Union Budget 2026 New TDS Provisions
The Union Budget 2026 introduced some notable updates to the TDS framework. It is worth knowing these before you look at the detailed rate chart.
Under the Income Tax Act, 2025, all TDS provisions have been consolidated under Section 393, replacing the older scattered sections from the Income Tax Act, 1961.
- Tax collected at source provisions now fall under Section 394 of the new Act, effective 1st April 2026.
- Form 15G and Form 15H have been replaced by Form 121, which is used when a taxpayer wishes to declare that their income is below the taxable limit and no TDS should be deducted.
- Form 26A, which showed all TDS against your PAN, has been replaced by Form 149 under the new Act.
- The threshold limits for interest income on bank and post office deposits have been revised upwards, giving some relief to small depositors.
- The TDS rate on e-commerce participants under Section 1940 continues at 0.10%, encouraging compliance in the digital economy.
Taxpayers should also be aware of provisions like Section 206AB, which deals with higher TDS rates for specified non-filers of income tax returns.
Latest Applicable TDS Rates in India
The applicable TDS deduction slab depends on the nature of payment, threshold limit, and category of taxpayer. The rates are set by the Government and updated through Finance Acts or Budget announcements. Below, you will find the new TDS rate chart broken down clearly by category so you can find the one that applies to you.
TDS Rates for Residents
This section covers TDS applicable to resident individuals, HUFs, firms, and companies receiving payments within India. These are among the most commonly referenced rates in day-to-day transactions.
| Section |
Nature of Transaction |
Threshold Limit |
TDS Rate |
|---|
| 192 |
Salary Income |
Basic exemption limit |
TDS Slab Rates |
| 192A |
Premature EPF Withdrawal |
₹50,000 |
10% |
| 193 |
Interest on Securities |
₹10,000 |
10% |
| 194 |
Dividends |
₹10,000 |
10% |
| 194A |
Interest on bank/post office deposits |
₹50,000 (₹1,00,000 for senior citizens) |
10% |
| 194B |
Lottery/game show/gambling winnings |
₹10,000 |
30% |
| 194BA |
Online gaming winnings |
Nil |
30% |
| 194BB |
Winnings from horse races |
₹10,000 (aggregate in FY) |
30% |
| 194C |
Payment to contractors / sub-contractors |
₹30,000 (single) or ₹1 lakh (FY) |
1% (Individuals/HUF), 2% (Others) |
| 194D |
Insurance Commission |
₹20,000 |
2% (Individuals/HUF), 10% (Others) |
| 194DA |
Life Insurance Policy receipt |
₹1 lakh |
2% |
| 194EE |
National Savings Scheme (NSS) payment |
₹2,500 |
10% |
| 194G |
Lottery Commission |
₹20,000 |
2% |
| 194H |
Commission / Brokerage |
₹20,000 |
2% |
| 194I(a) |
Rent for Plant & Machinery |
₹50,000 |
2% |
| 194I(b) |
Rent for Land, Building & Furniture |
₹50,000 |
10% |
| 194IA |
Transfer of immovable property (non-agri) |
₹50 lakh |
1% |
| 194IB |
Rent by Individual/HUF (not covered u/s 194I) |
₹50,000 pm |
2% |
| 194IC |
Payment under Joint Development Agreement |
Nil |
10% |
| 194J(a) |
Fees – Technical Services, Call Centre, Royalty, Film Distribution |
₹50,000 |
2% |
| 194J(b) |
Fees – All other Professional Services |
₹50,000 |
10% |
| 194K |
Dividend from Mutual Funds |
₹10,000 |
10% |
| 194LA |
Compensation on immovable property transfer (non-agri) |
₹5 lakh |
10% |
| 194M |
Contract/Brokerage/Professional fees by Individuals & HUF |
₹50 lakh |
2% |
| 194N |
Cash withdrawals exceeding Rs. 1 crore |
₹1 crore (₹3 crore for co-op society) |
2% |
| 194O |
TDS on e-commerce participants |
₹5 lakh |
0.10% |
| 194Q |
Purchase of Goods exceeding Rs. 50 lakh |
₹50 lakh |
0.10% |
| 194R |
Benefits or perquisites of business/profession |
₹20,000 |
10% |
| 194S |
Transfer of virtual digital assets (VDA) |
₹10,000 / ₹50,000 (specified persons) |
1% |
| 194T |
Payments by Partnership Firms to Partners |
₹20,000 |
10% |
Financial Year 2026-27: TDS Rates and Threshold Limits
To make things easy to refer to, here is a quick summary of the most commonly used TDS rates for FY 2026-27 at a glance.
| Transaction Type |
Section |
TDS Rate |
|---|
| Salary |
192 |
Slab Rates |
| Bank Interest (Regular) |
194A |
10% |
| Bank Interest (Senior Citizen) |
194A |
10% (limit ₹1 lakh) |
| Professional Fees (Technical) |
194J(a) |
2% |
| Professional Fees (Others) |
194J(b) |
10% |
| Rent (Land/Building) |
194I(b) |
10% |
| Contractor Payments |
194C |
1% or 2% |
| Commission/Brokerage |
194H |
2% |
| Insurance Commission |
194D |
2% or 10% |
| Lottery/Gambling |
194B |
30% |
| VDA (Crypto) Transfer |
194S |
1% |
| Immovable Property Sale |
194IA |
1% |
| E-commerce Participants |
194O |
0.10% |
Businesses often refer to the 194J TDS rate and 194J TDS limit while making payments to consultants, freelancers, doctors, lawyers, and technical experts.
TDS Rates for Non-Resident Indians
Non-Resident Indians are taxed differently as their income sourced from India is subject to specific rates, often higher than those for residents. In some cases, the rates under the Double Taxation Avoidance Agreement (DTAA) may be lower, and the taxpayer can opt for whichever is more beneficial.
| Section |
Nature of Payment |
TDS Rate |
|---|
| 192 |
Salary |
Normal Slab Rate |
| 192A |
Accumulated PF balance (taxable) |
10% |
| 194B |
Lottery/crossword/gambling winnings |
30% |
| 194BA |
Online gaming winnings |
30% |
| 194BB |
Winnings from horse races |
30% |
| 194E |
Payment to non-resident sportsmen/sports associations |
20% |
| 194EE |
NSS deposits |
10% |
| 194G |
Commission on lottery tickets |
2% |
| 194LB |
Interest on the infrastructure debt fund |
5% |
| 194LC |
Interest on long-term bond / RDB listed on IFSC |
4% / 9% |
| 194N |
Cash withdrawals over ₹1 crore |
2% / 5% |
| 194T |
Payments by firm to partners (above ₹20,000) |
10% |
| 195 |
Long-term capital gains u/s 115E |
20% |
| 195 |
Long-term capital gains u/s 112 |
12.50% |
| 195 |
Short-term capital gains u/s 111A |
12.50% |
| 195 |
Dividend income |
10% |
| 195 |
Any other income |
20% |
| 196A |
Income from units of non-resident |
30% |
| 196C |
Interest/dividends from bonds or GDR |
12.50% |
| 196D |
Income of Foreign Institutional Investors from securities |
20% |
TDS Rates for a Domestic Company
When a domestic company is the recipient of payment, the TDS rates applicable are as follows. These apply to resident companies registered and operating in India.
| Section |
Nature of Payment |
TDS Rate |
|---|
| 192 |
Salary |
Slab Rates |
| 193 |
Interest on Securities |
10% |
| 194 |
Dividend |
10% |
| 194A |
Interest (other than securities) |
10% |
| 194C |
Payment to contractors |
2% |
| 194D |
Insurance Commission |
10% |
| 194H |
Commission / Brokerage |
2% |
| 194I(a) |
Rent for Plant & Machinery |
2% |
| 194I(b) |
Rent for Land, Building & Furniture |
10% |
| 194J(a) |
Fees for Technical Services, Royalty, Film Distribution |
2% |
| 194J(b) |
Fees for Professional Services |
10% |
| 194K |
Dividend from Mutual Funds |
10% |
| 194Q |
Purchase of Goods (above Rs. 50 lakh) |
0.10% |
| 194R |
Benefits or perquisites from business/profession |
10% |
TDS Rates Where the Company is Not a Domestic Company
For payments made to foreign companies, the TDS rates are generally higher. These apply under Section 195 and related provisions of the Income Tax Act.
| Section |
Nature of Payment |
TDS Rate |
|---|
| 195 |
Any income other than dividends or capital gains |
40% |
| 195 |
Long-term capital gains u/s 112 |
12.50% |
| 195 |
Short-term capital gains u/s 111A |
12.50% |
| 195 |
Long-term capital gains (others) |
20% |
| 196C |
Income from bonds or GDR (interest/dividend) |
12.50% |
| 196D |
Income of FIIs from securities (excluding dividends and capital gains) |
20% |
TCS Rate Chart
Tax Collected at Source (TCS) is collected by the seller from the buyer at the time of sale of specified goods or services. With effect from 1st April 2026, Section 394 of the Income Tax Act, 2025, governs TCS provisions. The chart below lists the current applicable rates.
| Section |
Nature of Transaction |
Threshold |
TCS Rate |
|---|
| 206C(1) |
Alcoholic liquor for human consumption |
Not applicable |
2% |
| 206C(1) |
Tendu leaves |
Not applicable |
2% |
| 206C(1) |
Timber (forest lease or other mode) |
Not applicable |
2% |
| 206C(1) |
Scrap |
Not applicable |
2% |
| 206C(1) |
Minerals (coal, lignite, iron ore) |
Not applicable |
2% |
| 206C(1C) |
Parking lot, toll plaza, mining & quarrying |
Not applicable |
2% |
| 206C(1F) |
Sale of a motor vehicle |
₹10 lakh |
1% |
| 206C(1G) |
Foreign remittance under LRS (education/medical) |
₹10 lakh |
2% |
| 206C(1G) |
LRS for other purposes |
₹10 lakh |
20% |
| 206C(1G) |
Overseas tour programme package |
Not applicable |
2% |
Conclusion
TDS plays a vital role in the nation’s revenue collection. It makes sure that taxes are deducted at the source of income, making the tax compliance process more efficient and transparent. It is always a good idea to keep an eye on the new TDS rate chart and TDS return due date information in order to stay up to date on the newest guidelines and tax percentages. Understanding TDS provisions along with deductions under Section 80C (Now known as Section 123) can help taxpayers plan their finances more efficiently.
As the new Income Tax Act, 2025, comes into effect, the sections, TDS exemptions, and forms have been updated, but the underlying principles remain the same. Make sure you review the new TDS rate chart for FY 2026-27, keep an eye on your Form 26AS (now Form 149 under the new Act), and file your TDS return filing. And if excess TDS has been deducted, do not forget to file a TDS refund claim when filing your Income Tax Return.
FAQs on TDS Rate Chart
1
What Exactly is a TDS Certificate?
The certificate of tax deducted at source, or Form 16/ 16A, is given out when the employer deducts tax on behalf of the employees. These certificates offer TDS/TCS information for numerous transactions involving the deductor and the deductee.
2
What are the TDS Rates that Apply to Securities Interest?
Before releasing the interest, anyone who is transferring interest income from securities to an Indian resident must deduct taxes. 10% is the tax rate under Section 193.
3
When should we deduct TDS at a higher rate?
If the person you are paying doesn’t provide their PAN or Aadhaar, or if they are a “specified person” under the new non-filer rules, you have to deduct tax at double the normal rate or 5% (whichever is higher).
4
What is the interest rate for the late deduction of TDS?
If you fail to deduct tax on time, you’ll have to pay a penalty of 1% interest per month. If you deduct it but forget to deposit it to the government, that penalty jumps to 1.5% per month.
5
Where can we check the amount of TDS credit available?
The easiest way to check the credit TDS amount is to log in to your E-filing portal and check your Form 26AS or your Annual Information Statement (AIS). It shows every rupee deducted against your PAN.
6
Should TDS be deducted from payments made to the Government?
No, TDS does not apply to payments made to the Government, including taxes, fees, and government-related transactions.
7
What to do if there is any mistake in the deduction of Tax at Source (TDS)?
If there is an error in the TDS deduction, the deductor must rectify it by filing a revised TDS return. The deductee can also claim the excess TDS while filing their income tax return.
8
What is the TDS rate for an NRI?
It varies wildly. While interest on NRE accounts is often tax-free, interest on NRO accounts is taxed at 30% (plus surcharge and cess). Always refer to the DTAA for the specific country of residence.
