Legal Reference
Sections 391-410 (TDS), ITA 2025 | Comprehensive TDS rate chart for Tax Year 2026-27 | All domestic TDS provisions
1. Why TDS Compliance Needs a Rate Chart
Tax Deducted at Source (TDS) operates across more than 20 different payment categories under ITA 2025, each with its own rate, threshold, and applicable section. A payment from one category cannot use another category TDS rate -- getting the section and rate wrong creates TDS defaults even if the amount deposited is correct. This comprehensive TDS rate chart for Tax Year 2026-27 covers every significant TDS provision a business or individual is likely to encounter.
2. TDS on Salary (Section 391)
Salary TDS is unique -- there is no fixed rate. TDS is deducted at the "average rate of income tax" computed on the employee estimated annual income after deductions. The employer computes the annual tax, divides by 12, and deducts monthly. No fixed threshold -- if any tax is due, TDS must be deducted on the first rupee of salary. Senior citizens are not exempt from salary TDS (only from advance tax without business income).
3. TDS on Interest (Sections 393A-393C)
| Payment Type | Section | Rate | Threshold |
|---|
| Interest on securities (debentures, bonds) | 393A | 10% | Rs 5,000/year |
| Interest other than on securities (FD, RD, savings above limit) | 393B | 10% | Rs 40,000/year (Rs 50,000 senior) |
| Interest from co-operative society or post office | 393C | 10% | Rs 40,000/year (Rs 50,000 senior) |
4. TDS on Professional and Technical Fees (Section 399)
| Payment Type | Rate | Threshold |
|---|
| Professional services (CA, doctor, lawyer, architect) | 10% | Rs 30,000/year |
| Technical services (IT, software, maintenance) | 2% | Rs 30,000/year |
| Royalty payments | 10% | Rs 30,000/year |
| Director fees (non-salary) | 10% | No threshold |
| Call centre operators | 2% | Rs 30,000/year |
5. TDS on Contractor Payments (Section 400)
| Payment Type | Rate | Threshold |
|---|
| Contractor payments (individual/HUF) | 1% | Rs 30,000 per contract or Rs 1,00,000 per year |
| Contractor payments (company/firm) | 2% | Rs 30,000 per contract or Rs 1,00,000 per year |
| Sub-contractor payments | 1% or 2% | Same as above |
6. TDS on Rent (Section 401)
| Payment Type | Rate | Threshold |
|---|
| Rent of land, building, furniture | 10% | Rs 2,40,000/year |
| Rent of plant, machinery, equipment | 2% | Rs 2,40,000/year |
| Rent paid by individual/HUF (above Rs 50,000/month) | 10% | Rs 50,000/month (under a different provision of Section 399) |
7. TDS on Winnings and Prizes
| Payment Type | Section | Rate | Threshold |
|---|
| Lottery, crossword, game show winnings | 393D | 30% | Rs 10,000/prize |
| Online gaming net winnings | 394B | 30% | No threshold (even Re 1) |
| Horse race winnings | 393E | 30% | Rs 10,000/year |
8. TDS on Sale of Property and Other Capital Transactions
| Payment Type | Section | Rate | Threshold |
|---|
| Immovable property purchase (buyer deducts) | 394 | 1% | Rs 50,00,000 (Rs 50 lakh) per property |
| Immovable property sale by NRI (buyer deducts) | 395 / Section 195 | 20% LTCG / 30% STCG | No threshold |
| Transfer of virtual digital assets (VDA) | 67B | 1% | Rs 10,000/year |
9. TDS on Dividends and Mutual Fund Distributions
| Payment Type | Section | Rate | Threshold |
|---|
| Dividend from domestic companies | 393 | 10% | Rs 5,000/year |
| Dividend/IDCW from mutual funds | 393 | 10% | Rs 5,000/year |
| Income from units of business trust (REIT/InvIT) | 393 | 10% | Rs 5,000/year |
10. TDS on Other Common Payments
| Payment Type | Section | Rate | Threshold |
|---|
| Commission/brokerage | 397 | 5% | Rs 15,000/year |
| Insurance commission | 398 | 5% | Rs 15,000/year |
| Payment to LIC agents | 398 | 5% | Rs 15,000/year |
| EPF withdrawal (before 5 years) | 392A | 10% | Rs 50,000 |
| Payment to contractors (transporters with PAN) | 400 | Nil | Exempt if PAN furnished |
| Cash withdrawal above threshold | 403 | 2% or 5% | Rs 1 crore (2%); Rs 3 crore (5%) |
11. What Happens When PAN Is Not Available
When the deductee does not furnish PAN, TDS must be deducted at the HIGHER of: the applicable TDS rate; 20%; or the rate in force. This "higher of" rule effectively creates a 20% floor for PAN non-furnishing. It applies across all TDS sections. Example: professional fees TDS is normally 10% -- without PAN, TDS becomes 20%. This is why collecting PAN from vendors, professionals, and contractors before making payments is critical.
12. TDS Deposit Due Dates
TDS must be deposited to the government within specified timelines:
- For all deductors except government: 7th of the following month (example: April TDS by 7 May)
- For March deductions: 30 April (special extension)
- Government deductors (without challan): same day of deduction; with challan: 7th of following month
- Interest for late deposit: 1.5% per month from date of deduction to date of deposit (Section 415)
13. Why TaxClue
TDS compliance requires knowing the correct section, rate, threshold, and deposit deadline for every payment type. Errors lead to interest, expense disallowance, and penalties. TaxClue maintains TDS compliance calendars and files quarterly TDS returns for businesses. Contact us 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.
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❓ Frequently Asked Questions
What is the TDS rate on FD interest?
Under Section 393B of ITA 2025, TDS on FD interest is 10% when annual interest from a single bank exceeds Rs 40,000 (Rs 50,000 for senior citizens 60+). Without PAN, TDS becomes 20%. Savings account interest (Section 393B) follows similar rates. Post office FD and co-operative society interest: Section 393C at 10% with Rs 40,000 threshold (Rs 50,000 senior). Form 15G (below 60) or 15H (senior citizen) can be submitted to avoid TDS if total income is below the taxable limit.
What is the TDS rate on property purchase?
Under Section 394 of ITA 2025, when a buyer purchases immovable property (excluding agricultural land) for Rs 50 lakh or more, the buyer must deduct TDS at 1% of the total consideration before paying the seller. This applies to resident sellers. For NRI sellers, TDS at 20% (LTCG) or 30% (STCG) on the entire consideration applies under Section 195. The buyer must deposit TDS using Form 26QB and issue Form 16B to the seller within 15 days of deposit.
What happens to TDS if the deductee does not give PAN?
If the deductee does not furnish PAN, TDS must be deducted at the higher of: the applicable TDS rate (e.g., 10% for professional fees); 20%; or the rate in force. Practically, this means a minimum 20% TDS applies when PAN is not available. This rule applies across all TDS sections. Always collect PAN from vendors, professionals, and landlords before making payments to ensure the correct (lower) rate applies.
What is the TDS rate on commission and brokerage?
Under Section 397 of ITA 2025, TDS at 5% applies on commission and brokerage payments exceeding Rs 15,000 per year to a single payee. This covers stock broker commissions (above threshold), distribution commissions, marketing commissions, and other agency-type payments. Insurance commissions are separately covered under Section 398 at 5% with Rs 15,000 threshold.
Is there TDS on large cash withdrawals?
Yes. Under Section 403 of ITA 2025, banks deduct TDS on cash withdrawals. When aggregate cash withdrawals from a single bank account exceed Rs 1 crore in a year: 2% TDS on the excess above Rs 1 crore. For persons who have not filed ITR for the past 3 years: TDS at 2% above Rs 20 lakh and 5% above Rs 1 crore. This provision incentivises ITR filing and discourages large cash transactions.
