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.

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).

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

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

D. Interest on Securities & Deposits

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.

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

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.

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.

📌 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 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.

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

Key Takeaways

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.

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