Key Highlights
- TDS rates for Tax Year 2026-27 (Assessment Year 2027-28)
- Rates under ITA 2025 — Chapter XIX TDS/TCS provisions
- Higher TDS if PAN not furnished: 20% (Section 406 of ITA 2025)
- No TDS if payee submits Form 15G (resident, non-senior) or Form 15H (senior citizen)
- Lower/nil TDS certificate available under Section 398
- TDS deposit deadline: 7th of following month (30 April for March)
Legal Reference
Chapter XIX (TDS/TCS), Sections 391-425, Income Tax Act, 2025 | Finance Act 2024 rate changes effective 1 October 2024 | CBDT TDS rate circular for Tax Year 2026-271. Key TDS Rates — Resident Payees (Tax Year 2026-27)
| Section (ITA 2025) | Nature of Payment | TDS Rate | Threshold |
|---|---|---|---|
| 391 | Salary (Section 391) | Average rate (slab-based) | Above basic exemption |
| 392 | Accumulated EPF withdrawal | 10% | Rs 50,000 |
| 393 | Dividend (Indian company) | 10% | Rs 5,000/year |
| 393A | Interest on securities | 10% | Rs 10,000 |
| 393B | Interest (bank/post office FD) | 10% | Rs 40,000 (Rs 50,000 senior) |
| 393C | Interest other sources (NBFCs) | 10% | Rs 5,000 |
| 393D | Lottery/crossword winnings | 30% | Rs 10,000 |
| 394 | Purchase of immovable property | 1% (buyer deducts) | Rs 50,00,000 |
| 394A | Online gaming net winnings | 30% | Rs 100 (year-end) |
| 395 | Capital gains on property (NRI) | LTCG: 20%; STCG: 30% | Nil |
| 396 | Non-resident payments (general) | As applicable / DTAA | Nil |
| 397 | Rent (individual/HUF Rs 50K+/month) | 5% (reduced from 10% — Budget 2024) | Rs 50,000/month |
| 398 | Payment to contractors | 2% (works contract); 1% (others) | Rs 30,000 single / Rs 1L aggregate |
| 399 | Professional/technical fees | 10% | Rs 30,000/year |
| 399A | Commission/brokerage | 5% (reduced — Budget 2024) | Rs 15,000/year |
| 399B | Rent (company/firm — Section 194I) | 10% (land/building); 2% (plant/machinery) | Rs 2,40,000/year |
| 400 | Payment for transfer of certain immovable property | 1% | Rs 50L |
| 401 | E-commerce operators to participants | 1% | Rs 5L/year |
2. Key Budget 2024 TDS Rate Changes (Effective 1 October 2024)
| Section | Nature | Old Rate | New Rate |
|---|---|---|---|
| 397 (194IB) | Rent by individual/HUF | 5% | 2% |
| 399A (194H) | Commission/brokerage | 5% | 2% |
| 399 (194J) | Professional/technical fees | 10%/2% | 10%/2% (no change) |
| 393B (194A) | Bank FD interest threshold | Rs 40,000 | Rs 50,000 (Budget 2025) |
3. Higher TDS for Non-PAN Cases (Section 406)
If the payee does not furnish their PAN, TDS must be deducted at the higher of: the applicable TDS rate; or 20%. This applies to all TDS sections. This encourages all payees to provide their PAN and ensures tax compliance.
4. Form 15G / 15H: When No TDS is Required
Payees with income below the taxable threshold can submit self-declarations to avoid TDS:
- Form 15G: For residents below 60 years with total income below the basic exemption limit (Rs 4L new regime) and estimated annual income below taxable limit
- Form 15H: For senior citizens (60+) whose total income is below taxable limit
- These forms can be submitted to banks, mutual funds, and other TDS deductors
- Valid for one Tax Year — must be submitted fresh every year
5. Why TaxClue
TDS compliance requires identifying the correct section, rate, threshold, and deposit deadline for every payment. TaxClue provides TDS advisory, quarterly TDS return filing (Form 24Q, 26Q, 27Q), and TDS reconciliation services. Contact us for complete TDS compliance under ITA 2025.
Disclaimer
This article is for general informational and educational purposes only. It does not constitute legal, financial, or professional tax advice. Readers are advised to consult a qualified Chartered Accountant or tax professional before making any decisions. TaxClue Consultech Pvt Ltd accepts no liability. All case studies and examples in this article are illustrative only and do not represent actual persons or transactions.