TDS Master Sheet – Income Tax Act 2025 Applicable from 01 April 2026 (FY 2026-27 / AY 2027-28)
The revised tax deduction at source (TDS) framework under the new Income-tax provisions consolidates several earlier sections into simplified provisions governing salary payments, resident payments, non-resident payments, and certain specific transactions. Under Section 392, tax must be deducted on salary based on applicable income-tax slab rates and on taxable withdrawals from recognised provident funds exceeding Rs.50,000. Section 393 reorganizes TDS rules for payments to residents such as commission, rent, contractor payments, professional fees, dividends, interest, purchase of goods, virtual digital assets, and e-commerce transactions, with rates generally ranging from 0.1% to 10% depending on the nature of payment and applicable thresholds. Separate provisions also prescribe TDS obligations for payments to non-residents, including interest, royalties, dividends, and investment income, often subject to DTAA benefits. Additional rules apply to lottery winnings, online gaming, horse race income, and cash withdrawals. Overall, the framework streamlines earlier provisions by consolidating multiple TDS sections while retaining most thresholds and rates.
| SECTION 392 – TDS ON SALARY | |||||
| SEC NO. | HEAD | Threshold | RATE | REMARKS | OLD SECTION REF. |
| 392(1-6) | Salary Income | Nil | As per slab / average rate | Deduct monthly based on estimated annual income | 192 |
| 392(7) | EPF / Recognised PF Withdrawal | ₹50,000 | 10% | Applicable if withdrawal is taxable | 192A |
| SECTION 393(1): A. Payments to Resident | |||||
| SL | HEAD / NATURE | PAYER TYPE | RATE | Threshold | OLD SEC |
| 1(i) | Insurance Commission | Any | Rates in Force | ₹20,000 | 194D |
| 1(ii) | Commission / Brokerage (Non‑Insurance) | Specified Person | 2% | ₹20,000 | 194H |
| 2(i) | Rent – General | Non‑Specified Person | 2% | ₹50,000 per month or part | 194I |
| 2(ii)(a) | Rent – Plant & Machinery | Specified Person | 2% | ₹50,000 per month or part | 194I |
| 2(ii)(b) | Rent – Land/ Building/ Furniture | Specified Person | 10% | ₹50,000 per month or part | 194I |
| 3(i) | Purchase of Immovable Property | Any Buyer | 1% | ₹50,00,000 | 194IA |
| 3(ii) | JDA / Development Agreement | Any | 10% | Nil | 194IC |
| 3(iii) | Compulsory Acquisition | Any | 10% | ₹5,00,000 | 194LA |
| 4(i) | Mutual Fund / Unit Income | Any | 10% | ₹10,000 | 194K |
| 4(ii) | Business Trust Distribution | Trust | 10% | Nil | 194LBA |
| 4(iii) | Investment Fund Income | Fund | 10% | Nil | 194LBB |
| 4(iv) | Securitisation Trust | Trust | 10% | Nil | 194LBC |
| 5(i) | Interest on Securities | Any | Rates in Force | ₹10,000 | 193 |
| 5(ii) | Bank/PO Interest | Bank/PO | Rates in Force | ₹50k / ₹1L Senior | 194A |
| 5(iii) | Other Interest | Specified Person | Rates in Force | ₹10,000 | 194A |
| 6(i) | Contractor Payment | Designated Person | 1% / 2% | ₹30k / ₹1L | 194C |
| 6(ii) | Contractor/ Professional/ Commission (Ind/HUF) | Ind/HUF | 2% | ₹50,000 | 194M |
| 6(iii)(a) | Technical Fees | Specified Person | 2% | ₹50,000 | 194J |
| 6(iii)(b) | Professional Fees | Specified Person | 10% | ₹50,000 | 194J |
| 6(iii)(c) | Director Fees | Specified Person | 10% | Nil | 194J |
| 6(iii)(d) | Royalty | Specified Person | 10% | ₹50,000 | 194J |
| 7 | Dividend | Domestic Company | 10% | Nil | 194 |
| 8(i) | Life Insurance Payout (Taxable Part) | Any | 2% (on income) | ₹1,00,000 | 194DA |
| 8(ii) | Purchase of Goods | Buyer | 0.1% | ₹50,00,000 | 194Q |
| 8(iii) | Senior Citizen Bank TDS | Specified Bank | Rates in Force | Slab based | 194P |
| 8(iv) | Benefit/ Perquisite (Business) | Specified Person | 10% | ₹20,000 | 194R |
| 8(v) | E‑commerce Operator | Operator | 0.1% | Nil | 194O |
| 8(vi) | Virtual Digital Asset | Any | 1% | Nil | 194S |
| SECTION 393(2) B. PAYMENTS TO NON-RESIDENT | |||||
| SL NO. | NATURE OF PAYMENT TO NON-RESIDENT | TDS RATE | Threshold | OLD IT ACT SEC | |
| 1 | Income of Non-Resident Sportsman / Sports Association | 20% | Nil | 194E | |
| 2 | Interest on Foreign Currency Loan (Govt / Indian Concern) | 20% or DTAA | Nil | 195 | |
| 3 | Interest on Infrastructure Bonds (Long Term) | 5% | Nil | 194LC | |
| 4 | Interest on Rupee Denominated Bonds | 5% | Nil | 194LC | |
| 5 | Interest to Foreign Institutional Investor (FII) | 20% or DTAA | Nil | 196D | |
| 6 | Income of Business Trust (REIT / InvIT) | 5% / 10% | Nil | 194LBA | |
| 7 | Income of Investment Fund (AIF) | 10% | Nil | 194LBB | |
| 8 | Income from Securitisation Trust | 10% | Nil | 194LBC | |
| 9 | Income from Mutual Fund Units | 20% or DTAA | Nil | 196A | |
| 10 | Income from Units of Specified Company | 20% | Nil | 196A | |
| 11 | Long-Term Capital Gain – Offshore Fund | 10% | Nil | 196B | |
| 12 | Short-Term Capital Gain – Offshore Fund | 12.5% | Nil | 196B | |
| 13 | Income from Global Depository Receipts (GDR) | 10% | Nil | 196C | |
| 14 | Income from Foreign Currency Bonds | 10% | Nil | 196C | |
| 15 | Income of Foreign Institutional Investor – Securities | 20% or DTAA | Nil | 196D | |
| 16 | Income of Specified Fund (IFSC) | 10% | Nil | 196E | |
| 17 | Royalty / Fees for Technical Services | 20% or DTAA | Nil | 195 | |
| 18 | Dividend to Non-Resident | 20% or DTAA | Nil | 195 | |
| 19 | Other Income (Residual Category) | 30% or DTAA | Nil | 195 | |
| C. PAYMENTS TO ANY PERSON (LOTTERY / CASH / GAMING ETC.) | |||||
| S.NO | HEAD | RATE | Threshold | OLD SEC | |
| 1 | Lottery / Games | Rates in Force | ₹10,000 single txn | 194B | |
| 2 | Online Gaming | Rates in Force | Net winnings | 194BA | |
| 3 | Horse Race | Rates in Force | ₹10,000 | 194BB | |
| 4 | Lottery Commission | 2% | ₹20,000 | 194G | |
| 5 | Cash Withdrawal | 2% | ₹1Cr / ₹3Cr | 194N | |
| 6 | NSS / Deposits | 10% | ₹2,500 | 194EE | |
| 7 | Partner Remuneration | 10% | ₹20,000 | 194T | |
FAQs – TDS Rates Under the Income Tax Act, 2025 (Effective from 1 April 2026)
Q1. What is the major change in the TDS provisions under the Income Tax Act, 2025?
Answer: The Income Tax Act, 2025 consolidates multiple TDS provisions into a simplified framework. Section 392 governs TDS on salary and provident fund withdrawals, while Section 393 covers TDS on resident payments, non-resident payments, and specified transactions, replacing numerous provisions of the Income-tax Act, 1961.
Q2. Have the TDS rates changed from 1 April 2026?
Answer: No. Although the TDS provisions have been reorganized under new section numbers, most TDS rates and monetary thresholds remain substantially the same as under the Income-tax Act, 1961. The primary change is in the structure and numbering of the provisions.
Q3. Which types of payments are covered under Section 393 for resident payees?
Answer: Section 393 covers a wide range of resident payments, including commission, rent, contractor payments, professional and technical fees, interest, dividends, mutual fund income, purchase of goods, life insurance payouts, e-commerce transactions, business perquisites, virtual digital assets (VDAs), and immovable property transactions.
Q4. Does the new TDS framework contain separate provisions for payments to non-residents?
Answer: Yes. Section 393 contains a dedicated set of provisions for payments to non-residents, covering interest, royalties, fees for technical services, dividends, business trust distributions, investment fund income, mutual fund income, foreign institutional investor income, offshore fund income, and other specified payments, with DTAA benefits available wherever applicable.
Q5. What special transactions are covered under the TDS provisions apart from salary and regular business payments?
Answer: The new framework also prescribes TDS on lottery and online gaming winnings, horse race winnings, lottery commissions, cash withdrawals, National Savings Scheme (NSS) payments, and remuneration or other specified payments made to partners, each subject to the prescribed rates and threshold limits.
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