TDS Rate Chart FY 2026-27: Latest Section-wise TDS Rates, Thresholds, Due Dates, Examples and Compliance Guide
TDS is still one of the easiest places for a business, firm, LLP, company or professional to make an expensive mistake. A wrong section, wrong threshold, delayed deduction, late deposit or old section-code reporting after 1 April 2026 can lead to interest, expense disallowance, correction statements, notices and cash-flow pressure. This guide gives you a practical, updated TDS chart for FY 2026-27 with the current rate structure, new-law reporting context, examples, due dates and a working compliance checklist.
A key point for FY 2026-27 is that while the rate and threshold policy is largely unchanged, the Income Tax Department has clarified that TDS provisions are now reorganised under the Income Tax Act, 2025. Salary withholding is presented under Section 392, and most non-salary withholding is consolidated under Section 393. So, a deductor may still apply the familiar commercial logic of Sections 194C, 194J, 194H, 194I, 194Q and others, but for transactions from 1 April 2026 onward, the new reporting section reference must be used.
- What is TDS?
- What Changed from 1 April 2026?
- TDS Rate Chart FY 2026-27
- Important Special Cases
- TDS Deposit Due Dates
- TDS Return Due Dates
- Practical Examples
- When TDS May Not Be Required
- Interest, Disallowance and Other Consequences
- TDS Compliance Checklist
- Common TDS Mistakes
- Related DN & CO. Reads
- Frequently Asked Questions
- Official References
- Conclusion
What is TDS?
TDS means Tax Deducted at Source. In simple terms, the payer deducts tax at the prescribed rate at the time of payment or credit, whichever rule applies to that category of income, and then deposits that tax with the Government.
It applies across a wide range of transactions, including:
- Salary
- Interest
- Dividend
- Professional fees
- Contractor payments
- Commission or brokerage
- Rent
- Purchase of goods in specified cases
- Business benefits or perquisites
- Virtual digital asset transactions
- Payments by firm to partner in covered cases
What Changed from 1 April 2026?
The Department has clearly stated that for sums paid or credited on or after 1 April 2026, the withholding provisions of the Income Tax Act, 2025 apply. The trigger still broadly depends on the familiar principle of payment or credit, whichever is earlier, except where a specific provision works differently, such as salary.
The Department has also clarified that there is no policy change in the rates and thresholds. The law is mainly restructured. In broad terms:
- Section 392 covers salary withholding under the new Act.
- Section 393 covers most non-salary TDS categories in tabular form.
- Using old section numbers like 194C, 194J or 194H in post-1 April 2026 reporting can create processing errors and correction work.
TDS Rate Chart FY 2026-27
The chart below focuses on the major resident-payment categories most businesses and professionals actually use in practice. The “old section reference” is retained here for business familiarity, but remember that post-1 April 2026 reporting should align with the new law.
| Nature of Payment | Old Familiar Reference | Rate | Threshold | Practical Note |
|---|---|---|---|---|
| Salary | 192 / now under Section 392 | As per slab | Based on estimated taxable salary | Computed after considering declarations, regime and eligible adjustments |
| Interest other than securities - bank, cooperative bank, post office | 194A | 10% | ₹50,000 for non-senior citizen | Threshold increased from older lower level; apply payer-wise aggregation rules |
| Interest other than securities - senior citizen | 194A | 10% | ₹1,00,000 | Senior-citizen threshold is higher |
| Other interest | 194A | 10% | ₹10,000 | Use for non-bank/non-post-office covered cases |
| Dividend | 194 | 10% | ₹10,000 | Threshold increased from older lower level |
| Contract payment to Individual/HUF | 194C | 1% | ₹30,000 single payment or ₹1,00,000 aggregate | Common issue: aggregate threshold ignored |
| Contract payment to others | 194C | 2% | ₹30,000 single payment or ₹1,00,000 aggregate | Rate differs by payee category |
| Insurance commission | 194D | 2% | ₹20,000 | Threshold increased |
| Lottery ticket commission / remuneration | 194G | 2% | ₹20,000 | Threshold increased |
| Commission or brokerage | 194H | 2% | ₹20,000 | Threshold increased |
| Rent for plant and machinery | 194I | 2% | ₹50,000 per month or part of month | Do not confuse with old annual threshold memory |
| Rent for land, building, furniture or fittings | 194I | 10% | ₹50,000 per month or part of month | Check monthly threshold carefully |
| Professional services | 194J | 10% | ₹50,000 | Professional and technical treatment may differ |
| Technical services | 194J | 2% | ₹50,000 | Technical service lower rate continues |
| Interest on securities | 193 | 10% | ₹10,000 | Threshold introduced where earlier nil threshold applied |
| Income in respect of units | 194K | 10% | ₹10,000 | Threshold increased |
| Purchase of immovable property | 194IA | 1% | ₹50 lakh | Buyer may file through challan-cum-statement route |
| Rent by Individual/HUF not liable to tax audit in normal TDS setup | 194IB | 2% | Rent exceeds ₹50,000 per month | Handled through challan-cum-statement route |
| Payment by Individual/HUF to contractor or professional | 194M | 2% | ₹50 lakh | Also challan-cum-statement category |
| Purchase of goods | 194Q | 0.1% | ₹50 lakh | Buyer turnover condition also matters |
| E-commerce operator to participant | 194O | 0.1% | ₹5 lakh for eligible individual/HUF participant cases | Check participant profile and PAN/Aadhaar conditions |
| Benefit or perquisite from business or profession | 194R | 10% | ₹20,000 | Frequently missed in promotional schemes and incentives |
| Virtual digital asset transfer | 194S | 1% | ₹10,000 / ₹50,000 for specified person | Check category carefully |
| Cash withdrawal | 194N | 2% / 5% as applicable | ₹1 crore or ₹20 lakh depending on filer status | Bank or post office deducts |
| Firm to partner payment | 194T | 10% | ₹20,000 | Important for firms from FY 2026-27 onward |
Important Special Cases
1. Salary is now under Section 392
Salary withholding is no longer just something employers can leave on autopilot. The Department has specifically stated that for salary paid from April 2026 onward, the employer should compute TDS under Section 392(1) of the new Act and reset payroll logic for the new tax year.
2. Challan-cum-statement cases are now consolidated
Under the old law, taxpayers used separate forms such as 26QB, 26QC, 26QD and 26QE. Under the new law, these resident PAN-based categories have been merged into Form 141.
| Transaction Type | Old Reference | New Form / New-law Context |
|---|---|---|
| Rent paid by Individual/HUF | 194IB / Form 26QC | Form 141 - Schedule A |
| Transfer of immovable property | 194IA / Form 26QB | Form 141 - Schedule B |
| Payment by Individual/HUF to contractor or professional | 194M / Form 26QD | Form 141 - Schedule C |
| Virtual digital asset transfer by Individual/HUF | 194S / Form 26QE | Form 141 - Schedule D |
3. No-PAN cases need extra care
In practice, if PAN is unavailable or inoperative in a situation where PAN is required, higher-rate consequences can arise. Do not finalize payment files without a PAN status check.
4. Cash withdrawal TDS needs yearly monitoring
Banks and post offices deduct TDS on cash withdrawals above the prescribed limit. If you want a wider compliance picture around PAN, AIS visibility, cash withdrawals and transaction reporting, read our detailed DN & CO. guide on bank transaction limits, PAN and tax notice risk.
TDS Deposit Due Dates
The Income Tax Department has clarified that the core TDS deposit timeline continues under the new Act through the Income Tax Rules, 2026. So the practical rule remains:
| Month of Deduction | General Due Date for Deposit |
|---|---|
| April to February | 7th of the next month |
| March | 30 April |
TDS Return Due Dates
The standard quarterly TDS return calendar is generally followed unless specifically extended by notification or circular.
| Quarter | Standard Due Date |
|---|---|
| Q1: April to June | 31 July |
| Q2: July to September | 31 October |
| Q3: October to December | 31 January |
| Q4: January to March | 31 May |
Practical Examples
Example 1: Professional fees
A company pays a consultant ₹1,00,000 for professional services.
TDS rate: 10%
TDS amount: ₹10,000
Net payment: ₹90,000
Example 2: Contractor payment
A business makes a contract payment of ₹2,00,000 to an individual contractor.
TDS rate: 1%
TDS amount: ₹2,000
Net payment: ₹1,98,000
Example 3: Rent payment under Section 194I
A business pays office rent of ₹80,000 per month for commercial premises.
Since the payment exceeds the current monthly threshold, TDS applies.
Rate for land/building: 10%
Monthly TDS: ₹8,000
Example 4: Cash withdrawal TDS
A return-filing taxpayer withdraws ₹1.20 crore in cash during the financial year.
TDS generally applies on ₹20 lakh at 2%.
TDS amount: ₹40,000
When TDS May Not Be Required
TDS may not arise in situations such as:
- The payment does not cross the applicable threshold
- A valid lower-deduction or nil-deduction certificate exists
- Form 15G or Form 15H is validly furnished in the categories where the law permits it
- The income itself is exempt in the relevant hands
- The transaction falls outside the charging scope of the particular withholding category
Interest, Disallowance and Other Consequences
The Department has clarified that the main consequence structure remains intact under the new Act.
| Default | Typical Consequence |
|---|---|
| Late deduction of TDS | Interest at 1% per month or part thereof |
| Late deposit after deduction | Interest at 1.5% per month or part thereof |
| Failure to deduct or deposit resident-payment TDS in business accounts | 30% disallowance of the expenditure in specified cases |
| Late TDS return filing | Fee and possible further compliance consequences |
| Serious non-compliance | Assessee-in-default exposure, penalty, and in some cases prosecution risk |
TDS Compliance Checklist
- Identify the exact nature of payment before booking it
- Check whether the recipient is resident or non-resident
- Verify threshold on both single-payment and aggregate basis where relevant
- Confirm PAN and category of the deductee
- Apply the correct rate
- Check whether special form or certificate exists
- Deduct at the correct event point
- Deposit within due date
- Use the correct new-law section mapping from 1 April 2026 onward
- File the correct return or challan-cum-statement
- Issue TDS certificate on time
- Reconcile books, challans, 26AS/AIS and return filing data
Common TDS Mistakes
- Using the old section code in post-1 April 2026 return reporting
- Applying 194I and 194IB interchangeably
- Ignoring aggregate threshold under Section 194C
- Treating all consultancy-style payments as technical services at 2%
- Skipping TDS because the vendor says tax will be adjusted later
- Missing benefit or perquisite TDS under Section 194R
- Not reviewing VDA and partner-payment categories separately
- Depositing tax correctly but filing the return with wrong details
Related DN & CO. Reads
If you want to connect TDS compliance with broader financial and working-capital risk, these DN & CO. reads are useful:
Frequently Asked Questions
Are TDS rates different under the Income Tax Act, 2025?
No. The Income Tax Department has clarified that the rates and monetary thresholds are largely retained. The major change is in the presentation and section numbering.
Which section should be used after 1 April 2026?
For post-1 April 2026 transactions, the new-law section reference should be used. Salary is under Section 392, and most other TDS categories are presented under Section 393.
Can I still think in terms of Section 194C, 194J and 194H for internal understanding?
Yes, for internal commercial understanding many teams will continue using those familiar labels. But for compliance reporting after 1 April 2026, the new section reference should be mapped correctly.
What is Form 141?
Form 141 is the unified challan-cum-statement under the new law for specified resident PAN-based TDS transactions such as certain rent, property, contractor/professional and VDA cases.
Has the threshold for rent under Section 194I changed?
Yes, the relevant threshold framework now needs to be read carefully in light of the updated limits. For practical current use, many businesses will now check the monthly threshold rather than relying on old memory of the earlier annual number.
What happens if TDS is deducted but deposited late?
Interest at 1.5% per month or part thereof can apply from the date of deduction to the date of actual payment, along with other downstream compliance risks.
Does wrong section quoting matter if the rate and amount are otherwise correct?
Yes. The Department has indicated that using old section numbers for post-1 April 2026 transactions can cause processing errors and may require a correction statement.
Official References
- Income Tax Department: TDS Compliance FAQ under Income Tax Act, 2025
- Income Tax Department: Tax Payments FAQ and new-law TDS section presentation
- Income Tax Department: Form 141 FAQs
- Income Tax Department: Form 141 User Manual
- Government budget document showing updated TDS thresholds proposed and aligned for FY 2025-26 onward
- Income Tax Department: TDS on Cash Withdrawal under Section 194N FAQ
- Income Tax Department: TAN FAQ
Conclusion
TDS for FY 2026-27 is not just about knowing a few old section numbers. The real compliance task is now two-layered: apply the right rate and threshold, and also report the transaction under the correct new-law mapping from 1 April 2026 onward. Businesses that continue using old section references mechanically may create avoidable correction work even when the amount deducted is otherwise correct.
The safest working approach is simple: classify the payment correctly, verify PAN and threshold before release, deduct on time, deposit on time, file the right return or Form 141 where needed, and reconcile every month. That is what keeps TDS from becoming a year-end problem.