How TDS works under the new Act
Under the Income-tax Act, 2025, the 194-series sections were replaced by tables: section 393(1) for payments to residents, 393(2) for non-residents and 393(3) for certain payments to anyone. Each row carries a payment code quoted in TDS returns. Rates and thresholds were carried over from the Budget 2025 changes.
TDS rate chart 2026-27 — payments to residents
| Payment (old section) | Threshold | Rate |
|---|---|---|
| Salary (192 → 392) | Taxable salary | Average slab rate |
| Bank / co-op / post office interest (194A) | ₹50,000 a year (₹1 lakh for senior citizens) | 10% |
| Other interest (194A), interest on securities (193) | ₹10,000 | 10% |
| Dividends (194) | ₹10,000 | 10% |
| Rent — plant and machinery (194I) | ₹50,000 a month | 2% |
| Rent — land, building, furniture (194I) | ₹50,000 a month | 10% |
| Rent paid by individuals/HUF not under audit (194-IB) | ₹50,000 a month | 2% |
| Contractors, including manpower supply (194C) | ₹30,000 single / ₹1 lakh a year | 1% individual/HUF, 2% others |
| Commission or brokerage (194H) | ₹20,000 | 2% |
| Insurance commission (194D) | ₹20,000 | 2% (10% to companies) |
| Technical fees, call centres (194J) | ₹50,000 | 2% |
| Professional fees (194J) | ₹50,000 | 10% |
| Director fees (194J) | No threshold | 10% |
| Purchase of goods by large buyers (194Q) | ₹50 lakh | 0.1% |
| Purchase of property from a resident (194-IA) | ₹50 lakh | 1% |
| Contract / professional fees paid by individuals (194M) | ₹50 lakh | 2% |
| Salary, commission, interest to partners (194T) | ₹20,000 | 10% |
| Mutual fund income (194K) | ₹10,000 | 10% |
| E-commerce sellers (194O) | ₹5 lakh for individual/HUF sellers | 0.1% |
| Business perquisites (194R) | ₹20,000 | 10% |
| Virtual digital assets (194S) | ₹50,000 / ₹10,000 | 1% |
| Lottery and horse-race winnings (194B / 194BB) | ₹10,000 per transaction | 30% |
| Cash withdrawals (194N) | ₹1 crore (₹3 crore co-ops) | 2% |
No PAN? TDS is generally 20% (5% for 194Q / 194O items).
Payments to non-residents — section 393(2)
- Interest, royalty and fees for technical services: 20%; long-term capital gains: 12.5%; short-term gains on listed equity: 20%; other income: 30% for individuals — plus surcharge and cess, or the lower treaty rate with a TRC and Form 41.
- Buying property from an NRI: from 1 October 2026, resident individual buyers deposit TDS against their PAN without a TAN — see TDS on NRI property sale.
- Full guide: TDS on payments to non-residents.
What Budget 2026 changed
- Manpower supply is treated as contract work (1% / 2%).
- No-TAN TDS for individuals buying property from NRIs.
- TCS on overseas tour packages: flat 2%; on education and medical remittances above ₹10 lakh: 2% — see the TCS calculator.
Frequently asked questions
What is the TDS rate on professional fees in 2026-27?
10% above ₹50,000 a year; technical fees and call-centre payments are 2% above ₹50,000.
What is the TDS on rent for 2026-27?
10% on rent for land, buildings or furniture and 2% on plant and machinery, where rent exceeds ₹50,000 a month; individuals and HUFs not under audit deduct 2% above ₹50,000 a month.
What is the TDS threshold for bank interest?
₹50,000 a year (₹1 lakh for senior citizens), with TDS at 10%.
What is the TDS rate on contractor payments?
1% for individual or HUF contractors and 2% for others, where a single payment exceeds ₹30,000 or the year's total exceeds ₹1 lakh.
Please note: this guide is general information based on the rules as they stood on the review date above. Regulations and RBI/CBDT procedures change often — please get advice on your specific facts before acting.