Complete TDS Rate Chart for FY 2026-27: Old Sections vs New Sections Under the Income-tax Act, 2025

Complete TDS Rate Chart for FY 2026-27: Old Sections vs New Sections Under the Income-tax Act, 2025

Introduction

The Income-tax Act, 2025 has brought a major structural change to the Tax Deducted at Source (TDS) framework effective from 1 April 2026. While most TDS rates and threshold limits remain unchanged, the section numbering has been rationalized and consolidated.

For businesses, accountants, tax professionals, and deductors, understanding the mapping between old and new TDS sections is essential to ensure compliance and avoid penalties.

This guide provides a comprehensive overview of the TDS provisions applicable for FY 2026-27 (AY 2027-28).

Key Changes Under the Income-tax Act, 2025

The new Income-tax Act has simplified TDS provisions by consolidating multiple sections:

• Section 392 – TDS on Salary

• Section 393 – TDS on Payments Other Than Salary

Although section numbers have changed, most TDS rates and thresholds continue as before.

Important TDS Rates and Thresholds for FY 2026-27

Contractor Payments

• Old Section: 194C

• New Section: Covered under Section 393

• Threshold: ₹30,000 per contract or ₹1,00,000 aggregate during the financial year

• TDS Rate: 1% for Individual/HUF Contractors and 2% for Others

Professional Fees

• Old Section: 194J

• Threshold: ₹50,000

• TDS Rate: 10%

Technical Services

• Old Section: 194J

• Threshold: ₹50,000

• TDS Rate: 2%

Commission and Brokerage

• Old Section: 194H

• Threshold: ₹20,000

• TDS Rate: 2%

Rent

• Plant & Machinery: 2%

• Land, Building & Furniture: 10%

• Monthly Threshold: ₹50,000

Interest Income

• Bank FD/RD Interest: 10%

• Threshold for General Taxpayers: ₹50,000

• Threshold for Senior Citizens: ₹1,00,000

Purchase of Immovable Property

• Old Section: 194IA

• Threshold: ₹50 Lakh

• TDS Rate: 1%

Purchase of Goods

• Old Section: 194Q

• Threshold: ₹50 Lakh

• TDS Rate: 0.1%

E-Commerce Transactions

• Old Section: 194O

• Threshold: ₹5 Lakh for Individual/HUF Participants

• TDS Rate: 1%

Partner Remuneration and Interest

• Old Section: 194T

• Threshold: ₹20,000

• TDS Rate: 10%

Why TDS Compliance is Important

Failure to deduct or deposit TDS can result in:

• Interest liability

• Late filing fees

• Penalties

• Disallowance of expenditure

• Notices from the Income Tax Department

Therefore, businesses must regularly review payments, monitor thresholds, and file TDS returns within prescribed timelines.

Documents and Records to Maintain

To ensure smooth TDS compliance, businesses should maintain:

• PAN details of payees

• Invoices and contracts

• Payment records

• TDS challans

• Quarterly TDS returns

• Form 16 and Form 16A records

Conclusion

The transition to the Income-tax Act, 2025 primarily changes section numbering while retaining most existing TDS rates and thresholds. Businesses should familiarize themselves with the new structure to avoid compliance issues during FY 2026-27.

Professional guidance can help ensure accurate deduction, timely deposit, and hassle-free filing of TDS returns.

Need Help with TDS Compliance?

KNP Taxation provides expert assistance for:

✓ TDS Return Filing✓ TDS Registration & Compliance✓ GST Registration & Returns✓ Income Tax Return Filing✓ Accounting & Bookkeeping✓ Business Registrations

Website: www.knptaxation.com

Mobile: 9675666125