TDS rate chart FY 2026-27: a quick guide

TDS rates for FY 2026-27 range from 0.1% to 30% depending on the nature of payment, with common rates of 1-2% for contractors (194C), 10% for professional fees (194J) and rent of property (194I), and 2% for commission (194H). Higher rates apply where the payee has no PAN (Section 206AA) or is a non-filer (206AB).

Common TDS sections at a glance

Thresholds above reflect Finance Act 2025 rationalisations effective FY 2025-26 onwards. Confirmed for FY 2026-27. Search every rate in the TDS Rate Finder.

PAN and non-filer higher rates

• Section 206AA — if the payee does not furnish a PAN, deduct at the higher of the normal rate or 20%.
• Section 206AB — higher TDS for specified non-filers of returns (where it applies for the period).
• Always validate the payee's PAN and filing status before deducting at the normal rate.

The new Income-tax Act 2025 mapping

From FY 2026-27, the new Act renumbers TDS: salary to Section 392, non-salary payments consolidate into Section 393, and TCS to Section 394. The rates and thresholds broadly continue; the references change. See new TDS sections. Under the Income Tax Act, 2025 (effective 1 April 2026): TDS on payments → Section 393; TDS on salaries → Section 392; TCS → Section 394.

Practical compliance

• Deduct at the time of credit or payment, whichever is earlier.
• Deposit by the 7th of the next month (30 April for March, in many cases).
• File quarterly returns (24Q/26Q/27Q) and issue Form 16/16A.
• Late deduction/deposit attracts interest under Section 201(1A).

How to use this chart without triggering defaults

TDS compliance fails at three points: wrong section classification, missed threshold tracking, and late deposit. The section determines the rate; the threshold determines when deduction starts; the deposit date determines interest exposure under Section 201(1A) — 1% per month for failure to deduct and 1.5% per month for deducting but not depositing, counted from the date of deduction to the date of payment.

Worked examples across common sections

Note the classification trap in 194J: fees for technical services and payments to call centres attract 2%, while professional fees attract 10%. Where an invoice mixes both, deduct at the higher rate or obtain a clear break-up.

The compliance calendar attached to every deduction

• Deposit: by the 7th of the following month (30 April for March deductions by non-government deductors).
• Quarterly returns: Form 24Q (salary), 26Q (resident non-salary), 27Q (non-resident) — due 31 July, 31 October, 31 January and 31 May for the four quarters.
• Certificates: Form 16 by 15 June; Form 16A within 15 days of the return due date.
• Late return fee: Rs.200 per day under Section 234E, capped at the TDS amount; penalties under Section 271H can follow for returns delayed beyond a year.

Interaction with 206AB and PAN failure

If the payee gives no PAN, Section 206AA forces the higher of the section rate or 20%. For payees who have not filed their return for the preceding year (with TDS+TCS of Rs.50,000 or more), Section 206AB pushes the rate to twice the section rate or 5%, whichever is higher. Run the compliance check on the reporting portal before large payments, and document the result — it is your defence in a 201 proceeding. The Supreme Court in Hindustan Coca-Cola Beverage v. CIT (2007) settled that where the payee has paid the tax, the deductor cannot be asked to pay the TDS again, but interest under 201(1A) still runs.

Under the Income-tax Act 2025

From 1 April 2026, the familiar 194-series numbering is consolidated: TDS on non-salary payments sits in Section 393, salary TDS in Section 392, and TCS in Section 394, with the same rates and thresholds carried over from the Finance Act 2025 rationalisation. Deductors should update engagement letters, notices and internal SOPs to dual-reference both numbering schemes during the transition year. Verify every rate at incometax.gov.in before deducting on high-value payments.

Quarterly reconciliation: the control that prevents notices

Every quarter, before filing 26Q/24Q, reconcile three data sets: the expense ledger (what you booked), the TDS payable ledger (what you deducted), and the challan register (what you deposited). The classic failure is an invoice booked on the 30th of the month that misses the deduction run, surfaces in the next month's ledger, and creates a one-month 201(1A) interest exposure at 1%.

• Map every expense GL that can attract TDS (professional fees, rent, contracts, commission, interest) to a default section in the ERP or Tally, and force an exception report for entries where TDS is zero.
• Track thresholds cumulatively per PAN per year, not per invoice — 194J's Rs.50,000 and 194C's Rs.1,00,000 annual limits are the ones most often breached mid-year without anyone noticing.
• Where a vendor gives a lower-deduction certificate under Section 197, validate it on TRACES (rate, section, period, threshold amount) and set an expiry alert — deducting at the certificate rate after its threshold is exhausted is a default.
• File corrections promptly: a PAN error in a filed return blocks the payee's credit in 26AS and generates a demand at 20% under 206AA against you.

For payments to non-residents, this chart does not apply — Section 195 requires deduction at rates in force or DTAA rates (with TRC and Form 10F), plus Form 15CA/CB certification. See our Section 195 guide.