✨ Introduction
Tax Deducted at Source (TDS) is a key compliance mechanism under the Income Tax Act, ensuring tax collection at the point of income generation. For FY 2026-27 (Tax Year 2026-27), effective from 1st April 2026, the Income Tax Act 2025 (New) consolidates most provisions into Section 393, simplifying compliance while retaining familiar rates. This guide provides a detailed table of applicable TDS rates for payments to residents and non-residents, along with compliance notes.
🏠 Table – For Payment to Residents
| Sr No. | Old Act Section | New Act Section | Ref Serial No. | Nature of Payment | Applicable Payer | Threshold Limit | TDS Rate |
| 1 | 192 | 392 | N/A | Salary | Any employer | Basic exemption limits | Slab rates |
| 2 | 194H | 393 | 1 | Commission or brokerage | Any person | ₹20,000 | 2% |
| 3 | 194I(a) | 393 | 2 | Rent – Land/Building/Furniture | Any person other than Individual/HUF | ₹50,000 per month | 10% |
| 4 | 194I(b) | 393 | 2 | Rent – Plant/Machinery/Equipment | Any person other than Individual/HUF | ₹50,000 per month | 2% |
| 5 | 194IB | 393 | 2 | Rent by Individual/HUF | Individual/HUF | ₹50,000 per month | 2% |
| 6 | 194IA | 393 | 3 | Transfer of immovable property (other than agricultural land) | Any person | ₹50,00,000 (stamp duty value or consideration, whichever higher) | 1% |
| 7 | 194IA | 393 | 3 | Capital gain on development agreement (Sec 67(14)) | Any person | Nil | 10% |
| 8 | 194IA | 393 | 3 | Compensation/enhanced consideration | Any person | ₹5,00,000 | 10% |
| 9 | 194K | 393 | 4 | Income from mutual fund units/specified company units | Any person | ₹10,000 | 10% |
| 10 | 194K | 393 | 4 | Distributed income | Business Trust | Nil | 10% |
| 11 | 194K | 393 | 4 | Income from investment fund units | Investment Fund | Nil | 10% |
| 12 | 194K | 393 | 4 | Income from securitisation trust | Securitisation Trust | Nil | 10% |
| 13 | 194A | 393 | 5 | Interest (other than securities) | Specified persons | ₹50,000 (banks/co-op), ₹1,00,000 (senior citizens), ₹10,000 (others) | 10% |
| 14 | 194C | 393 | 6 | Payments to contractors | Specified persons | ₹30,000 single / ₹1,00,000 aggregate | 1% / 2% |
| 15 | 194J(a) | 393 | 6 | Professional services | Specified persons | ₹50,000 | 10% |
| 16 | 194J(b) | 393 | 6 | Technical services | Specified persons | ₹50,000 | 2% |
| 17 | 194 | 393 | 7 | Dividend | Any person | Nil | 10% |
| 18 | 194Q | 393 | 8 | Purchase of goods | Buyer turnover > ₹10 Cr | ₹50,00,000 | 0.10% |
| 19 | 194DA | 393 | 8 | Payment from life insurance policy | Any person | ₹1,00,000 | 2% |
| 20 | 194P | 393 | 8 | Senior citizen income (after deductions/rebate) | Specified bank | Basic exemption limits | Slab rates |
| 21 | 194R | 393 | 8 | Business/professional perquisites | Specified person | ₹20,000 | 10% |
| 22 | 194O | 393 | 8 | E-commerce transactions | E-commerce operator | Nil | 0.10% |
| 23 | 194S | 393 | 8 | Transfer of virtual digital assets | Any person | Nil | 1% |
🌍 Table – For Payment to Non-Residents
| Sl No. | Nature of Income | Payee | Payer | Rate |
| 1 | Income of non-resident sportsman/entertainer | Non-resident | Any person | 20% |
| 2 | Interest on foreign currency loans/bonds (pre-2023) | Non-resident/foreign company | Indian company/trust | 5% |
| 3 | Interest on rupee denominated bonds (pre-2023) | Non-resident/foreign company | Indian company/trust | 5% |
| 4 | Interest on IFSC listed bonds | Non-resident/foreign company | Indian company/trust | 4% (till June 2023), 9% (after July 2023) |
| 5 | Interest from infrastructure debt fund | Non-resident/foreign company | Debt fund | 5% |
| 6 | Distributed income from business trust | Non-resident unit holder | Business trust | 5%–10% |
| 7 | Mutual fund units/specified company units | Non-resident | Any person | 20% (subject to DTAA) |
| 8 | Offshore fund units | Offshore fund | Any person | 10% |
| 9 | LTCG on offshore fund units | Offshore fund | Any person | 12.5% |
| 10 | GDRs/bonds – Interest/dividends | Non-resident | Any person | 10% |
| 11 | GDRs/bonds – LTCG | Non-resident | Any person | 12.5% |
| 12 | Securities income (FII) | FII | Any person | 20% (subject to DTAA) |
| 13 | Securities income (specified fund) | Specified fund | Any person | 10% |
| 14 | Other interest/sums (not salaries) | Non-resident/foreign company | Any person | Rates in force |
📌 Notes
- Rates are defined as of today and may vary with updates.
- The Income Tax Act 2025 consolidates most TDS sections into Section 393, simplifying compliance.
-
- indicates new changes in tax rates and basic limits.
- Key updates include:
- Threshold for professional fees raised to ₹50,000.
- TDS on life insurance payouts reduced to 2%.
- TDS on securitisation trust income fixed at 10%.
- Higher TDS: Non-furnishing of PAN → 20% or higher rate.
- Late payment interest: 1% per month for late deduction; 1.5% per month for late deposit.
✅ Conclusion
The FY 2026-27 TDS framework consolidates provisions under the Income Tax Act 2025, streamlining compliance while tightening rules around dividends, VDAs, and e-commerce transactions. With reduced thresholds and expanded coverage, taxpayers must ensure timely deduction and deposit of TDS to avoid penalties. This structured approach makes compliance easier for businesses, professionals, and individuals while aligning taxation with evolving financial and digital transactions.
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