the same day the tax is deducted. Late deposit attracts interest at 1.5% per month from the date of deduction to the date of deposit under Section 201(1A).
What is the penalty for not filing TDS returns on time?
Late filing of TDS returns attracts a late fee of ₹200 per day under Section 234E until the return is filed, subject to a maximum equal to the TDS amount. Additionally, Section 271H allows the Assessing Officer to impose a penalty between ₹10,000 and ₹1 lakh for failure to file TDS statements within the prescribed time. Interest on late deduction and deposit also applies separately.
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