TDS Rates FY 2026-27: Complete Section-by-Section Chart

The most fundamental change to Indian TDS in two decades happened on 1 April 2026, and most rate charts you''ll find online haven''t caught up. What was a thicket of 60+ separate TDS sections in the old Income Tax Act — 194A for interest, 194C for contractors, 194J for professional fees, 194-IB for rent paid by individuals, and dozens of others — has been consolidated into a handful of parent sections under the Income Tax Act, 2025. Section 392 now covers all salary TDS. Section 393 covers everything else, organised as tabular sub-entries with numeric payment codes. Section 394 covers TCS.

The substantive rates have barely changed. What''s changed is the legal architecture, the section numbers you cite on TDS returns and challans, and the form names that flow through the system. Quoting Section 194C on a payment made after 1 April 2026 now triggers system-level validation errors at the e-filing portal — you need to use Section 393(1) [Table: Sl. No. 6(i)] with payment code 1017 instead. This pillar article maps every common TDS provision from the old framework to the new one, lays out the current rates and thresholds, and clarifies which provisions actually matter for the typical Indian taxpayer or deductor. Use Ganak''s Freelancer Invoice TDS Calculator to verify TDS on professional fees against the current rules.

The Structural Shift: From 60+ Sections to Three

Under the Income Tax Act, 1961, TDS provisions were scattered across Sections 192 through 194T — more than 60 separate sections, each covering a specific type of payment with its own threshold, rate, and exemptions. Over decades of amendments, the structure had become genuinely difficult to navigate even for tax practitioners. Section 194-IA (TDS on property purchase), Section 194-IB (rent by individuals), Section 194M (contractor/professional payments by individuals above ₹50 lakh), Section 194-O (e-commerce), Section 194Q (purchase of goods), Section 194S (VDA), and the dozens of others each lived in their own sub-section with their own quirks.

The Income Tax Act, 2025 has reorganised all of this into three parent sections:

• Section 392: Dedicated to salary TDS. Replaces old Sections 192 and 192A (early withdrawal of EPF). Tax is deducted at the average rate of income tax based on the estimated total salary for the year and the regime the employee has elected (new or old).
• Section 393: The umbrella TDS section. Replaces everything from Section 193 through 194T plus Section 195. Organised as a series of tables under sub-clauses (393(1) through 393(5)), with each table entry assigned a serial number and a numeric payment code (1001 to 1067).
• Section 394: Replaces Section 206C — the TCS framework covering tax collection on sales of specified goods, foreign remittances under LRS, overseas tour packages, motor vehicle sales, and luxury items.

The practical effect: every TDS challan and quarterly return filed for payments made on or after 1 April 2026 must use the new section references and numeric payment codes. Filing with old section numbers (194C, 194J, 194-IB, etc.) results in validation errors at the e-filing portal. Modern payroll and accounting software has been updated to handle the mapping automatically, but older systems and manual filers need to be conscious of the change.

A worked example. A company makes a contractor payment of ₹2 lakh on 15 April 2026 (financial year 2026-27). Under the old framework, this attracted 2% TDS under Section 194C (1% for individuals/HUF deductees). Under the new framework, the same payment attracts the same 2% TDS — but the legal citation is now Section 393(1) [Table: Sl. No. 6(i)], reportable under payment code 1017 in the TDS return. The deductee''s certificate is no longer Form 16A but Form 131. The quarterly TDS return is no longer Form 26Q but Form 140.

Complete TDS Rate Chart for FY 2026-27

The table below covers every common TDS provision applicable for FY 2026-27, organised by payment type. Where the new Act has consolidated multiple old sections into one entry, the table notes the old reference for continuity. All thresholds shown are per deductor per payee per financial year unless otherwise specified.

The table is organised by economic transaction type rather than by section number, because that''s how readers actually search for and use this information. The new payment codes (in square brackets) are what your TDS software will require in quarterly returns — keep them handy if you''re filing TDS manually.

The Threshold and Rate Changes That Matter

Several of the rates and thresholds in the chart above are new compared to a year ago. The most consequential changes affect everyday transactions:

Section 194J professional fees threshold raised to ₹50,000. Budget 2024 raised this from ₹30,000, effective from 1 April 2025. The change means small consultancy engagements, occasional freelance work, and one-time professional services below ₹50,000 annually per deductor are no longer subject to TDS. For a content creator earning ₹4,000 a month from a particular client (₹48,000 annually), no TDS applies. This is a meaningful relief for the freelance economy.

Section 194-IB rent TDS rate halved to 2%. The TDS rate on rent paid by individuals or HUFs not under tax audit (specified under what was Section 44AB) has been reduced from 5% to 2% from 1 October 2024. The threshold of ₹50,000 per month remains. Tenants paying high rents in metro cities — a Mumbai or Bengaluru renter paying ₹70,000-1.5 lakh per month — now deduct TDS at the lower 2% rate at the time of final rent payment in March (or when vacating, whichever is earlier).

Section 194 dividend threshold raised to ₹10,000. Up from ₹5,000 by Budget 2024. For retail investors holding dividend-paying stocks, this means only larger dividend payments per company per year attract TDS. A taxpayer receiving ₹8,500 in dividends from one company through the year now sees no TDS deducted.

Section 194A bank interest thresholds raised. Budget 2025 raised the threshold for senior citizens from ₹50,000 to ₹1,00,000 annually, and for general taxpayers from ₹40,000 to ₹50,000. This change benefits retirees with FD-heavy portfolios and reduces routine TDS deductions for moderately-sized depositors.

Section 194H commission/brokerage rate reduced to 2%. The reduction from 5% to 2% took effect from October 2024, applying to commission paid to insurance agents, brokers, and similar intermediaries. The threshold remains ₹20,000.

Section 194T introduced — TDS on partner payments. A genuinely new provision from FY 2025-26 onwards. Payments by a firm or LLP to its partners — remuneration, interest on capital, bonus — now attract 10% TDS if the aggregate annual payment to that partner exceeds ₹20,000. This brings partner payments into the TDS net for the first time in Indian tax history, affecting every CA firm, law firm, and consultancy partnership.

TCS on LRS reduced. The TCS on Liberalised Remittance Scheme transactions (foreign remittances under the ₹2.5 lakh/year limit) was reduced to 2% on amounts above ₹10 lakh per year, down from earlier higher rates. Overseas tour package purchases attract a flat 2% TCS with no threshold.

The 20% No-PAN Rule and the Rollback of 206AB

Two cross-cutting rules apply across most TDS provisions:

The 20% no-PAN rule (old Section 206AA, now under Section 393 cross-references). If the deductee does not furnish a valid PAN, TDS is deducted at the higher of: (a) the normal applicable rate, (b) the rate specified in the relevant section, or (c) 20%. The practical effect is that any payee without a PAN faces 20% TDS regardless of the underlying provision. For a contractor whose normal TDS would be 2%, no-PAN status pushes it to 20%. For a professional whose normal TDS is 10%, no-PAN also pushes it to 20%.

For higher-rate provisions like VDA (Section 194S, 1%) or e-commerce (Section 194-O, 0.1%), the 20% rule produces a much sharper penalty than the underlying rate. A crypto exchange transaction by someone without a valid PAN attracts 20% TDS rather than 1% — a 20× multiplier on tax withholding.

The rollback of Sections 206AB and 206CCA. These provisions, introduced in 2021, required deductors to apply higher TDS rates (twice the normal rate or 5%, whichever was higher) to payees who had not filed their ITR in the previous two years. The compliance burden of maintaining "filer status" lists fell on deductors, who had to check the IT department''s database before every payment. Finance Act 2025 abolished both provisions. From 1 April 2025 onwards, deductors are not required to check filing status for TDS purposes — only the PAN furnishing rule remains. Articles published before mid-2025 that mention "higher TDS for non-filers" are outdated.

Who Deducts TDS: Individuals vs Businesses

Not every payer needs to deduct TDS on every payment. The framework distinguishes between three classes of deductors:

Companies, firms, LLPs, and individuals/HUFs under tax audit: These deductors must apply TDS on virtually all qualifying payments — contractor payments, professional fees, rent on commercial property, interest, dividends, etc. They have TANs (Tax Deduction Account Numbers) and file quarterly TDS returns.

Individuals/HUFs not under tax audit: The general rule is that ordinary individuals don''t need to deduct TDS on most payments — your housekeeper, gardener, or freelance designer doesn''t need TDS deducted by you. But four specific provisions explicitly require even non-audit individuals to deduct TDS:

• Section 194-IA (was, now under Section 393) — 1% TDS on property purchase above ₹50 lakh. Applies to all buyers including individuals.
• Section 194-IB — 2% TDS on rent above ₹50,000/month paid by individuals/HUF.
• Section 194M — 5% TDS on contractor or professional payments by individuals/HUF where aggregate annual payment to that recipient exceeds ₹50 lakh.
• Section 194S — 1% TDS on VDA (crypto) transfers above the thresholds.

For these four provisions, individuals don''t need a TAN — they deduct TDS and remit it using Form 26QB (property), Form 26QC (rent), Form 26QD (Section 194M), or Form 26QE (VDA), all of which can be filed through the e-filing portal using just a PAN. The new Act consolidates these forms into a unified Form 141 from 1 April 2026.

Non-residents and foreign entities: Section 195 (now Section 393(2)) governs TDS on payments to non-residents. The rates vary by income type — interest, royalty, technical services, capital gains — and Double Taxation Avoidance Agreements (DTAAs) often reduce the rate from the statutory level. This is one area where professional advice is genuinely warranted; the cross-border tax rules are complex enough that getting them wrong is expensive.

How to Claim TDS Credit in Your ITR

TDS deducted on your income is creditable against your final tax liability. Three steps to verify and claim:

1. Check Form 26AS (or Form 168 from FY 2026-27). The IT department''s consolidated TDS record is available through the e-filing portal. Every TDS deduction by every deductor should appear here, attributed to your PAN. Discrepancies between your Form 16/16A and Form 26AS mean either the deductor hasn''t deposited the TDS or has mis-attributed it.
2. Check your AIS (Annual Information Statement). Beyond TDS, AIS includes dividend payments, interest income, mutual fund transactions, and share trading data sourced from third-party reporting. Reconcile your records against AIS before filing.
3. Claim TDS credit in Schedule TDS of your ITR. The portal auto-populates from Form 26AS. Verify the figures match your records, especially if you have multiple TDS deductors across the year.

If TDS was deducted but doesn''t appear in your Form 26AS, contact the deductor in writing and ask them to file a correction return on TRACES. Do not file your ITR claiming credit that doesn''t appear in Form 26AS — the system will reject it as un-credited TDS, and you''ll either receive a defective return notice or be denied the refund pending reconciliation.

Frequently Asked Questions

What are the major TDS changes under the Income Tax Act, 2025?

The structural reorganisation is the biggest change. Over 60 separate TDS sections from the old Act (192 through 194T plus 195) have been consolidated into just three parent sections: Section 392 (salary), Section 393 (everything else, with tabular sub-clauses and numeric payment codes 1001-1067), and Section 394 (TCS). Substantive rates are mostly unchanged, but TDS challans and quarterly returns filed for payments made on or after 1 April 2026 must use the new section references and payment codes. The old Section 206AB (higher TDS for non-filers) was abolished by Finance Act 2025 and no longer applies.

What is the TDS rate on professional fees for FY 2026-27?

10% under Section 393(1) [Table: Sl. No. 4(i)], payment code 1027 — the same rate that applied under old Section 194J. The threshold has been raised to ₹50,000 per recipient per financial year (up from ₹30,000 by Budget 2024). For technical services (a sub-category within Section 194J), the rate is 2% with the same ₹50,000 threshold. If the professional doesn''t furnish a PAN, TDS rises to 20%.

What is the TDS rate on rent paid by individuals?

2% under Section 393(1) [Table: Sl. No. 2(i)], payment code 1023 — reduced from 5% by amendments effective October 2024. This applies to individuals or HUFs not under tax audit (Section 44AB) who pay rent exceeding ₹50,000 per month. The TDS is deducted once a year — at the time of final rent payment in March or when vacating the property, whichever is earlier. Tenants don''t need a TAN; they remit TDS through Form 26QC (now consolidated into Form 141 under the new Act) using just their PAN.

How does the no-PAN TDS rule work?

If a deductee does not furnish a valid PAN, the deductor applies TDS at the higher of: (a) the normal rate applicable to the transaction, (b) the rate specified in the section, or (c) 20%. The 20% floor ensures that anyone receiving payment without disclosing PAN faces a meaningful tax withholding. For provisions with lower-than-20% normal rates (like 1% on VDA or 0.1% on e-commerce), no-PAN status produces a sharp multiplier — 20% TDS instead of 1% or 0.1%. This rule was under old Section 206AA; it continues under the new Act framework.

Is TDS deducted on bank fixed deposit interest in FY 2026-27?

Yes, if your aggregate FD interest from one bank exceeds the threshold — ₹50,000 per year for general taxpayers (up from ₹40,000) or ₹1,00,000 for senior citizens (up from ₹50,000), per Budget 2025. The rate is 10% under Section 393(1), payment code 1012. If you don''t furnish a PAN, the rate rises to 20%. Submit Form 15G (general taxpayers below taxable income) or Form 15H (senior citizens below taxable income) — now consolidated as Form 121 under the new Act — to your bank if you want to prevent TDS deduction on grounds of low total income.

What is Section 194T and why does it matter?

Section 194T (under old Act numbering, now within Section 393 of the new Act) is a genuinely new TDS provision introduced from FY 2025-26 onwards. It requires firms and LLPs to deduct 10% TDS on payments made to partners — remuneration, interest on capital, bonuses, and similar payments — where the aggregate annual payment to that partner exceeds ₹20,000. This brings partner payments into the TDS net for the first time. Every chartered accountancy firm, law partnership, and professional services LLP must now deduct TDS on partner distributions.

How is TDS on cryptocurrency transactions calculated?

Section 194S (under old Act numbering, now Section 393(1) [Table: Sl. No. 11], payment code 1045) imposes 1% TDS on the consideration paid for transfer of a Virtual Digital Asset. The threshold is ₹50,000 per financial year for "specified persons" (individuals and HUFs not under tax audit) and ₹10,000 for others. Once you cross the threshold, every subsequent transfer through an Indian exchange or PMLA-registered platform attracts 1% TDS on the gross consideration. The TDS is creditable against the 30% final tax under Section 115BBH — it''s an advance payment, not an additional tax. If PAN is not furnished, the rate rises to 20%.

Sources and Further Reading

This pillar article is based on the Income Tax Act, 2025 (effective 1 April 2026), incorporating the Finance Act, 2024 and Finance Act, 2025 amendments, and CBDT notifications mapping old section references to new Section 392, 393, and 394 sub-clauses. For official references:

• Income Tax Department — TDS Compliance under the Income Tax Act, 2025
• TRACES Portal — TDS Reconciliation Analysis and Correction Enabling System
• Income Tax e-Filing Portal — TDS challan filing and Form 26AS/168
• Income Tax India — Section 392, 393, 394 statutory text and payment codes

Last verified: 15 May 2026. This article will be updated when CBDT issues further clarifications on payment code mappings or if Budget 2027 changes TDS rates or thresholds.