---
title: "TDS Rate Chart FY 2025-26: Section-wise Table & Due Dates"
description: "View the complete section-wise TDS rate chart for FY 2025-26- resident and non-resident rates, TCS rate chart, due dates, surcharge, cess, and key 2026-27 updat"
canonical: "https://busy.in/tds/section-wise-tds-rate-table-for-fy-2025-26/"
author: "Rithesh Bajoriya"
published: "2025-08-27T18:30:00.000Z"
category: "TDS"
---

-   TDS (Tax Deducted at Source) is deducted at the time of payment or credit and deposited with the government by the deductor, not the payee
-   From 1 April 2026, TDS and TCS compliance has to be read under the Income-tax Act, 2025, not the old 1961 Act section structure
-   The major changes carried into the current regime include TDS on partner remuneration and related payments, the removal of the old higher-TDS rule for non-filers, and higher thresholds for several common TDS categories
-   Interest awarded by the Motor Accidents Claims Tribunal to an individual is treated as outside the TDS net from 1 April 2026
-   Interest, other than interest on securities, paid to certain co-operative societies engaged in banking is also kept outside TDS from 1 April 2026
-   Supply of manpower is now better aligned with the contractor category for TDS purposes, reducing classification disputes in many practical cases
-   Resident individuals and HUFs buying immovable property from a non-resident get compliance relief from obtaining TAN from 1 October 2026 for such transactions
-   A depository-based route for eligible no-deduction declarations for certain securities and mutual fund incomes is expected from 1 April 2027
-   TDS deposit is generally due by the 7th of the following month, except for March where the usual due date remains 30 April
-   Quarterly TDS return deadlines continue to be 31 July, 31 October, 31 January, and 31 May
-   Late deduction, late deposit, and late return filing still attract interest, fee, and penalty consequences, so rate knowledge alone is not enough - compliance timing matters equally

# Section-wise TDS Rate Table for FY 2025-26

## **What is TDS and Why Does It Matter?**

[**Tax Deducted at Source**](https://busy.in/tds/what-is-tax-deducted-at-source/) (TDS) is a mechanism under India's income-tax law under which the person making a payment deducts tax before releasing the amount to the recipient. The deducted tax is then deposited with the Central Government and is credited against the recipient's final income tax liability.

The idea behind TDS is simple. Instead of waiting until the end of the year to collect the full tax from the recipient, the law collects tax at the source itself whenever specified payments are made. This improves tax collection, reduces leakage, and creates a continuous tax trail linked to the recipient's PAN.

TDS applies to a wide range of payments such as:

-   Salary
-   Bank interest
-   Interest on securities
-   [**Dividend**](https://busy.in/tds/tds-on-dividend/)
-   Contractor payments
-   Professional fees
-   Commission and brokerage
-   Rent
-   Property purchase
-   Insurance commission
-   [**Benefits and perquisites**](https://busy.in/tds/section-194r-tds-on-business-perks-freebies-and-benefits/)
-   E-commerce payments
-   Virtual Digital Asset transactions
-   Certain partner payments by firms and LLPs
-   Various payments to non-residents

[**Who needs to deduct TDS**](https://busy.in/tds/who-must-pay-tds-in-india-deductors-individuals-businesses-government/) **?**

-   Companies and LLPs for most specified payments
-   Firms and other business entities where the relevant provision applies
-   Individuals and HUFs covered by tax audit for applicable categories
-   Certain individuals and HUFs not under tax audit in specified cases such as high monthly rent or large-value contract and professional payments
-   E-commerce operators, specified buyers, banks, employers, and other deductors depending on the transaction type

**Why does TDS matter so much in practice?**

Because TDS is not just about deducting a rate from a payment. It creates a full compliance chain. Once tax is required to be deducted, the deductor must:

-   Deduct it correctly
-   Deduct it at the correct time
-   Deposit it by the due date
-   Report it in the right return form
-   [**Issue the correct certificate to the deductee**](https://busy.in/tds/section-203-of-income-tax-act-employer-tds-obligations/)

A mistake in rate, threshold, timing, PAN, return filing, or classification can create cascading issues, including short deduction notices, interest liability, return defaults, vendor disputes, 26AS mismatches, and disallowance-related concerns in business accounting.

## **What's New in TDS for FY 2026-27**

FY 2026-27 is important because it is the first full financial year operating under the [**Income-tax Act, 2025**](https://www.incometaxindia.gov.in/income-tax-act-2025) framework. This does not mean that the business categories of TDS have become unrecognisable. Salary, interest, rent, [**contractor payments**](https://busy.in/tds/section-194c-contractors-subcontractors/) , professional fees, commission, and non-resident payments still exist. But the legal structure has changed, and compliance now needs to be read under the new law.

The important current-year changes and carry-forward changes to keep in mind are:

### **1\. New law structure from 1 April 2026**

From 1 April 2026, TDS and TCS are governed under the Income-tax Act, 2025.

### **2\. TDS on partner remuneration and similar fixed payments continues to matter**

The earlier introduction of TDS on payments like salary, remuneration, bonus, commission, and interest to partners remains one of the biggest compliance changes for firms and LLPs. Many partnership firms that historically had no TDS responsibility on such payments now need to track threshold crossing and deduct tax accordingly.

### **3\. Old higher-TDS rule for non-filers is no longer part of the live compliance burden**

The separate rule that previously imposed a [**higher TDS burden on specified non-filers**](https://busy.in/tds/section-194nf-of-income-tax/) of income tax returns is no longer part of routine compliance in the same way. This reduces one level of vendor verification burden for deductors.

### **4\. Relief for Motor Accidents Claims Tribunal interest**

Interest on compensation awarded by the Motor Accidents Claims Tribunal to an individual is treated as outside TDS from 1 April 2026. This is a meaningful relief because the earlier treatment often created deduction issues in compensation-related cases.

### **5\. Relief for interest paid to certain co-operative banking entities**

Interest, other than interest on securities, credited or paid to certain co-operative societies engaged in banking, is also kept outside TDS from 1 April 2026. This is a targeted change and should not be confused with a blanket exemption for all co-operative entities or all interest payments.

### **6\. Clarification for supply of manpower**

One practical grey area in TDS classification is whether manpower supply should be treated as a work contract or as a technical/professional service in some cases. The current approach aims to align manpower supply more closely with the contractor bucket, which, in many practical cases, means 1% or 2% TDS rather than a higher professional-fee rate.

### **7\. TAN relief for certain property buyers**

From 1 October 2026, a resident individual or HUF buying immovable property from a non-resident gets relief from the need to obtain [TAN](https://busy.in/tds/tan-registration-how-to-obtain-and-register-tan-online/) for that transaction. This does not mean TDS disappears. It means the compliance process becomes lighter in that specific case.

## Before 1 April 2026 vs After 1 April 2026

| Period | Law Framework |
| --- | --- |
| Up to 31 March 2026 | Income-tax Act, 1961 |
| From 1 April 2026 | Income-tax Act, 2025 |

## Complete Section-wise TDS Rate Chart - Residents

**Important note:** The categories below are presented in a familiar practical format so that finance teams, business owners, and readers can quickly identify the correct payment bucket. Even where older shorthand labels are commonly used in business practice, the current-year legal framework is under the Income-tax Act, 2025.

### **Salary and Employment**

| Nature of Payment | Threshold | Rate |
| --- | --- | --- |
| Salary | Basic exemption and slab conditions apply | Slab rate |
| EPF / PF withdrawal | ₹50,000 | 10% |

Salary TDS is not a flat-rate deduction. It works on the estimated annual taxable salary, based on applicable slab rates, after considering eligible exemptions, deductions, and declarations as allowed under the applicable regime. That is why salary is always different from ordinary non- [**salary TDS**](https://busy.in/tds/tds-on-salary-and-normal-slab-vs-new-regime-rates/) categories.

For EPF or PF withdrawals, TDS generally applies when the withdrawal exceeds the threshold and does not qualify for non-taxability under the rules. PAN availability also matters in practice.

## Complete Section-wise TDS Rate Chart - Residents

### [**Interest and Securities**](https://busy.in/tds/tds-on-interest-payments-calculation-and-reporting-methods/)

| Nature of Payment | Threshold | Rate |
| --- | --- | --- |
| Interest on securities / debentures | ₹10,000 | 10% |
| Dividend | ₹10,000 | 10% |
| Bank interest - non-senior citizen | ₹50,000 | 10% |
| Bank interest - senior citizen | ₹1,00,000 | 10% |
| Interest other than bank interest | ₹10,000 | 10% |
| Income from mutual fund units | ₹5,000 | 10% |

This is one of the most common TDS areas for individuals and businesses alike. Bank interest TDS is often applicable to [**fixed deposits and other deposit-linked earnings**](https://busy.in/tds/tds-on-fixed-deposits/) . Senior citizens get a [**higher threshold for bank interest**](https://busy.in/tds/save-tds-on-interest-form-15g-15h/) before TDS becomes applicable.

Interest on securities, dividends, and [**mutual fund unit income**](https://busy.in/tds/section-194k-tds-on-mutual-fund-distributions-demystified/) also continue to remain important categories, especially for finance teams, treasury functions, and investors tracking TDS credits in [**Form 26AS**](https://busy.in/tds/form-26as/) or AIS.

**Important FY 2026-27 update:** Interest, other than interest on securities, paid to certain co-operative societies engaged in banking is kept outside TDS from 1 April 2026. This is a targeted relief and should be applied carefully after confirming that the recipient and payment category fit the rule.

### **Winnings and Gaming**

| Nature of Payment | Threshold | Rate |
| --- | --- | --- |
| Lottery/crossword winnings | ₹10,000 aggregate | 30% |
| Online gaming winnings | No threshold | 30% |
| Horse race winnings | ₹10,000 | 30% |

These categories are high-rate withholding categories. The tax is deducted at a steep 30%, and the online gaming bucket is especially important because it does not use the same threshold logic as some traditional winnings categories.

Businesses dealing with gaming, prize distribution, promotional activities, or related payment ecosystems should be especially careful in classifying such payments correctly, because the rate is high and the margin for error is small.

### **Contractor and Professional Payments**

| Nature of Payment | Threshold | Ind / HUF | Others |
| --- | --- | --- | --- |
| Contractor payment - single contract | ₹30,000 | 1% | 2% |
| Contractor payment - aggregate in FY | ₹1,00,000 | 1% | 2% |
| Technical services/call centre | ₹50,000 | 2% | 2% |
| Professional fees/royalty / director fees | ₹50,000 | 10% | 10% |
| Specified large payments by non-audit Ind / HUF | ₹50,00,000 aggregate | 5% | \- |

This section remains one of the most litigated and practically sensitive parts of TDS compliance. The real issue is often not the rate itself, but the classification:

-   Is it a contractor payment or a professional service?
-   Is it a technical service or a work contract?
-   Is the threshold to be checked per invoice, per contract, or on aggregate basis?
-   Is the payee an individual/HUF or another type of entity?

For contractor payments, the usual rates remain 1% for payments to individuals/HUFs and 2% for others, subject to threshold conditions.

For technical services and call centre-related payments, the lower 2% rate applies.

For [**professional fees**](https://busy.in/tds/section-393-tds-on-professional-and-technical-fees-rates-threshold-due-dates-and-compliance-guide-for-tax-year-2026-27/) , royalty in the relevant bucket, and director fees, 10% continues to be the standard rate.

For certain large payments made by non-audit individuals and HUFs, the special category with 5% TDS remains highly relevant.

**Important FY 2026-27 update:** Supply of manpower is intended to be treated under the contractor bucket. This matters because many businesses have historically faced classification confusion, in which manpower supply could be misread as a technical or professional service. The clearer approach helps bring many such payments into the 1% or 2% contractor structure.

### **Insurance and Commission**

| Nature of Payment | Threshold | Ind / HUF | Others |
| --- | --- | --- | --- |
| Insurance commission | ₹15,000 | 5% | 10% |
| Life insurance policy maturity proceeds | ₹1,00,000 | 5% | 5% |
| Commission on lottery ticket sales | ₹15,000 | 5% | 5% |
| Commission/brokerage | ₹20,000 | 2% | 2% |

Commission-related categories often get overlooked in small-business compliance because the payment appears commercial rather than tax-sensitive. But insurance commission, general commission or brokerage, and lottery-related commission all carry their own TDS treatment.

The raised threshold for [**general commission and brokerage**](https://busy.in/tds/section-194h-of-income-tax/) remains important from a practical compliance angle because it reduces the deduction burden on smaller annual payments.

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### **Rent and Property**

| Nature of Payment | Threshold | Rate |
| --- | --- | --- |
| Rent - plant, machinery, equipment | ₹50,000 per month | 2% |
| Rent - land, building, furniture | ₹50,000 per month | 10% |
| Purchase of immovable property | ₹50,00,000 | 1% |
| Rent by non-audit individual / HUF | ₹50,000 per month | 5% |
| Joint Development Agreement payment category | No threshold | 10% |
| Compensation on compulsory acquisition | ₹2,50,000 | 10% |

Rent is one of the most common business expense categories where TDS errors happen. The most common mistakes are:

-   Applying annual threshold logic where monthly logic applies
-   Using the wrong rate for machinery vs building
-   Ignoring the special rule for non-audit individuals or HUFs paying high monthly rent
-   Forgetting that property purchase TDS applies on the whole value once threshold is crossed, not only on the excess

For [**immovable property purchases**](https://busy.in/tds/tds-on-property-transactions-stepwise-guide-with-form-26qb-16b/) , 1% TDS remains a key compliance requirement once the transaction value reaches the threshold.

For [**non-audit individuals and HUFs**](https://busy.in/tds/section-194m-tds-rules-for-high-value-payments-by-individuals--hufs/) paying monthly rent above the specified threshold, the special 5% deduction category remains very important.

**Important FY 2026-27 update:**

1\. A resident individual or HUF [**buying immovable property from a non-resident**](https://busy.in/tds/tds-on-property-purchase-and-sale-transactions/) gets relief from obtaining a TAN from 1 October 2026 for that transaction. This reduces compliance friction, but TDS itself still applies.

**2\.**  Interest on compensation awarded by the Motor Accidents Claims Tribunal to an individual is treated as outside TDS from 1 April 2026. This is a specific and meaningful carveout.

### **Cash, Goods, and Digital Transactions**

| Nature of Payment | Threshold | Rate |
| --- | --- | --- |
| Cash withdrawal above ₹1 crore | ₹1,00,00,000 | 2% |
| Cash withdrawal by specified non-filers above ₹20 lakh | ₹20,00,000 | 2% to 5% |
| E-commerce participant payments | ₹5,00,000 | 0.1% |
| Purchase of goods by specified buyer | ₹50,00,000 | 0.1% |
| Virtual Digital Assets - specified person | ₹50,000 | 1% |
| Virtual Digital Assets - others | ₹10,000 | 1% |

This is one of the most modern and operationally complex areas of TDS.

-   Cash withdrawal TDS applies to high-cash businesses and certain non-filer cases.
-   E-commerce payment deductions are important for marketplace businesses and online sellers, especially when platform settlements lead to frequent reconciliation questions.
-   Purchase of goods TDS remains a major compliance issue for businesses crossing turnover thresholds because it requires system-level tracking of cumulative purchases from each vendor.

[**Virtual Digital Asset payments**](https://busy.in/tds/tds-on-e-commerce-transactions-virtual-digital-assets-cryptocurrency-in-india/) remain within the TDS framework, and the distinction between the specified-person threshold and the other threshold should not be ignored.

### **Other Specified Payments**

| Nature of Payment | Threshold | Rate |
| --- | --- | --- |
| Benefits or perquisites | ₹20,000 | 10% |
| Senior citizen specified bank case | As applicable | Slab by bank |
| NSS deposit withdrawals | ₹2,500 | 10% |
| Partner remuneration / salary / interest | ₹20,000 | 10% |

## **New Rule for Partner Remuneration and Similar Payments**

One of the most significant recent compliance changes for firms and LLPs is the requirement to deduct TDS on fixed payments made to partners once the threshold is crossed.

A firm or LLP has to deduct TDS at **10%** on aggregate payments exceeding **₹20,000** per partner in a financial year in respect of fixed payments such as:

-   Salary
-   Remuneration
-   Bonus
-   Commission
-   Interest on capital
-   Similar fixed or contractual partner payments

What is excluded?

-   Share of profit

This distinction is critical. Share of profit distributed to a partner is not the same as salary, remuneration, commission, or interest on capital. Only the fixed-payment-type items are included in the TDS net.

**Why is this so important?**

Because many firms historically did not associate partner payments with TDS obligations in the same way as vendor or employee payments. That position changed. Now firms and LLPs need to track:

-   Partner-wise aggregate payment totals
-   Payment nature
-   Threshold crossing
-   Timely deduction
-   Timely deposit
-   Reporting in the correct return
-   Issuance of TDS certificate

This is not just a rate issue. It is a process issue. Small firms, professional partnerships, and LLPs are especially exposed if they continue to follow older practices without updating their compliance systems.

## **TDS on Non-Residents**

[**Non-resident payments**](https://busy.in/tds/section-195-of-income-tax/) should never be handled casually. They are often summarised in short tables, but in practice they require much deeper review than resident payments do.

Why? Because for non-residents, the final withholding position can depend on:

-   Nature of income
-   Domestic law rate
-   Rate in force
-   DTAA eligibility
-   Tax Residency Certificate
-   Form 10F
-   Beneficial ownership position
-   Permanent establishment considerations in some cases
-   Characterisation of income

A high-level practical reference view is below:

| Nature of Payment | Indicative Rate |
| --- | --- |
| LTCG on listed equity | 12.5% plus surcharge and cess, subject to law and treaty |
| LTCG on other assets | 20% plus surcharge and cess, subject to law and treaty |
| STCG on listed equity | 20% plus surcharge and cess, subject to law and treaty |
| Interest | 20% or treaty rate, whichever is applicable |
| Royalty / Fees for Technical Services | 10% or treaty rate, whichever is applicable |
| Other income | As per rate in force |

For example:

-   A treaty may reduce the withholding rate
-   A payment that looks like a technical fee under domestic law may be characterised differently under a treaty
-   Documentation gaps can deny treaty benefits
-   Certain capital gains outcomes depend on the nature of the asset and applicable law

**Note:** Do not finalise the deduction without checking treaty eligibility and documentation.

## **Higher TDS When PAN Is Not Furnished**

Where the deductee [**does not furnish PAN**](https://busy.in/tds/section-206aa-surcharge-cess-pan-requirements/) , TDS is generally required to be deducted at the higher of three rates: the rate specified in the relevant provision, the rate or rates in force, or 20%.
In simple terms, even if a payment normally attracts TDS at a lower rate, non-availability of PAN can significantly increase the deduction amount. That is why collecting and verifying PAN is an important part of TDS compliance, not just a routine documentation step.

Illustrative examples:

| Normal Rate | Higher Rate Without PAN |
| --- | --- |
| 10% | 20% |
| 2% | 20% |
| 1% | 20% |
| 0.1% | higher-rule impact can become materially higher |

This has serious business implications:

-   Vendor payments can get blocked or disputed
-   Reconciliation becomes messy
-   Working capital of the payee gets hit
-   Refund dependency increases
-   TDS return mismatches become more likely

So from a controls perspective, PAN collection is not a clerical issue. It is a core compliance requirement.

It is also important not to confuse this with the old non-filer-based higher-TDS rule that used to exist separately. That old non-filer compliance burden is no longer part of the current routine TDS practice in the same way.

## **Penalties and Interest for TDS Default**

Knowing the rate is only half the job. A business can know the correct TDS rate and still end up in default if it deducts late, deposits late, or files the return late.

### **Interest for default**

| Default | Rate | Period |
| --- | --- | --- |
| TDS not deducted | 1% per month | From the date tax should have been deducted to the actual date of deduction |
| TDS deducted but not deposited | 1.5% per month | From the date of deduction to the actual date of deposit |

These interest costs can become substantial in recurring or high-value payment situations.

### [**Late return filing fee**](https://busy.in/tds/penalty-late-payment-filing/)

-   ₹200 per day
-   Maximum cap equals the TDS amount for that return period

Even if the tax has been deducted and deposited correctly, late filing of the return can still create a fee burden.

### **Penalty consequences**

Apart from interest and fee, penalty provisions can also come into play in serious or repeated default situations.

### **Prosecution risk**

Where tax is deducted but wilfully not deposited, prosecution exposure can arise in more serious cases. This is why businesses should never treat deducted TDS as a temporary cash-flow buffer.

### **Quick Reference: Default Cost Summary**

| Default | Cost |
| --- | --- |
| TDS not deducted | 1% per month interest plus penalty exposure |
| TDS deducted but not deposited on time | 1.5% per month interest |
| Late TDS return filing | ₹200 per day, capped at TDS amount |
| Serious wilful non-deposit | prosecution risk plus fine and other consequences |

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## **TCS Rate Chart for FY 2026-27**

Tax Collected at Source (TCS) is different from TDS. In TDS, the payer deducts tax before releasing payment. In TCS, the seller collects tax from the buyer and deposits it with the government.

### **Domestic TCS**

| Nature of Transaction | Rate |
| --- | --- |
| Alcoholic liquor | 1% |
| Tendu leaves | 5% |
| Timber | 2% |
| Other forest produce | 2% |
| Scrap | 1% |
| Minerals such as coal, lignite, iron ore | 1% |
| Parking lot / toll / mining lease | 2% |
| Motor vehicles above ₹10 lakh | 1% |
| Sale of goods | Removed |

The removal of TCS on sale of goods remains one of the most important simplification measures for businesses that earlier had to track that extra layer of collection compliance on turnover-linked sales.

### **TCS on Foreign Remittance and Overseas Spend**

The foreign remittance and overseas spend area remains one of the most dynamic TCS categories, and this is also where businesses and individuals often rely on incomplete summaries. The broad current direction includes compliance relief and lower collection burden in selected cases.

A practical summary view:

| Nature | Threshold | Rate |
| --- | --- | --- |
| Education through loan from financial institution | As applicable | specific concessional treatment applies |
| Education / medical remittance | As applicable | concessional treatment applies |
| Overseas tour package | as applicable under current rules | lower collection structure applies |
| General LRS remittances | as applicable | refer current live rate at time of transaction |

## **Due Dates for TDS Deposit and Return Filing**

Due-date compliance is one of the most important parts of the TDS process because even a correctly deducted amount can create interest and filing consequences if the deposit or return timing is missed.

### **TDS Deposit Due Dates**

| Deductor / Period | Due Date |
| --- | --- |
| All deductors - April to February | 7th of following month |
| All deductors - March | 30th April |
| Government cases without challan | Same day |

These dates should be tracked on a standard compliance calendar, as missing the deadline by even a few days can start the interest clock.

### **Quarterly TDS Return Due Dates**

| Quarter | Period | Return Due Date |
| --- | --- | --- |
| Q1 | April to June | 31 July |
| Q2 | July to September | 31 October |
| Q3 | October to December | 31 January |
| Q4 | January to March | 31 May |

### **TDS Return Forms**

-   Form 24Q - TDS on salary
-   Form 26Q - TDS on resident non-salary payments
-   Form 27Q - TDS on payments to non-residents
-   Form 27EQ - TCS returns

### **TDS Certificate Deadlines**

-   Form 16 (salary): 15 June of the following financial year
-   Form 16A (non-salary): within 15 days from the due date of the quarterly return

Businesses often focus only on deduction and deposit, but certificate issuance is equally important because the deductee needs the TDS correctly reflected and supported for credit claims.

## **Surcharge and Health & Education Cess on TDS**

A common mistake is to say that surcharge and 4% Health & Education Cess automatically apply in the same way to every TDS line item. That is too broad.

In practice:

-   For many routine resident TDS categories, people generally refer to the base TDS rate itself
-   Surcharge and cess become especially relevant in contexts such as salary withholding and many non-resident payments
-   Effective rate computation can therefore vary based on the nature of payment and recipient profile

### **Illustrative Surcharge - Individuals**

| Total Income | Surcharge |
| --- | --- |
| Up to ₹50 lakh | Nil |
| ₹50 lakh to ₹1 crore | 10% |
| ₹1 crore to ₹2 crore | 15% |
| Higher income slabs | As applicable under current law |

### **Surcharge - Domestic Companies**

| Total Income | Surcharge |
| --- | --- |
| Up to ₹1 crore | Nil |
| ₹1 crore to ₹10 crore | 7% |
| Above ₹10 crore | 12% |

### **Health & Education Cess**

-   4% on income tax plus surcharge, where applicable

### **Example of effective-rate thinking**

If a non-resident payment or another relevant category attracts a 10% base rate and a surcharge is applicable, Health & Education Cess applies on tax plus surcharge. That means the final effective rate can be higher than the plain table rate.

This is why non-resident withholding and salary withholding should not be finalised only from a bare TDS rate chart.

## Conclusion

For FY 2026-27, TDS compliance is not just about knowing the rate. It is about using the correct category, tracking thresholds, collecting PAN, and meeting deposit and return deadlines under the Income-tax Act, 2025. A small mistake in classification or timing can lead to interest, fees, and reconciliation issues.

The best approach is to use the TDS rate chart as a quick reference, but always confirm the payment type, recipient status, and compliance timeline before deducting tax. In practice, accurate process matters just as much as the rate itself.

## About the author

**Rithesh Bajoriya**

As a Chartered Accountant with over 18 years of experience, I have honed my skills in the field and developed a genuine passion for writing. I specialize in crafting insightful content on topics such as GST, income tax, audits, and accounts payable. By focusing on delivering information that is both engaging and informative, my aim is to share valuable insights that resonate with readers.

## Frequently asked questions

### What is the TDS rate for FY 2026-27?

There is no single TDS rate for FY 2026-27. TDS rates vary depending on the nature of payment. Common examples include 10% for many interest, dividend, rent, and professional-fee categories, 1% to 2% for contractor payments, 1% for certain property and VDA cases, and 30% for [**lottery and online gaming winnings**](https://busy.in/tds/section-194b-of-income-tax/) .

### Is the old section-wise format still valid in FY 2026-27?

It remains useful for business understanding because people still identify categories through old labels. But for current-year legal framing, FY 2026-27 is under the Income-tax Act, 2025. So, you should not rely only on the old section structure.

### What is the rule for partner remuneration TDS now?

A firm or LLP must deduct TDS at 10% on the aggregate of fixed payments exceeding ₹20,000 per partner per financial year. This includes salary, remuneration, bonus, commission, and interest on capital. The share of profit remains outside the scope of this TDS.

### What is TDS on contractor payments?

Contractor payments generally attract TDS at 1% if the payee is an individual or HUF and 2% in other cases, subject to threshold conditions. The single-contract threshold and aggregate annual threshold both need to be checked.

### What is TDS on professional fees?

Professional fees generally attract TDS at 10% once the threshold is crossed. Technical services and certain call centre categories may fall under the lower 2% rate, so correct classification matters.

### What is TDS on property purchase?

When the value of immovable property reaches ₹50 lakh or more, TDS at 1% applies on the transaction amount, subject to applicable rules. The buyer is responsible for deduction and deposit compliance.

### Is there any FY 2026-27 relief for property purchase from a non-resident?

Yes. From 1 October 2026, a resident individual or HUF buying immovable property from a non-resident gets relief from obtaining TAN for that transaction. This reduces compliance burden, though TDS itself still applies.

### What happens if PAN is not provided?

TDS generally has to be deducted at the higher of the applicable rate, the rate in force, or 20%. This can significantly increase deduction even for categories that normally carry a low TDS rate.

### Is there any special 2026 update for compensation interest?

Yes. Interest on compensation awarded by the Motor Accidents Claims Tribunal to an individual is treated as outside TDS from 1 April 2026.

### How is manpower supply treated for TDS purposes?

The current practical approach is to align manpower supply more clearly with the contractor category. That reduces disputes in cases where such payments were earlier debated as technical or professional services.

### Are TDS rates different for non-residents?

Yes. Non-resident withholding depends on the nature of payment, domestic law, rate in force, [**DTAA eligibility**](https://busy.in/tds/how-tds-rates-are-decided-income-tax-act-finance-act-dtaa/) , and documents such as TRC and Form 10F. A simple resident TDS chart should never be used blindly for non-resident cases.

### What is the due date for TDS deposit?

In most cases, TDS must be deposited by the 7th of the following month. For deductions made in March, the usual due date is 30 April.

### What is the fee for late TDS return filing?

Late filing of TDS return attracts a fee of ₹200 per day, subject to a maximum cap equal to the TDS amount for that return period.

### What is the difference between TDS and TCS?

TDS is deducted by the payer before making payment to the recipient. TCS is collected by the seller from the buyer at the time of receipt or collection as applicable. Both are credited against the final tax liability of the recipient or buyer, subject to the rules.

### Is TDS applicable on Virtual Digital Assets?

Yes. Payments for transfer of Virtual Digital Assets continue to attract TDS under the applicable category, with threshold differences between specified persons and others.

### Is TDS applicable on online gaming winnings?

Yes. Online gaming winnings continue to attract TDS at 30%, and this category is stricter than many conventional threshold-based withholding categories.

### Do small businesses need to worry about TDS if they are not under tax audit?

Yes, in certain cases. Even non-audit individuals and HUFs can come under TDS obligations in categories like high monthly rent and specified large payments. It is a mistake to assume that only companies or tax-audit cases deal with TDS.

### What is the biggest practical mistake in TDS compliance?

The biggest practical mistake is usually not the rate itself. It is classification and timing. Businesses often misclassify contractor vs professional fees, ignore threshold aggregation, miss PAN collection, or deposit deducted tax late.

### Is TDS only a finance-team issue?

No. TDS affects procurement, vendor onboarding, payroll, treasury, property transactions, legal documentation, and accounting reconciliation. It is a business-process issue, not just a tax-team issue.

### Is there any forward-looking 2027 change worth noting?

Yes. From 1 April 2027, a depository-based route for eligible no-deduction declarations for certain securities and mutual fund incomes is expected. That matters more for process planning than for day-to-day FY 2026-27 deduction work.

## Related articles

- [Form 13 Is Now Form 128: Lower or Nil TDS Certificate Guide](https://busy.in/tds/form-13-is-now-form-128-lower-or-nil-tds-certificate-guide/)
- [Impact of Non-Compliance on TDS Certificate Issuance: 2025 Update](https://busy.in/tds/impact-of-non-compliance-on-tds-certificate-issuance-2025-update/)
- [Section 194R: TDS on Business Perks, Freebies, and Benefits](https://busy.in/tds/section-194r-tds-on-business-perks-freebies-and-benefits/)
- [Section 194M: TDS Rules for High-Value Payments by Individuals & HUFs](https://busy.in/tds/section-194m-tds-rules-for-high-value-payments-by-individuals--hufs/)
- [Form 12BA: Complete Guide to Salary Perquisites, Applicability, and Tax Implications](https://busy.in/tds/form-12ba-complete-guide-to-salary-perquisites-applicability-and-tax-implications/)
- [Section 194K: TDS on Mutual Fund Dividend and IDCW Income](https://busy.in/tds/section-194k-tds-on-mutual-fund-distributions-demystified/)
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- [Importance of TDS in Cash Flow Management for Businesses](https://busy.in/tds/importance-of-tds-in-cash-flow-management-for-businesses/)
- [Section 194DA: Complete Guide to TDS on Insurance Policy Maturity Payouts](https://busy.in/tds/section-194da-complete-guide-to-tds-on-insurance-policy-maturity-payouts/)
- [TDS on Software Purchase in India: A Complete Guide for Businesses](https://busy.in/tds/tds-on-software-purchase-in-india-a-complete-guide-for-businesses/)