This is a quick-reference guide to TDS rates for AY 2026-27 (Tax Year 2025-26). Under the Income-tax Act, 2025 (effective 01-04-2026), Salary TDS is in Sec. 392 and all other TDS provisions (old Sections 193 – 196C) are consolidated in Sec. 393 with six rate tables. For AY 2026-27 compliance, the old Sec. 194x numbering continues to apply; Sec. 392 / Sec. 393 become operative for payments on or after 01-04-2026.
Rates and thresholds below reflect Finance Act 2025 and Finance (No. 2) Act 2024 amendments.
TDS Rate Table: AY 2026-27 (FY 2025-26)
| Nature of Payment | Sec. (IT Act 1961) | ↔ IT Act 2025 | Rate | Threshold (₹) |
|---|---|---|---|---|
| Salary | 192 | 392 | Slab rates | As per slab |
| Interest on securities | 193 | 393 | 10% | 10,000 (debentures, FA 2025) |
| Dividends | 194 | 393 | 10% | 10,000 (FA 2025, up from 5,000) |
| Interest (bank / co-op / post office) | 194A | 393 | 10% | 50,000 (non-senior) / 1,00,000 (senior citizen, FA 2025) |
| Interest (non-banking payer) | 194A | 393 | 10% | 10,000 (FA 2025, up from 5,000) |
| Winnings — lottery/crossword | 194B | 393 | 30% | 10,000 per transaction (FA (No.2) 2024) |
| Winnings — horse races | 194BB | 393 | 30% | 10,000 per transaction (FA (No.2) 2024) |
| Contractor — individual/HUF payee | 194C | 393 | 1% | 30,000 single / 1,00,000 aggregate FY |
| Contractor — other payees | 194C | 393 | 2% | 30,000 single / 1,00,000 aggregate FY |
| Insurance commission (individual payee) | 194D | 393 | 2% (FA 2025, down from 5%) | 20,000 (FA 2025) |
| Life insurance payout | 194DA | 393 | 2% (FA (No.2) 2024) | 1,00,000 per FY |
| NSS deposits | 194EE | 393 | 10% | 2,500 |
| Rent — plant / machinery / equipment | 194-I(a) | 393 | 2% | 6,00,000 per FY (FA 2025, up from 2,40,000) |
| Rent — land / building / furniture | 194-I(b) | 393 | 10% | 6,00,000 per FY (FA 2025, up from 2,40,000) |
| Transfer of immovable property | 194-IA | 393 | 1% | 50,00,000 (consideration or SDV, whichever higher) |
| Rent by individual/HUF (no TAN) | 194-IB | 393 | 2% (FA 2025, down from 5%) | > 50,000 per month |
| Professional / technical fees | 194J | 393 | 2% (FTS / royalty for films / call centres) or 10% (professional, directors') | 50,000 per FY (FA 2025, up from 30,000) |
| Commission / brokerage | 194H | 393 | 2% (FA 2025, down from 5%) | 20,000 per FY (FA 2025, up from 15,000) |
| E-commerce operator payments | 194-O | 393 | 0.1% (FA (No.2) 2024, down from 1%) | 5,00,000 |
| Payment to non-resident | 195 | 393 | As per Sec. 115A / DTAA | No threshold |
| Income from MF units | 194K | 393 | 10% | 10,000 (FA 2025, up from 5,000) |
| Payment on transfer of virtual digital asset | 194S | 393 | 1% | 10,000 (50,000 for specified persons) |
Key Finance Act 2025 Changes to Remember
- Sec. 194A (interest): Senior-citizen threshold raised to ₹1,00,000; non-banking payer threshold raised to ₹10,000.
- Sec. 194D / 194H / 194IB: Rate cut to 2% (from 5%).
- Sec. 194J (professional/technical fees): Threshold raised to ₹50,000 per FY.
- Sec. 194 (dividends) and Sec. 194K (MF units): Threshold raised to ₹10,000.
- Sec. 194-I (rent): Threshold now ₹6,00,000 per FY (from ₹2,40,000). This is a major change — many smaller lease arrangements now fall below the TDS net.
- Sec. 194B / 194BB: Threshold now applies per transaction, not annual aggregate (FA (No.2) 2024).
Non-Resident Payments — Sec. 195 / Sec. 393
TDS on payments to non-residents is the most complex TDS area. Key points:
- Rate depends on the nature of income (royalty, FTS, interest, dividend, capital gains) and the applicable DTAA.
- The payer must apply whichever rate is more beneficial to the payee (domestic vs DTAA).
- A Tax Residency Certificate (TRC) under Sec. 90(4) and Form 10F are prerequisites for DTAA relief.
- Form 15CA / 15CB compliance is mandatory for most outbound remittances.
- Common error: Deducting TDS at 10% on software payments without checking the DTAA — the India–US DTAA Article 12 treatment of software payments as royalties has been the subject of extensive litigation (Engineering Analysis Centre v CIT, SC 2021 clarified the position).
Common TDS Mistakes CAs Should Avoid
1. Applying stale thresholds post FA 2025. The rent threshold (₹6L), Sec. 194J threshold (₹50K), and dividend threshold (₹10K) all changed from 01-04-2025. Using pre-FA 2025 thresholds is the #1 error seen in AY 2026-27 returns.
2. Wrong rate for contractor payments (Sec. 194C). 1% applies only when the payee is an individual or HUF. A sole proprietorship is "individual"; a partnership firm is "other" and attracts 2%.
3. Forgetting the per-co-owner rent threshold. If rent is paid to three co-owners and each co-owner's share is below the threshold, no TDS applies even if the total exceeds it.
4. Missing stamp-duty value rule for Sec. 194-IA. TDS is on the higher of consideration or stamp-duty value. A ₹48L sale deed with ₹55L SDV attracts TDS on ₹55L.
5. Ignoring lower/nil-deduction certificates under Sec. 197. CAs should maintain a tracker of client certificates and expiry dates.
6. Late deposit. TDS deducted must be deposited by the 7th of the following month (30 April for March deductions). Late deposit attracts interest @ 1.5% per month under Sec. 201(1A).
Quick Tips for Filing Season
- Verify all TDS credits in Form 26AS / AIS against the client's books before filing
- For salaried clients, ensure the employer has applied the correct regime (old vs new) for TDS
- If TDS credit is missing in 26AS, file a correction request with the deductor before the filing deadline
- Track lower/nil TDS certificates and their expiry dates to avoid over-deduction
TaxMarg's TDS reference database covers all sections with rates, thresholds, and DTAA cross-references. Search any TDS section or payment type for the complete provision with examples.