📌 Introduction
The Government of India has introduced key updates in TDS (Tax Deducted at Source) rates under the new Income Tax framework applicable from 1 April 2026 (FY 2026–27). These changes aim to simplify compliance, improve transparency, and widen the tax base.
In this article, we provide a complete section-wise TDS rate chart along with explanations to help taxpayers, professionals, and businesses stay compliant.
The transition to the Income Tax Act 2025 marks a significant shift in India's tax landscape.
TDS Rate Chart: Old Act (1961) vs. New Act (2025)
Effective from April 1, 2026 (Tax Year 2026-27)
| Nature of Payment | Old Section (1961 Act) | New Section (2025 Act) | Threshold Limit | TDS Rate (%) |
| Salary | 192 | 392 | Basic Exemption | Slab Rates |
| Interest on Securities | 193 | 393(1) Sl. 5(i) | ₹10,000 | 10% |
| Interest (Banks/Post Office) | 194A | 393(1) Sl. 5(ii) | ₹50,000 | 10% |
| Interest (Senior Citizens) | 194A | 393(1) Sl. 5(ii) | ₹1,00,000 | 10% |
| Dividends | 194 | 393(1) Sl. 7 | Nil | 10% |
| Contractor Payments | 194C | 393(1) Sl. 6(i) | ₹30k (Single) / ₹1L (Agg.) | 1% (Ind/HUF) / 2% (Others) |
| Professional Fees (Specified) | 194J(a) | 393(1) Sl. 6(iii) | ₹50,000 | 2% |
| Professional Fees (Others) | 194J(b) | 393(1) Sl. 6(iii) | ₹50,000 | 10% |
| Commission / Brokerage | 194H | 393(1) Sl. 1 | ₹20,000 | 2% |
| Rent (Plant & Machinery) | 194-I(a) | 393(1) Sl. 2(ii) | ₹50,000 / month | 2% |
| Rent (Land & Building) | 194-I(b) | 393(1) Sl. 2(ii) | ₹50,000 / month | 10% |
| Partner Remuneration/Salary | 194T | 393(10) Sl. 7 | ₹20,000 | 10% |
| Virtual Digital Assets (VDA) | 194S | 393(1) Sl. 8(vi) | ₹10k / ₹50k | 1% |
| Purchase of Goods | 194Q | 393(1) Sl. 8(ii) | ₹50,00,000 | 0.10% |
| Online Gaming Winnings | 194BA | 393(10) Sl. 2 | Nil | 30% |
1. The Big Shift: 1961 vs. 2025
The Income Tax Act 2025 is not just a revision; it is a full replacement of the 64-year-old Income Tax Act of 1961.
2. Key Changes Effective April 1, 2026
Uniformity in Thresholds: Many limits have been rationalized. For instance, the threshold for TDS on Professional Fees (194J) has been increased to ₹50,000.
The "Tax Year" Concept: The new Act officially adopts the term "Tax Year" (TY) to replace the confusing "Previous Year" and "Assessment Year" terminology.
TDS on Partners (Section 194T): One of the most significant additions.
Partnership firms and LLPs must now deduct 10% TDS on salary, bonus, or interest paid to partners if the aggregate exceeds ₹20,000 in a year. Life Insurance Payouts: The TDS rate on the taxable portion of life insurance payouts has been reduced to 2% (previously 5%).
3. Compliance & Penalties
The new regime emphasizes digital-first compliance.
⚠️ Important Highlights (FY 2026–27)
- ✔ Applicable from 1 April 2026
- ✔ PAN mandatory – higher TDS if not provided
- ✔ New IT Act 2025 focuses on simplified compliance
- ✔ Threshold limits revised for ease of small taxpayers
- ✔ Increased tracking of high-value transactions
📌 Key Changes Under New IT Act 2025
- Simplification of TDS provisions
- Better digital reporting and integration
- Reduced litigation through clarity in sections
- Alignment with faceless assessment system
📊 Who Should Deduct TDS?
- Businesses & Companies
- Professionals (CA, Lawyers, Consultants)
- Employers
- Individuals/HUF (in specified cases)
💡 Why TDS is Important?
- Ensures advance tax collection
- Reduces tax evasion
- Helps in tracking financial transactions
- Smooth filing of Income Tax Returns (ITR)
📅 Due Dates for TDS Deposit
- Monthly: 7th of next month
- March Month: 30 April
- Quarterly Returns: Form 24Q / 26Q filing mandatory
❗ Penalty for Non-Compliance
- Interest: 1% to 1.5% per month
- Late Fee: ₹200 per day
- Penalty: Up to equal amount of TDS
📌 Impact on Taxpayers & Professionals
👨💼 For Businesses:
- Easier compliance
- Less manual errors
👨💻 For Professionals:
- Updated knowledge required
- New section codes in filings
👤 For Individuals:
- Better transparency
- Faster ITR processing
📢 Conclusion
The updated TDS rates for FY 2026–27 under the new Income Tax Act 2025 aim to make compliance easier while ensuring transparency. Taxpayers and businesses must stay updated and ensure timely deduction and filing to avoid penalties.
⚠️ Disclaimer
This article is for informational purposes only. The above TDS rates are based on available updates under the new Income Tax Act 2025. Users are advised to verify with official government notifications or consult a tax professional before making any decisions. We are not responsible for any discrepancies.
🔥 Bonus
- TDS rates FY 2026-27
- New Income Tax Act 2025 TDS
- Latest TDS chart India
- Section wise TDS rates
- TDS on salary, interest, rent 2026