Every financial year, the Government of India updates the TDS rates. This is usually done through Union Budget or through amendments during the year when required. These changes affect taxpayers, businesses, employers and professionals across the country. To help you stay updated, this blog provides latest TDS Rate Chart for FY 2026-27 along with applicable rates w.e.f. from 1 April 2026.
TDS full form is Tax Deducted at Source. It is a system of tax collection introduced by Income Tax Department. Under this system, the person making certain payments deducts a prescribed percentage of tax before paying remaining amount to recipient. The tax is then given to government on behalf of recipient. The person deducting the tax is known as deductor and the person on whose payment TDS is applied is called deductee.
TDS rates in India are not fixed and are dependent on various factors like nature of payment, status of recipient (resident or non-resident), applicable threshold limit and provisions of Income Tax Act or any applicable Double Taxation Avoidance Agreement. In general, TDS on payments to residents is deducted only after the prescribed threshold limit is crossed.
However, in many cases involving payments to non-residents u/s 393(2) of Income Tax Act 2025 (previously Section 195 under Income Tax Act 1969), TDS may apply from the very first rupee unless a lower rate, exemption or treaty benefit is available.
The following table lists the TDS rates for resident taxpayers applicable during FY 2026-27. The sections refer to the relevant provisions of the Income Tax Act, 1961 and are included for reference only:-
| Section | Nature of Transaction | Threshold Limit | TDS Rate |
|---|---|---|---|
| 192 | Salary | Basic exemption limit applicable to the employee | Income tax slab rates |
| 192A | Premature Withdrawal from Employees Provident Fund | Rs. 50,000 | 10% |
| 193 | Interest on Securities | Rs. 10,000 | 10% |
| 194 | Dividend Income | Rs. 10,000 | 10% |
| 194A | Interest on Bank/Post Office Deposits | Rs. 50,000 | 10% |
| 194A | Interest on Bank/Post Office Deposits (Senior Citizens) | Rs. 1,00,000 | 10% |
| 194A | Other Interest (Other than Interest on Securities) | Rs. 10,000 | 10% |
| 194C | Payments to Contractors or Sub-contractors | Rs. 30,000 per transaction or Rs. 1,00,000 during the financial year | 1% (Individuals/HUFs), 2% (Others) |
| 194D | Insurance Commission | Rs. 20,000 | 2% (Individuals/HUFs), 10% (Others) |
| 194DA | Payment under a Life Insurance Policy | Rs. 1,00,000 | 2% |
| 194EE | Payment under the National Savings Scheme (NSS) | Rs. 2,500 | 10% |
| 194G | Commission on Sale of Lottery Tickets | Rs. 20,000 | 2% |
| 194H | Commission or Brokerage | Rs. 20,000 | 2% |
| 194LBA | Certain Income from a Business Trust's Units | No Threshold | 10% |
| 194M | Payments by Individuals or HUFs for Contract Work, Commission, Brokerage, or Professional Fees | Rs. 50 lakh | 2% |
The table below provides the TDS rates applicable to non-residents for FY 2026-27. The section numbers are as per the Income Tax Act, 1961 and are provided for reference purposes only:-
| Section | Nature of Payment | TDS Rate |
|---|---|---|
| 194E | Payments to Non-Resident Sportsmen or Sports Associations | 20% |
| 194LB | Interest from Infrastructure Debt Fund | 5% |
| 194LBA(2) | Interest Income Distributed by a Business Trust | 5% |
| 194LBA(2) | Dividend Income Distributed by a Business Trust | 10% |
| 194LBA(3) | Rental Income Distributed by a Business Trust | 30% |
| 194LBB | Income Distributed by an Investment Fund to a Non-Resident Unit Holder | 30% |
| 194LBC | Income from Securitisation Trust | 30% |
| 194LC | Interest on Certain Foreign Borrowings | 5% (or applicable concessional rate under the Act) |
| 194LD | Interest on Rupee-Denominated Bonds or Government Securities Paid to an FII/QFI | 5% |
| 195 | Other Payments to Non-Residents (Including Foreign Companies) | Rates in force under the Income-tax Act or applicable DTAA |
| 196A | Income in Respect of Units Held by Non-Residents | 20% |
Knowing about the latest TDS rates helps the taxpayers and businesses to deduct the tax correctly as well as stay compliant with the Income Tax Act. For professional assistance in TDS Compliance or ITR Filing, you can contact Registrationwala.
Q1. What is the difference between TDS Deductor and Deductee?
A. Deductor is a person or entity who has the responsibility to deduct TDS before making payment whereas Deductee is the person whose payment is subject to TDS. The deductor pays the tax deducted with government on behalf of deductee.
Q2. Does the TDS rate differ for NRIs?
A. Yes. TDS rates for NRIs may be different from rates applicable to residents. The applicable rate depends on various factors such as type of income, provisions of Income Tax Act and if NRI is eligible to claim benefits under Double Taxation Avoidance Agreement.
Q3. How often do TDS rates get updated?
A. TDS rates are generally reviewed by government every year and any changes are announced in the Union Budget. If revised, new rates usually become effective from the beginning of financial year, i.e., 1 April. However, the government may also introduce changes through amendments during the year if the same is required.
Q4. Who needs to file TDS return?
A. The deductor needs to file the TDS return.
Sunny Goel is a Chartered Accountant (CA) and the Senior Finance & Regulatory Consultant at Registrationwala. He has expertise in accounting, taxation, finance, regulatory compliance, and insurance compliance. He writes simple and easy-to-understand content to help businesses understand financial rules, tax laws, insurance regulations, compliance requirements, and other regulatory matters.
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