TDS Rate Chart for Tax Year 2026-27: The Ultimate Complete Guide to New Sections & Rates

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Complete TDS rate chart for Tax Year 2026-27

TDS Rate Chart for Tax Year 2026-27: Complete Section-Wise Guide Under Income Tax Act 2025

From April 1, 2026, the Income Tax Act, 2025 replaced the Income Tax Act, 1961. Every TDS section number you have memorised — 192, 194C, 194J, 194H, 194I, 194A — is now retired. In their place, all Tax Deducted at Source is consolidated under Section 392 (salary) and Section 393 (all non-salary payments). TRACES no longer accepts old section names in quarterly returns — you must quote 4-digit numeric payment codes (1001–1067). Two rates have genuinely decreased: commission dropped from 5% to 2%, and individual/HUF rent dropped from 5% to 2%. This verified TDS rate chart for Tax Year 2026-27 covers every rate, every threshold, every TRACES code, and every compliance rule — sourced from the Income Tax Act 2025, Income Tax Rules 2026, and Finance Act 2026.

TDS rate chart tax year 2026-27 — quick reference rates under Income Tax Act 2025 TDS Rate Chart — Tax Year 2026-27 | Quick Reference Rates Salary (S.392): Slab Rate Commission (1006): 2% ↓from 5% Indv/HUF Rent (1007): 2% ↓from 5% Contractor Indv (1023):1% Contractor Other (1024):2%

Tech Services (1026): 2% Professional Fees (1027):10% Director Fees (1028): 10% (no threshold) Land/Bldg Rent (1009): 10% Interest — FD etc (1021):10%

Dividend (1029): 10% Goods Purchase (1031):0.1% VDA/Crypto (1037): 1% Online Games (1060):30% (no threshold) Partner Pay (1067): 10% | No PAN: 20%

TDS rate chart tax year 2026-27 — quick reference for the most common payment categories under Income Tax Act 2025 (Section 392 and Section 393)

📑 Table of Contents

  1. The New TDS Framework: Sections 392, 393, and 394
  2. 5 Critical Changes From April 1, 2026
  3. Section 392 — Salary TDS Rate Chart (Codes 1001–1004)
  4. Section 393(1) — Non-Salary Resident TDS Rate Chart (Codes 1005–1038)
  5. Section 393(3) — Winnings, Cash Withdrawals & Partner Payments (Codes 1058–1067)
  6. Free TDS Rate Finder & Calculator — Tax Year 2026-27
  7. Complete TDS Forms Mapping: Old vs New
  8. TDS Deposit Due Dates & Interest on Default
  9. No-PAN Rate & Deletion of 206AB/206CCA
  10. 10-Point Compliance Checklist
  11. Frequently Asked Questions
  12. Key Takeaways

The New TDS Framework: Sections 392, 393, and 394

Understanding the TDS rate chart for Tax Year 2026-27 starts with grasping the structural shift. The Income Tax Act, 1961 carried over 60 individual TDS sections — 192, 193, 194, 194A, 194B, 194BA, 194BB, 194C, 194D… all the way to 194T and 195. Each had its own threshold, rate, and set of provisos. Three thousand amendments across six decades had turned the structure into a compliance labyrinth.

The Income Tax Act 2025 replaces all of this with three consolidated parent sections:

  • Section 392 — Salary TDS only. Replaces old Sections 192 and 192A. Codes 1001–1004. Quarterly return: Form 138. Annual certificate: Form 130.
  • Section 393 — All non-salary TDS, in three sub-groups:
    • 393(1) — Payments to residents. Codes 1005–1038. Return: Form 140. Certificate: Form 131.
    • 393(2) — Payments to non-residents / foreign companies. Codes 1039–1057. Return: Form 144.
    • 393(3) — Winnings, cash withdrawals, partner payments. Codes 1058–1067.
  • Section 394 — All TCS (Tax Collected at Source). Replaces old Section 206C series. Codes 1068–1092. Return: Form 143.
TDS Architecture Under Income Tax Act 2025 — Tax Year 2026-27

SECTION 392 SALARY TDS Replaces: S.192, 192A Codes: 1001–1004 Return: Form 138 Certificate: Form 130 Rate: Income tax slab Threshold: Basic exemption Salary reset: April 1

SECTION 393 — ALL NON-SALARY TDS Replaces: All 194-series — 194A, 194C, 194J, 194H, 194I, 194Q, 194S, 194T and 40+ others 393(1) Residents Codes 1005–1038 Return: Form 140 Commission, rent, interest contracts, professional fees goods, VDA, e-commerce 393(2) Non-Residents Codes 1039–1057 Return: Form 144 NRI, foreign company payments +4% cess on all NR rates DTAA rates may apply 393(3) Winnings/Cash Codes 1058–1067 Return: Form 140 Lottery, online games Cash withdrawals >₹1 Cr Partner salary/interest

SECTION 394 — TCS TAX COLLECTED AT SOURCE Replaces: Section 206C series Codes: 1068–1092 Return Form: 143 Certificate: Form 133 Scrap, alcohol, minerals LRS, overseas tours Finance Act 2026 rate revisions

Image 1 ALT: TDS rate chart tax year 2026-27 architecture showing Section 392 for salary, Section 393 in three sub-categories for all non-salary TDS, and Section 394 for TCS under Income Tax Act 2025
🔴 TRACES Portal: Old Section Numbers Rejected
For any payment credited or made on or after April 1, 2026, quoting old section numbers (194C, 194J, 194H, etc.) in Forms 138, 140, or 144 triggers a validation error. The return will be treated as defective, requiring a correction statement — causing delays and penalties. Update all ERP systems, Tally, SAP, and TDS software to use TRACES codes 1001–1067 before the first quarterly filing.

5 Critical Changes From April 1, 2026

The TDS rate chart for Tax Year 2026-27 is not just a renaming exercise. While most TDS rates are unchanged, five structural and substantive changes directly affect compliance from Tax Year 2026-27:

1. Commission / Brokerage Rate Cut: 5% → 2% RATE CUT

Old Section 194H (commission/brokerage) is now Code 1006 under Section 393(1)[Sl.1(ii)]. Rate reduced from 5% to 2%. Threshold: ₹20,000 per annum. This covers all commissions paid to agents, brokers, sub-agents — except insurance commissions (Code 1005, separate rates).

2. Individual / HUF Rent (Non-Audit) Rate Cut: 5% → 2% RATE CUT

Old Section 194-IB (rent paid by individuals/HUFs not liable to tax audit) is now Code 1007 under Section 393(1)[Sl.2(i)]. Rate reduced from 5% to 2%. Threshold: ₹50,000 per month. Significant cash-flow relief for individual tenants. Note: Code 1007 is inferred — not yet formally notified by CBDT as of May 2026. Verify at TRACES portal before use.

3. Section 194J Split Into Three Distinct Codes STRUCTURAL

Old Section 194J covered both technical services (2%) and professional fees (10%) with frequent disputes on classification. The new Act separates these cleanly into three codes, making wrong-code filing itself a compliance error:

  • Code 1026 — 2%: Technical services fees, royalty for film sale/distribution/exhibition, call-centre services
  • Code 1027 — 10%: Professional services (doctors, lawyers, CAs, engineers, architects), other royalties, non-compete fees
  • Code 1028 — 10%: Director remuneration/fees/commission (non-salary) — no threshold

4. Sections 206AB & 206CCA Deleted — ITR Non-Filer Higher TDS Abolished DELETED

Sections 206AB and 206CCA, which required checking if payees had filed ITR for the past two years and applying double TDS for non-filers, are entirely deleted. From Tax Year 2026-27, deductors need only verify PAN. ITR filing status of payees is no longer relevant for TDS compliance. This removes a major operational burden from large businesses with thousands of vendors.

5. Simplified Cash Withdrawal TDS — Single Rule for All SIMPLIFIED

The old Section 194N had a complex two-tier structure: 2% for ITR filers and 5% for non-filers (above ₹20 lakh). Under Code 1065 / Section 393(3)[Sl.5.D(b)]: 2% TDS on cash withdrawals above ₹1 crore — same rate for everyone. The non-filer differential is removed along with 206AB/206CCA.

Section 392 — Salary TDS Rate Chart (Codes 1001–1004)

In the TDS rate chart for Tax Year 2026-27, salary TDS falls entirely under Section 392, replacing old Sections 192 and 192A. Salary TDS is calculated at applicable income tax slab rates after considering deductions and the chosen regime (old or new). Quarterly return filed in Form 138. Annual certificate: Form 130 (issued by June 15 of the following year).

Code Old Section Nature of Payment New Section Rate Threshold
1001 192 Salary — State Government / Local Authority employees 392(1) Slab rate Basic exemption limit
1002 192 Salary — Union (Central) Government employees (book entry) 392(1) Slab rate Basic exemption limit
1003 192 Salary — all other employers (private companies, firms, LLPs, etc.) 392(1) Slab rate Basic exemption limit
1004 192A Premature EPF withdrawal — before 5 years of continuous service (also Form 144 for non-resident employees) 392(7) 10% ₹50,000
💡 Salary TDS Reset — Mandatory on April 1, 2026: Every employer must reset the cumulative TDS calculation to zero on April 1. Employees must submit fresh investment declarations referencing new section numbers under IT Act 2025. Form 130 (replacing Form 16) is generated automatically from TRACES after Form 138 is filed. No Form 130 can be generated outside TRACES. Employers must not continue issuing Form 16 for Tax Year 2026-27 salary — it is non-compliant.

Section 393(1) — Non-Salary Resident TDS Rate Chart (Codes 1005–1038)

The largest category in the TDS rate chart for Tax Year 2026-27 — covering all non-salary TDS on payments to resident deductees. Filed in Form 140 (replaces Form 26Q). Certificate: Form 131 (replaces Form 16A).

A. Commission, Brokerage & Rent

Code Old Section Nature of Payment New Section Rate Threshold
1005 194D Commission/brokerage — Insurance (paid by insurance company to agents) 393(1)[Sl.1(i)] 2% (Individual/HUF)
10% (Others)		 ₹20,000 p.a.
1006 194H Commission/brokerage — all others (excluding BSNL/MTNL PCO franchisee) ↓ from 5% 393(1)[Sl.1(ii)] 2% ₹20,000 p.a.
1007* 194-IB Rent — Individual/HUF not liable to tax audit, on any property ↓ from 5% 393(1)[Sl.2(i)] 2% ₹50,000 per month
1008 194-I(a) Rent — Plant, machinery or equipment (paid by specified/audit-liable person) 393(1)[Sl.2(ii).D(a)] 2% ₹50,000 per month
1009 194-I(b) Rent — Land, building or furniture (paid by specified/audit-liable person) 393(1)[Sl.2(ii).D(b)] 10% ₹50,000 per month

* Code 1007 is inferred from sequential gap in CBDT-notified forms — not yet formally assigned as of May 2026. Verify at TRACES portal before using in returns.

B. Immovable Property

Code Old Section Nature of Payment New Section Rate Threshold
1010* 194-IA Purchase of immovable property from resident (buyer deducts on higher of consideration or stamp duty value) 393(1)[Sl.3(i)] 1% ₹50,00,000
1011 194-IC Cash consideration under Joint Development Agreement [Section 67(14) of IT Act 2025] 393(1)[Sl.3(ii)] 10% No threshold
1012 194-LA Compensation on compulsory acquisition of immovable property 393(1)[Sl.3(iii)] 10% ₹5,00,000

* Code 1010 also inferred — verify at TRACES portal before use in returns.

C. Investment Income — Mutual Funds, Business Trusts, Securitisation

Code Old Section Nature of Payment New Section Rate Threshold
1013 194K Income from Mutual Fund units / UTI (specified company units) 393(1)[Sl.4(i)] 10% ₹10,000 p.a.
1014 194LBA Interest income from Business Trust (REIT/InvIT) to resident unit holder 393(1)[Sl.4(ii)] 10% No threshold
1015 194LBA Dividend-type income from Business Trust to resident unit holder 393(1)[Sl.4(ii)] 10% No threshold
1016 194LBA Rental income (REIT property) from Business Trust to resident unit holder 393(1)[Sl.4(ii)] 10% No threshold
1017 194LBB Income from AIF (Category I or II) to resident unit holders 393(1)[Sl.4(iii)] 10% No threshold
1018 194LBC Income from securitisation trust to resident investors 393(1)[Sl.4(iv)] 10% No threshold

D. Interest on Securities & Deposits

Code Old Section Nature of Payment New Section Rate Threshold
1019 193 Interest on securities — listed debentures, bonds, Govt securities 393(1)[Sl.5(i)] 10% ₹10,000 p.a. (₹5,000 for debentures)
1020 194A Interest (not on securities) — Bank/Post Office/Co-operative — Senior Citizens (60+) 393(1)[Sl.5(ii).D(a)] 10% ₹1,00,000 p.a.
1021 194A Interest (not on securities) — Bank/Post Office/Co-operative — Others (below 60 years) 393(1)[Sl.5(ii).D(b)] 10% ₹50,000 p.a.
1022 194A Interest (not on securities) — all other payers (companies, NBFCs, firms, individuals) 393(1)[Sl.5(iii)] 10% ₹10,000 p.a.

E. Contracts, Work & Professional Fees

The most frequently used category in any TDS rate chart for Tax Year 2026-27 reference. Note the split of old Section 194J into three distinct codes — using the wrong code, even at the correct tax amount, is a compliance error under the new Act.

Code Old Section Nature of Payment New Section Rate Threshold
1023 194C Contract payment for carrying out work — payee is Individual or HUF 393(1)[Sl.6(i).D(a)] 1% ₹30,000 per payment or ₹1,00,000 aggregate p.a.
1024 194C Contract payment for carrying out work — payee is Others (company, firm, LLP, etc.) 393(1)[Sl.6(i).D(b)] 2% ₹30,000 per payment or ₹1,00,000 aggregate p.a.
1025* 194M Contract/commission/professional fees paid by Individual/HUF not liable to tax audit (where codes 1023/1006/1027 not applicable) 393(1)[Sl.6(ii)] 2% ₹50,00,000 p.a.
1026 194J(a) Technical services fees, royalty for film sale/distribution/exhibition, call-centre services 393(1)[Sl.6(iii).D(a)] 2% ₹50,000 p.a.
1027 194J(b) Professional services fees (doctors, lawyers, CAs, engineers, architects), other royalties, non-compete fees 393(1)[Sl.6(iii).D(b)] 10% ₹50,000 p.a.
1028 194J(b) Director remuneration/fees/commission — non-salary payments to directors 393(1)[Sl.6(iii).D(b)] 10% No threshold
Old Section 194J Split Into 3 Codes — Tax Year 2026-27 OLD: Section 194J 2% — technical services 10% — professional fees Ambiguous split, frequent classification disputes Threshold: ₹30,000 ONE section, two rates, confusion → Code 1026 — 2% Technical Services Film royalty Call-centre services Threshold: ₹50,000 Sec 393(1)[Sl.6(iii).D(a)] Code 1027 — 10% Professional Fees Doctors, lawyers, CAs Engineers, architects Other royalties Threshold: ₹50,000 Sec 393(1)[Sl.6(iii).D(b)] Code 1028 — 10% Director Remuneration Director fees, sitting fees Commission (non-salary) No threshold

Sec 393(1)[Sl.6(iii).D(b)]

Image 2 ALT: Old Section 194J now split into three separate codes under TDS rate chart tax year 2026-27 — Code 1026 at 2% for technical services, Code 1027 at 10% for professional fees, Code 1028 at 10% for director remuneration

F. Dividends, Goods, Perquisites, VDA & E-Commerce

Code Old Section Nature of Payment New Section Rate Threshold
1029 194 Dividends by domestic company (including preference share dividends) 393(1)[Sl.7] 10% ₹1,00,000 p.a.
1030 194DA Life insurance policy proceeds (taxable portion including bonus) 393(1)[Sl.8(i)] 2% ₹1,00,000 p.a.
1031 194Q Purchase of goods — buyer’s turnover exceeds ₹10 crore in preceding year 393(1)[Sl.8(ii)] 0.1% Excess over ₹50,00,000 p.a.
1032 194P Payment to specified senior citizen — bank deducts TDS (no separate ITR filing required) 393(1)[Sl.8(iii)] Slab rate Basic exemption limit
1033 194R Business/profession benefit or perquisite — provided in cash 393(1)[Sl.8(iv)] 10% ₹20,000 p.a.
1034 194R Business/profession benefit or perquisite — in kind (where payer meets the tax in cash) 393(1)[Sl.8(iv)] 10% ₹20,000 p.a.
1035 194-O e-Commerce — payment to participant (individual/HUF) for sale of goods/services through operator 393(1)[Sl.8(v)] 0.1% ₹5,00,000 p.a. (Individual/HUF participants)
1036* 194S VDA transfer (crypto/NFT) — payer is Individual/HUF in non-audit category 393(1)[Sl.8(vi)] 1% ₹50,000 (specified person); ₹10,000 (others)
1037 194S VDA transfer (crypto/NFT) — payer is person other than Individual/HUF 393(1)[Sl.8(vi)] 1% ₹10,000 p.a.
1038 194S VDA transfer — consideration partly in cash, partly in kind (tax paid in cash by buyer) 393(1)[Sl.8(vi) Note 6] 1% ₹10,000 p.a.
⚠️ Manpower Supply — Explicitly Covered from April 2026: The Income Tax Act 2025 explicitly defines manpower supply (deploying workers/labour to another entity) as “Work” under Section 393. TDS applies at 1% (payments to Individual/HUF) or 2% (all other entities) under Codes 1023/1024. If your business was not deducting TDS on manpower supply contracts, correct this from April 1, 2026. Non-deduction risks expense disallowance under Section 40(a)(i).

Section 393(3) — Winnings, Cash Withdrawals & Partner Payments (Codes 1058–1067)

This sub-category of the TDS rate chart for Tax Year 2026-27 covers high-stakes payments — lottery winnings, online game income, large cash withdrawals, and partner remuneration. All deducted at source before payment reaches the recipient.

Code Old Section Nature of Payment New Section Rate Threshold
1058 194B Winnings from lottery, crossword puzzle, card game, gambling or betting (cash or kind) 393(3)[Sl.1] 30% ₹10,000
1059 194BB Winnings from horse races 393(3)[Sl.2] 30% ₹10,000
1060 194BA Winnings from online games (no minimum threshold — every rupee taxable) 393(3)[Sl.3] 30% No threshold
1065 194N Cash withdrawal by bank/post office/co-operative society — all taxpayers (simplified single rule) Simplified 393(3)[Sl.5.D(b)] 2% ₹1,00,00,000 p.a.
1066 194EE Payment from National Savings Scheme deposit under Section 80CCA(2)(a) of IT Act 1961 393(3)[Sl.6] 10% ₹2,500
1067 194T Payment to partner of firm/LLP: salary, remuneration, commission, bonus, interest on capital (including credit to capital account) 393(3)[Sl.7] 10% ₹20,000 p.a.
🔴 Code 1067 — Partner Payments: High Non-Compliance Risk: Section 194T (effective April 1, 2025, now continuing under Code 1067 in the new Act) mandates 10% TDS on all salary, remuneration, commission, bonus, and interest on capital paid to any partner of a firm or LLP if aggregate exceeds ₹20,000 per annum. Share of profit is excluded. Many partnership firms have not complied. Non-deduction risks a 100% penalty equal to the TDS amount under Section 271C plus interest at 1% per month.

Free TDS Rate Finder & Calculator — Tax Year 2026-27

Select any payment type below to instantly find the applicable TDS rate, TRACES code, new section reference, and form to file. Enter the payment amount to calculate the exact TDS deduction and net payment.

🧮 TDS Rate Finder & Calculator — Tax Year 2026-27





📊 TDS Calculation — Tax Year 2026-27

Nature of Payment—
New Section (IT Act 2025)—
TRACES Payment Code—
Quarterly Return Form—
Payment Amount—
TDS Rate Applied—
TDS Amount to Deduct—
Net Payment to Recipient—

📌 Bookmark this tool for instant TDS rate lookup throughout Tax Year 2026-27. For non-resident payments (Section 393(2)), consult your CA as DTAA rates and surcharge/cess may apply differently.

Complete TDS Forms Mapping: Old vs New — Tax Year 2026-27

Every deductor using the TDS rate chart for Tax Year 2026-27 must also know the new return form numbers. Issuing old form names for Tax Year 2026-27 transactions is non-compliant and will cause portal mismatches for deductees filing their ITR.

TDS / TCS Forms Mapping — Tax Year 2026-27 OLD FORMS (Last used: FY 2025-26) NEW FORMS (Tax Year 2026-27 onwards)

Form 24Q — Salary TDS quarterly return → Form 138 — Salary TDS quarterly return

Form 26Q — Non-salary resident TDS return → Form 140 — Non-salary resident TDS return

Form 27Q — Non-resident TDS return → Form 144 — Non-resident TDS return

Form 27EQ — TCS quarterly return → Form 143 — TCS quarterly return

Forms 26QB / 26QC / 26QD / 26QE → Form 141 — Single consolidated form (all property/rent/goods)

Form 16 — Annual salary TDS certificate → Form 130 — Annual salary TDS certificate (by June 15)

Form 16A — Non-salary TDS certificate → Form 131 — Non-salary TDS certificate

Forms 15G / 15H — Nil TDS declarations (separate) → Form 121 — Single merged nil-TDS declaration form

Image 3 ALT: TDS forms mapping for tax year 2026-27 showing all old forms (24Q, 26Q, 27Q, 16, 16A, 15G, 15H) replaced by new forms (138, 140, 144, 130, 131, 121) under Income Tax Act 2025
🔴 Form 16 Is Non-Compliant for Tax Year 2026-27 Salary: Issuing a document labelled Form 16 for Tax Year 2026-27 (April 2026 onwards) salary is technically non-compliant. The correct certificate is Form 130, generated automatically through TRACES after Form 138 is filed. Employees relying on Form 16 for Tax Year 2026-27 ITR filing will face portal mismatches.

TDS Deposit Due Dates & Interest on Default

Knowing the TDS rate chart for Tax Year 2026-27 is only half the compliance picture. Depositing deducted TDS on time is equally critical — late deposits attract interest and penalties that can exceed the original TDS amount.

Rule 218 of the Income Tax Rules, 2026 (corresponding to old Rule 30) retains the same deposit timelines.

Deposit Due Dates

  • General rule: TDS deducted in any month must be deposited by the 7th of the following month.
  • March exception: TDS deducted in March must be deposited by April 30 of the following year (non-government deductors). This applies to both March 2026 (old Act) and March 2027 (new Act).
  • Government deductors: Deposit in the same month as deduction, by the last day of that month.

You can verify all applicable provisions directly on the Income Tax Department’s official TDS services page, which lists all deductor obligations, deposit timelines, and return filing guidance under the Income Tax Act 2025.

Interest on Late Deduction / Non-Deduction

Under Section 400 of the Income Tax Act 2025 (old Section 201): Interest at 1% per month (or part thereof) from the date TDS was deductible to the date of actual deduction. All official CBDT notifications and circulars on TDS are published at the official CBDT Circulars database for deductors to track mandatory compliance changes.

Interest on Late Deposit After Deduction

Under Section 400: Interest at 1.5% per month (or part thereof) from the date of deduction to the date of actual deposit into government account. TDS payments must be made through the official income tax e-payment portal using the new challan system under the Income Tax Rules 2026.

Late Return Filing Fee

Under Section 407 (old Section 234E): ₹200 per day for each day of delay in filing Form 138 / Form 140 / Form 143 / Form 144, subject to a maximum of the TDS/TCS amount. TRACES return filing is done through the official TRACES portal at tdscpc.gov.in — deductors must register and file all quarterly returns here using numeric payment codes 1001–1092.

Penalties for Non-Deduction / Non-Deposit

  • Failure to deduct: Penalty of 100% of TDS amount under Section 271C.
  • Failure to deposit after deduction: Treated as criminal misappropriation under Section 276B. Responsible officer/director faces rigorous imprisonment of 3 months to 7 years plus fine.
  • CBDT Circulars now binding: Section 400(2) of the Income Tax Act 2025 (amended by Finance Act 2026) makes all CBDT circulars on TDS/TCS mandatorily binding on both deductors and tax authorities. The earlier argument that CBDT circulars are merely advisory is overturned.

No-PAN Rate & Deletion of 206AB / 206CCA

Two special compliance rules that run alongside the TDS rate chart for Tax Year 2026-27 — one that raises the deduction rate when PAN is absent, and one that removes an entire compliance requirement that has been abolished under the new Act.

No-PAN Rate: Section 397(2) of Income Tax Act 2025

If payee fails to furnish a valid PAN, TDS must be deducted at 20% or the applicable rate, whichever is higher. Two exceptions exist where the no-PAN rate is lower:

  • Purchase of goods (Code 1031): No-PAN rate is 5% (since 5% > 0.1% applicable rate)
  • e-Commerce (Code 1035): No-PAN rate is 5% (since 5% > 0.1% applicable rate)

For all other payments, 20% is the no-PAN rate — which can significantly reduce working capital for deductees. PAN verification of all vendors, contractors, and service providers before each quarter is essential. With approximately 11 crore PANs still unlinked to Aadhaar, bulk PAN verification is a material compliance risk.

Sections 206AB & 206CCA Deleted DELETED FROM APRIL 2026

These sections required deductors to check ITR filing history of payees for the prior two years and apply higher TDS (twice the rate or 5%, whichever higher) if the payee had not filed ITR. Both sections are completely deleted. From Tax Year 2026-27:

  • No need to run 206AB/206CCA checks on vendors
  • No need to maintain ITR filing status registers
  • No need to request ITR acknowledgement from payees
  • Purge all non-filer flags from vendor masters
  • TDS software no longer needs to query compliance portals for filing status

10-Point Compliance Checklist — TDS Rate Chart Tax Year 2026-27

After understanding the TDS rate chart for Tax Year 2026-27, your team needs a concrete action list. Complete all 10 steps before the Q1 return deadline of July 31, 2026.

TDS Rate Chart — 10-Point Compliance Checklist Tax Year 2026-27 | Income Tax Act 2025 | Effective April 1, 2026

☑ 1. Update ERP / TDS Software — Replace All Old Section Numbers Map 194C → codes 1023/1024, 194J → codes 1026/1027/1028, 194H → 1006 194I → 1008/1009, 194IB → 1007, 194A → 1020/1021/1022 in all masters. Old section names in Form 138 / 140 cause validation errors and defective returns.

☑ 2. Replace All TDS Return Forms and Certificates Quarterly returns: 24Q → 138 | 26Q → 140 | 27Q → 144 | 27EQ → 143 Challan-cum-statements 26QB/QC/QD/QE → consolidated Form 141 Certificates: Form 16 → Form 130 | Form 16A → Form 131 | 15G/15H → Form 121

☑ 3. Apply Revised Rates for Commission and Individual Rent Commission/brokerage (Code 1006): Deduct at 2% — not 5% (old 194H rate). Individual/HUF rent (Code 1007): Deduct at 2% — not 5% (old 194-IB rate). Audit-liable rent on land/building (Code 1009): Unchanged at 10%.

☑ 4. Use Correct 194J Split Codes (1026 / 1027 / 1028) Technical services and film royalty: Code 1026 @ 2%. Wrong code = compliance error. Professional fees (CA, doctor, lawyer, engineer): Code 1027 @ 10%. Director remuneration (non-salary): Code 1028 @ 10%, no threshold.

☑ 5. Deduct TDS on Partner Payments (Code 1067) Salary, remuneration, commission, bonus, interest on capital paid to any partner of a firm or LLP: 10% TDS under Code 1067 if aggregate exceeds ₹20,000 p.a. Share of profit is excluded. Update partnership firm payroll and accounts.

☑ 6. Cover Manpower Supply Under Contract TDS (Codes 1023/1024) Manpower supply is explicitly “Work” under the new Act. Deduct at 1% (Individual/HUF payee) or 2% (company/firm payee) from April 2026. Non-deduction = expense disallowance under Section 40(a)(i).

☑ 7. Purge 206AB/206CCA from Systems — ITR Status Checks Deleted Sections 206AB and 206CCA are deleted. No need to check ITR filing status of payees or maintain non-filer registers. Remove non-filer flags from vendor masters. Only PAN verification under Section 397(2) remains mandatory.

☑ 8. Verify PAN for All Payees — Section 397(2) No-PAN Rate: 20% If payee’s valid PAN is absent: deduct at 20% (or applicable rate if higher). Exception: Goods/e-commerce (codes 1031/1035): 5% no-PAN rate. Bulk PAN verification before each quarter is essential with ~11 crore unlinked PANs.

☑ 9. Deposit TDS on Time — Know Your Due Dates All months except March: Deposit by 7th of following month. March TDS exception: Deposit by April 30 (non-government deductors). Late deposit: interest at 1.5% per month. Late deduction: 1% per month.

☑ 10. File Quarterly Returns and Issue Certificates on Time Q1 (Apr–Jun 2026): File Form 138 & 140 by July 31, 2026. Q2 (Jul–Sep 2026): File by October 31, 2026. Q3: January 31, 2027. Q4: File by May 31, 2027. Issue Form 130 by June 15, 2027.

TDS Quick Reference — Tax Year 2026-27 Salary (1001–1003): Slab rate | EPF Withdrawal (1004): 10% Commission (1006): 2% ↓ from 5% | Ind/HUF Rent (1007): 2% ↓ from 5% Machinery Rent (1008): 2% | Land/Bldg Rent (1009): 10% Contractor Indv (1023): 1% | Contractor Other (1024): 2% Technical Svc (1026): 2% | Professional Fees (1027): 10% Director (1028): 10% no threshold | Interest (1020–1022): 10% Dividend (1029): 10% | Goods Purchase (1031): 0.1% VDA/Crypto (1037): 1% | Online Games (1060): 30% Partner Pay (1067): 10% | Cash >₹1Cr (1065): 2% No PAN (Sec 397(2)): 20% (5% for goods/e-comm) 206AB / 206CCA deleted — no ITR filing checks needed from Tax Year 2026-27 cleartaxadvisors.in | Expert TDS Compliance | Income Tax Act 2025

Infographic: TDS rate chart tax year 2026-27 — 10-point compliance checklist with quick reference rate summary for all common payment categories under Income Tax Act 2025

Frequently Asked Questions — TDS Rate Chart Tax Year 2026-27

Q1: What is the TDS rate chart for Tax Year 2026-27?
The TDS rate chart for Tax Year 2026-27 operates under the Income Tax Act 2025, where all TDS is consolidated under Section 392 (salary) and Section 393 (non-salary). Rates range from 0.1% on purchase of goods and e-commerce to 30% on lottery winnings and online games. Two key reductions: commission/brokerage dropped from 5% to 2% (Code 1006), and individual/HUF rent dropped from 5% to 2% (Code 1007). All other rates are unchanged from the old Act.
Q2: Which new sections replace 194C, 194J, 194H, 194I from April 1, 2026?
Section 194C (contractors) → Codes 1023 at 1% (Individual/HUF) and 1024 at 2% (others) under Section 393(1)[Sl.6(i)]. Section 194J (professional/technical fees) → Code 1026 at 2% (technical services, film royalty), Code 1027 at 10% (professional fees, royalties), Code 1028 at 10% (director fees). Section 194H (commission) → Code 1006 at 2% under Section 393(1)[Sl.1(ii)]. Section 194I (rent) → Code 1008 at 2% (machinery) and Code 1009 at 10% (land/building) under Section 393(1)[Sl.2(ii)]. Section 194-IB (individual rent) → Code 1007 at 2%.
Q3: What are TRACES payment codes and how many exist for Tax Year 2026-27?
TRACES payment codes are 4-digit numeric codes (1001–1092) replacing old section number references in TDS/TCS quarterly returns. There are 92 total codes: 42 TDS codes for resident payments (Section 392 and 393(1)/(3)), 19 codes for non-resident payments (Section 393(2)), and 25 TCS codes (Section 394). Note: codes 1007 and 1010 are inferred from sequential gaps and have not been formally notified by CBDT as of May 2026 — verify at TRACES portal before use.
Q4: What is the TDS rate on professional fees vs technical services in Tax Year 2026-27?
These are now two separate codes. Code 1026 at 2% covers technical services fees, royalty for film sale/distribution/exhibition, and call-centre services. Code 1027 at 10% covers professional services (doctors, lawyers, chartered accountants, engineers, architects), other royalties, and non-compete fees. Code 1028 at 10% covers director remuneration and fees. The threshold for Codes 1026 and 1027 is ₹50,000 per annum; Code 1028 has no threshold.
Q5: Is TDS on partner salary mandatory in Tax Year 2026-27?
Yes. Code 1067 / Section 393(3)[Sl.7] (old Section 194T, effective April 1, 2025, continuing in new Act) mandates 10% TDS on salary, remuneration, commission, bonus, and interest on capital paid to any partner of a firm or LLP if the aggregate annual payment exceeds ₹20,000. Share of profit is excluded. Both the firm and the LLP are deductors. This caught many professional and trading firms off guard — non-deduction triggers a 100% penalty plus 1% per month interest.
Q6: Do I still need to verify ITR filing status of vendors for higher TDS in Tax Year 2026-27?
No. Sections 206AB and 206CCA, which required checking whether payees had filed ITR for the last two years and applying higher TDS for non-filers, are completely deleted under the Income Tax Act 2025. From Tax Year 2026-27, only PAN verification under Section 397(2) is required. If PAN is absent or invalid, deduct at 20% (or 5% for goods/e-commerce). You can purge all non-filer registers and ITR-status-based flags from your vendor masters.
Q7: What is the penalty for not deducting TDS in Tax Year 2026-27?
Failure to deduct TDS attracts a penalty equal to 100% of the TDS amount under Section 271C, plus interest at 1% per month from the date TDS was deductible to the date of actual deduction under Section 400. Failure to deposit TDS after deduction is treated as criminal misappropriation under Section 276B — the responsible officer or director faces rigorous imprisonment of 3 months to 7 years plus a fine. The CBDT has instructed officers not to compound these offences easily.
Q8: Which new forms must be used for TDS in Tax Year 2026-27?
Form 24Q is replaced by Form 138 (salary TDS quarterly return). Form 26Q is replaced by Form 140 (non-salary resident TDS return). Form 27Q is replaced by Form 144 (non-resident TDS return). Form 27EQ is replaced by Form 143 (TCS return). Forms 26QB/26QC/26QD/26QE are all consolidated into Form 141 (single challan-cum-statement). TDS certificates: Form 16 is replaced by Form 130 (salary); Form 16A is replaced by Form 131 (non-salary). Forms 15G and 15H are merged into a single Form 121 for nil-TDS declarations.

Key Takeaways

📌 Essential Points from the TDS Rate Chart for Tax Year 2026-27

  • New Law: The TDS rate chart for Tax Year 2026-27 is governed by the Income Tax Act 2025 replacing Act 1961 from April 1, 2026. All 194-series sections abolished. Section 392 = salary TDS. Section 393 = all non-salary TDS. Section 394 = TCS.
  • Two Rate Cuts: Commission/brokerage (Code 1006): 5% → 2%. Individual/HUF rent (Code 1007): 5% → 2%. All other rates unchanged.
  • 194J Now 3 Codes: Code 1026 (technical, 2%), Code 1027 (professional, 10%), Code 1028 (director, 10%). Using wrong code at correct tax amount is a compliance defect.
  • Partner Payment TDS (Code 1067): 10% on salary, remuneration, commission, bonus, interest on capital paid to partners exceeding ₹20,000 p.a. Profit share excluded.
  • 206AB/206CCA Deleted: No ITR filing status checks needed. Only PAN verification under Section 397(2) remains. No-PAN rate: 20% for most; 5% for goods/e-commerce.
  • TRACES Codes: 4-digit numeric codes 1001–1092. Old section names cause return validation errors. Update all software before Q1 filing.
  • New Forms: 24Q→138, 26Q→140, 27Q→144, 27EQ→143, 26QB/QC/QD/QE→141, Form 16→130, 16A→131, 15G/15H→121.
  • Deposit Deadline: 7th of following month. March exception: April 30. Late deduction interest: 1% p.m. Late deposit interest: 1.5% p.m.
  • Manpower Supply Covered: Explicitly defined as “Work” under Section 393. Deduct at 1% (Individual/HUF payee) or 2% (others). Non-deduction risks expense disallowance.
  • CBDT Circulars Now Binding: Section 400(2) makes CBDT circulars on TDS mandatory for all deductors and tax authorities from April 2026.

Conclusion

The TDS rate chart for Tax Year 2026-27 is not merely a rate update — it is a complete legislative migration. Most rates are deliberately unchanged, but every procedural element — section references, TRACES codes, return form numbers, certificate formats — has transformed. The government wanted simplification without revenue disruption. The goal is achieved: Section 393’s tabular structure is far cleaner than 60+ scattered sections, and the deletion of 206AB/206CCA removes an enormous compliance overhead.

For your accounts and tax team, four actions are non-negotiable before the first quarterly filing: update payment masters to new TRACES codes, apply the 2% reduced rate for commission and individual rent, start deducting on partner payments at Code 1067, and stop issuing Form 16 for Tax Year 2026-27 salary. The Q1 return deadline is July 31, 2026. Build buffer time — TRACES portal historically experiences load issues near deadlines. File early, file with correct codes, and keep this rate chart bookmarked.

📞 Need TDS compliance support for Tax Year 2026-27? Contact ClearTax Advisors — we provide expert guidance on Form 138 / 140 / 144 quarterly return filing, TRACES section mapping, TDS certificate generation, and compliance advisory under the Income Tax Act 2025 for businesses and professionals across India.

Explore related guides: TDS & Income Tax Updates April 2026 — Complete Transition Guide | ITR Filing FY 2025-26 Step-by-Step Guide | How to Check Form 168 (New Form 26AS) on the Portal

⚠️ Data Verification Notice: Every rate, threshold, TRACES code, section reference, and form number in this TDS rate chart for Tax Year 2026-27 has been verified against the Income Tax Act, 2025, Income Tax Rules, 2026, Finance Act 2026, official TDSMAN rate chart (updated April 8, 2026), and ClearTax / CompuTax official guidance as of May 2026. Two codes — 1007 (individual rent) and 1010 (property purchase) — are inferred from sequential gaps in CBDT-notified forms and have not been formally notified by CBDT as of the publication date. Always verify these two codes at the TRACES portal (traces.gov.in) before using in quarterly returns. This content is educational and does not constitute professional tax advice. TDS laws may be amended through CBDT notifications and circulars after the publication date. Consult a qualified Chartered Accountant for advice specific to your entity type, industry, and payee profile.

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