TDS Rate Chart for FY 2026-27 — Complete updated reference

Introduction

Tax Deducted at Source (TDS) is one of the most important recurring tax compliances for businesses, employers, professionals, companies, firms and other deductors in India. TDS requires the payer to deduct tax at the prescribed rate when making specified payments and deposit that tax with the Central Government within the applicable timeline.

FY 2026-27 is an important transition year because the Income-tax Act, 2025 has come into effect from 1 April 2026. The good news for businesses is that the Income Tax Department has clarified that there has been no policy change in TDS rates or monetary thresholds merely because of the new Act. The TDS provisions have largely been consolidated into a simplified table under Section 393 of the Income-tax Act, 2025.

For payments or credits where the earlier event occurs on or before 31 March 2026, the Income-tax Act, 1961 applies. Where the earlier event occurs on or after 1 April 2026, the Income-tax Act, 2025 applies.

Therefore, businesses should update their accounting and TDS systems for FY 2026-27 and use the new Act’s section references for payments made or credited from 1 April 2026 onwards.

TDS Rate Chart FY 2026-27

The following is a practical reference chart for commonly encountered TDS provisions.

Payment / Nature	Old Section Reference	FY 2026-27 Rate	Important Threshold / Condition
Salary	192	Slab rate	Based on estimated taxable salary
Interest other than securities	194A	10%	Threshold applies
Dividend	194	10%	Subject to applicable threshold
Contractor – Individual/HUF	194C	1%	Per payment/annual threshold
Contractor – Others	194C	2%	Per payment/annual threshold
Commission/Brokerage	194H	2%	Threshold applies
Insurance commission	194D	2%	Threshold applies
Rent – Plant/Machinery	194I	2%	Threshold applies
Rent – Land/Building/Furniture	194I	10%	Threshold applies
Rent by Individual/HUF not liable to audit	194IB	2%	Threshold applies
Professional/Technical services	194J	2% / 10%	Depends on nature of payment
Purchase of immovable property	194IA	1%	Where prescribed conditions apply
Payment under specified immovable-property arrangement	194IC	10%	Subject to provision
Lottery/Games winnings	194B	30%	Subject to applicable threshold
Horse-race winnings	194BB	30%	Subject to applicable threshold
Online gaming net winnings	194BA	30%	Applicable on net winnings
Purchase of goods	194Q	0.1%	Subject to turnover and purchase thresholds
Benefits/perquisites from business/profession	194R	10%	Subject to threshold
Sale of virtual digital assets	194S	1%	Subject to applicable threshold
Payments by firm to partner	194T	10%	Subject to threshold
Commission on lottery tickets	194G	2%	Threshold applies
Income from units	194K	10%	Subject to threshold
Compensation for compulsory acquisition	194LA	10%	Subject to threshold
Certain payments by Individual/HUF	194M	2%	Subject to threshold
E-commerce participant	194-O	0.1%	Subject to conditions
Interest on securities	193	10%	Subject to applicable conditions
Payments to non-residents	195	Applicable rate	Depends on nature of income, DTAA etc.

The Income Tax Department has confirmed that the rates and monetary thresholds under the new TDS framework remain broadly the same as under the Income-tax Act, 1961.

1. TDS on Salary — Section 192

TDS on salary is different from most other TDS provisions.

The employer does not simply deduct a fixed percentage such as 10%.

Instead, the employer estimates the employee’s taxable income for the relevant tax year and deducts tax based on the applicable tax regime and estimated annual tax liability.

For FY 2026-27, salary TDS is governed by the new Income-tax Act, 2025 because payments relating to the new tax year fall under the new Act.

The employer should consider:

Salary

Allowances

Perquisites

Eligible deductions

Exemptions

Previous employment income, where applicable

Tax regime selected by the employee

Other income declared by the employee

2. TDS on Interest — Section 194A

Rate: 10%

This commonly applies to interest other than interest on securities paid to a resident.

Examples include interest paid by:

Companies

Firms

Banks, subject to specific provisions

Other specified persons

A threshold applies before TDS becomes applicable.

The threshold and payer-specific rules should be checked before deduction.

3. TDS on Dividend — Section 194

Rate: 10%

Dividend paid to a resident shareholder may attract TDS at 10%, subject to the applicable threshold and exemptions.

Companies should maintain accurate shareholder records and PAN information before processing dividend payments.

4. TDS on Contractor Payments — Section 194C

This is one of the most commonly used TDS provisions by Indian businesses.

Individual/HUF Contractor

1%

Other Contractor

2%

It generally applies to payments to residents for carrying out specified work, including contractual arrangements.

Examples include:

Construction work

Labour contracts

Advertising contracts

Transport contracts

Manufacturing under contract arrangements

The statutory thresholds should be checked before deducting TDS.

5. TDS on Rent — Section 194I

Two major rates apply.

Plant & Machinery

2%

Land, Building, Furniture or Fittings

10%

This distinction is particularly important for businesses paying:

Office rent

Warehouse rent

Factory rent

Equipment rent

Machinery rent

6. TDS on Rent by Certain Individuals/HUF — Section 194IB

Certain individuals and HUFs who are not covered by the regular tax-audit-related TDS provisions can fall under Section 194IB.

Rate 2%

The provision has its own threshold and compliance mechanism.

‍💻 7. TDS on Professional & Technical Services — Section 194J

This is another major provision for businesses.

Two rates are commonly relevant:

2%

For specified technical services and certain other specified payments.

10%

For professional services and other specified payments covered at the higher rate.

Examples of professional services include:

Legal services

Accounting

Architecture

Consultancy

Medical services

Professional advisory services

The exact nature of the service should be identified before determining the applicable rate.

8. TDS on Purchase of Immovable Property — Section 194IA

Rate: 1%

A buyer of specified immovable property from a resident seller may have to deduct TDS at 1%, subject to the statutory conditions and threshold.

The provision is generally relevant for purchases of:

Land

Building

Apartment

Other immovable property

The buyer should obtain the seller’s PAN and complete the prescribed reporting/payment procedure.

9. TDS on Certain Real Estate Arrangements — Section 194IC

Where consideration is paid under specified arrangements involving transfer of development rights or similar arrangements covered by the provision:

Rate: 10%

The exact applicability depends on the contractual structure.

10. Lottery, Crossword & Game Winnings — Section 194B

Rate: 30%

TDS applies to specified winnings from:

Lottery

Crossword puzzles

Card games

Other games

The threshold and applicable rules should be considered before deduction.

11. Horse Race Winnings — Section 194BB

Rate: 30%

TDS is applicable on winnings from horse races where the statutory conditions are satisfied.

12. Online Gaming — Section 194BA

Rate: 30%

TDS applies to net winnings from online games under the applicable provisions.

The computation is not simply based on every individual deposit or withdrawal. The statutory mechanism for determining net winnings must be followed.

13. Purchase of Goods — Section 194Q

Rate: 0.1%

Section 194Q applies to specified purchases of goods where the prescribed conditions are satisfied.

A major condition is that the buyer’s turnover in the preceding financial year must exceed the prescribed limit and purchases from the particular resident seller exceed the statutory threshold.

Businesses with substantial procurement should monitor this provision carefully.

14. Benefits or Perquisites — Section 194R

Rate: 10%

This provision applies to specified benefits or perquisites arising to a resident from business or profession.

It can become relevant for:

Business incentives

Promotional benefits

Gifts

Non-cash benefits

Business-related perquisites

The statutory threshold and exceptions should be reviewed before applying TDS.

₿ 15. Virtual Digital Assets — Section 194S

Rate: 1%

TDS at 1% can apply to consideration for transfer of specified Virtual Digital Assets, subject to the applicable conditions and thresholds.

This provision is particularly relevant to businesses dealing with:

Cryptocurrency

Certain digital tokens

Other assets falling within the statutory VDA definition

16. Payments to Partners — Section 194T

A significant development for FY 2026-27 is the introduction of TDS on certain payments made by a firm to its partners.

The provision covers specified payments such as:

Salary

Remuneration

Commission

Bonus

Interest

Rate: 10%

This should be specifically added to the FY 2026-27 TDS checklist for partnership firms and LLPs where applicable.

17. E-Commerce — Section 194-O

Rate: 0.1%

Specified e-commerce operators may be required to deduct TDS on payments made to e-commerce participants, subject to the statutory conditions and exemptions.

Businesses operating online marketplaces should review this provision carefully.

18. Commission/Brokerage — Section 194H

Rate: 2%

This commonly applies to commission or brokerage paid to residents.

Examples include:

Sales commission

Agency commission

Brokerage

Referral commission

The nature of the relationship and payment should be examined to determine whether Section 194H applies.

19. Insurance Commission — Section 194D

Rate: 2%

TDS can apply to specified insurance commission payments to residents.

20. Income from Units — Section 194K

Rate: 10%

Specified income relating to units may attract TDS under this provision when paid to a resident.

21. Compensation for Compulsory Acquisition — Section 194LA

Rate: 10%

Specified compensation paid for compulsory acquisition of immovable property can attract TDS, subject to statutory conditions and thresholds.

22. TDS by Individual/HUF on Certain Payments — Section 194M

Rate: 2%

This provision can apply to specified payments by individuals or HUFs who are not otherwise required to deduct TDS under provisions such as Section 194C, 194H or 194J.

It can cover payments to:

Contractors

Commission agents

Professionals

subject to the statutory conditions and threshold.

23. Payments to Non-Residents — Section 195

Payments to non-residents require separate analysis.

The applicable TDS rate depends on:

Nature of payment

Residential status

Domestic law

Applicable DTAA

PAN availability

Tax treaty documentation

Permanent establishment considerations

Beneficial ownership and other conditions

Common payments include:

Royalty

Technical services

Interest

Commission

Professional services

Other taxable payments

A business should not automatically apply the domestic 10% rate to every payment made to a foreign company.

🆕 Income-tax Act, 2025 — What Changed for TDS?

The biggest FY 2026-27 change is not a broad change in TDS rates.

Instead, the Income-tax Act, 2025 has reorganised the TDS provisions.

The Income Tax Department has specifically stated that the old TDS provisions contained across Sections 192 to 194T have been consolidated into Sections 392 and 393 of the new Act.

Therefore, accounting teams should update:

TDS software

ERP tax codes

Accounting ledgers

Invoice processing systems

TDS return utilities

Internal compliance checklists

Vendor master data

FY 2025-26 vs FY 2026-27 — Important Transition

This is particularly important for businesses making payments around March and April.

The Income Tax Department has clarified that the applicable Act depends on the earlier of credit or payment.

If earlier event is on or before 31 March 2026

The Income-tax Act, 1961 applies.

If earlier event is on or after 1 April 2026

The Income-tax Act, 2025 applies.

Example

A company credits a contractor’s bill on:

30 March 2026

and pays it on:

5 April 2026

The earlier event is the credit on 30 March 2026, so the old Act applies.

Conversely, if the bill is neither credited nor paid until:

5 April 2026

the new Income-tax Act, 2025 applies.

TDS Return Filing for FY 2026-27

The TDS reporting system has also transitioned to new form numbering under the Income-tax Act, 2025.

For example, the Income Tax Department identifies Form 140 as the quarterly statement corresponding to the earlier Form 26Q for TDS on non-salary payments made to residents.

Quarterly Due Dates

Quarter	Period	TDS Statement Due Date
Q1	April–June 2026	31 July 2026
Q2	July–September 2026	31 October 2026
Q3	October–December 2026	31 January 2027
Q4	January–March 2027	31 May 2027

The Income Tax Department’s current Form 140 guidance confirms these quarterly deadlines.

TDS Deposit

TDS deducted during the month generally has to be deposited within the prescribed timeline.

For most non-government deductors, tax deducted during a month is generally deposited by the 7th of the following month.

For March deductions, the applicable special deadline should be followed.

Businesses should ensure that the challan, deductee details and TDS ledger are reconciled before filing the quarterly statement.

Consequences of TDS Default

Incorrect or delayed TDS compliance can result in:

Interest

Late filing fees

Penalties

Disallowance of expenditure in certain cases

TDS demand

Notices from the Income Tax Department

Incorrect Form 26AS/AIS reporting for deductees

Therefore, TDS should be treated as a monthly compliance, not merely a quarterly filing exercise.

PAN & Higher TDS Considerations

The deductor should obtain and verify the PAN of the deductee wherever required.

Incorrect or invalid PAN information can result in higher TDS consequences under the applicable provisions.

Businesses should therefore maintain an updated vendor database containing:

PAN

Legal name

Entity type

Residential status

Nature of service

TDS section

Applicable rate

Lower/nil deduction certificate, if any

Lower or Nil TDS Certificate

In eligible situations, a taxpayer can obtain a certificate for:

Lower deduction

Nil deduction

The deductor should verify the certificate’s:

Validity

PAN

Period

Section

Rate

Monetary limit

before applying a lower rate.

TDS on GST Component

The treatment of GST for TDS purposes depends on the applicable TDS provision and the way the invoice is structured.

For many payments where GST is separately indicated and TDS is deducted on the underlying value of the service/work, the GST component may be excluded from the amount subject to TDS, provided the statutory conditions are satisfied.

Businesses should therefore maintain invoices with a clear breakup of:

Basic Value + GST = Total Invoice Value

rather than applying TDS blindly on the gross invoice.

Practical TDS Compliance Checklist for FY 2026-27

Obtain valid TAN where required.

Collect and verify vendor PAN.

Identify the correct TDS section.

Check the applicable monetary threshold.

Determine whether the payee is resident or non-resident.

Check whether a lower/nil deduction certificate exists.

Apply the correct rate.

Deduct TDS at the correct event—credit or payment, as applicable.

Deposit TDS within the prescribed deadline.

File the applicable quarterly TDS statement.

Issue TDS certificates.

Reconcile TDS payable with the books.

Reconcile reported TDS with the relevant tax records.

Correct errors through the prescribed correction mechanism.

Conclusion

The TDS rate structure for FY 2026-27 is broadly unchanged in terms of rates and monetary thresholds, but businesses must pay close attention to the transition to the Income-tax Act, 2025, which applies to payments/credits falling on or after 1 April 2026. The Income Tax Department has expressly clarified that the new Act reorganises and simplifies the TDS provisions rather than introducing a wholesale change in TDS rates.

For businesses, the most important rates to remember include 1%/2% for specified contractor payments, 2%/10% for different professional/technical service payments, 2%/10% for different rent categories, 10% for interest in specified cases, 0.1% for specified purchase-of-goods and e-commerce transactions, 10% for specified benefits/perquisites and partner payments, and 30% for specified winnings.

The introduction of Section 194T for specified payments to partners is particularly important for firms and LLPs and should be incorporated into FY 2026-27 accounting and compliance systems.

Businesses should also remember that TDS rates alone are not enough. Correct section selection, thresholds, PAN verification, residential status, timing of deduction, deposit deadlines, quarterly statements and reconciliation are all essential components of TDS compliance.

For FY 2026-27, companies should therefore update their TDS master data and accounting systems before processing payments under the new Income-tax Act, 2025.

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