The Income Tax Act, 2025 has introduced a revised structure for Tax Deducted at Source (TDS), including new section codes and continued applicability of existing rates and thresholds. With effect from 1st April 2026, these provisions will be applicable for Financial Year 2026-27.
In order to provide a quick and practical reference for professionals, businesses, and taxpayers, I have compiled a summary of key TDS rates, threshold limits, and corresponding section codes. This ready reckoner aims to simplify compliance and ensure correct deduction of tax at source across various types of payments.
| S. No. | NATURE OF PAYMENT | Old Section | NEW SECTION CODE | Payment Code | Threshold | TDS Rate |
| 1 | Interest on securities | 193 | 393(1) [SI.5(i)] | 1019 | ₹10,000 in a Financial Year | 10% |
| 2 | Dividend to an individual shareholder | 194 | 393(1) [SI.7] | 1029 | Nil | 10% |
| 3 | Interest other than Securities: A) Senior Citizens B) Other Individuals C) In other cases |
194A | A) 393(1)[SI.5(ii).D(a)] B) 393(1)[SI.5(ii).D(b)] C) 393(1)[SI.5(iii)] |
A) 1020 B) 1021 C) 1022 |
A) ₹1,00,000 B) ₹50,000 C) ₹10,000 |
10% |
| 4 | Payment to Contractors/ Sub-Contractors: A) Individual or HUF B) Other than Individual or HUF |
194C | A) 393(1)[SI.6(i).D(a)] B) 393(1)[SI.6(i).D(b)] |
A) 1023 b) 1024 |
₹30,000 per contract or ₹1,00,000 aggregate in a year | A) 1% B) 2% |
| 5 | Commission or brokerage | 194H | 393(1)[SI.1(ii)] | 1006 | ₹20,000 in a Financial Year | 2% |
| 6 | Rent A) Plant, Machinery B) Land, Building & Furniture |
A) 194I (a) B) 194I (b) |
A) 393(1)[SI.2(ii).D(a)] B) 393(1)[SI.2(ii).D(b)] |
A) 1008 B) 1009 |
₹50,000 per month or part of month | A) 2% B) 10% |
| 7 | Fees for A) Technical Services B) Professional Services C) Remuneration, fees or commission paid to a Director of a company |
194J | A) 393(1)[SI.6(iii).D(a)] B) 393(1)[SI.6(iii).D(b)] C) 393(1)[SI.6(iii).D(b)] |
A) 1026 B) 1027 C) 1028 |
₹50,000 in a Financial Year | A) 2% B) 10% C) 10% |
| 8 | Business/ Profession Perquisite or Benefit A) Cash B) in kind, or partly in cash and partly in kind |
194R | A) 393(1)[SI.8(iv)] B) 393(1)[SI.8(iv) Note 6] |
A) 1034 B) 1035 |
₹20,000 in a Financial Year | 10% |
| 9 | Payment by partnership firm to partners | 194T | 393(3)[SI.7] | 1067 | ₹20,000 in a Financial Year | 10% |
| 10 | Purchase of goods (applicable to buyers) | 194Q | 393(1)[SI.8(ii)] | 1031 | ₹50 lakh in a Financial Year | 0.1% |
| 11 | Sale of Scrap | 206C(1) | 394(1)[SI.4] | 1073 | Nil | 1% |
The summary presented above is intended for general guidance and should be read in conjunction with the relevant provisions of the Income Tax Act, 2025 and applicable rules.
Frequently Asked Questions (FAQs)
Q1. From which date will the TDS provisions under the Income Tax Act, 2025 become applicable?
The revised TDS provisions under the Income Tax Act, 2025 will be applicable from 1st April 2026 and will apply for Financial Year 2026-27.
Q2. What is the threshold limit for TDS on interest other than securities for senior citizens?
For senior citizens, TDS on interest other than securities is applicable when the payment exceeds ₹1,00,000 in a financial year. The applicable TDS rate is 10%.
Q3. What is the TDS rate applicable on payments made to contractors and sub-contractors?
The TDS rate is 1% where the payee is an Individual or HUF and 2% where the payee is other than an Individual or HUF. The threshold is ₹30,000 per contract or ₹1,00,000 in aggregate during a financial year.
Q4. What is the threshold limit and TDS rate for purchase of goods?
TDS on purchase of goods is applicable when purchases exceed ₹50 lakh in a financial year. The applicable TDS rate is 0.1%.
Q5. What is the TDS rate on payments by a partnership firm to its partners?
Payments made by a partnership firm to its partners are subject to TDS at 10% where the aggregate payment exceeds ₹20,000 in a financial year.
Related Video
Page Contents
Key Judicial Developments on Charitable Trust Exemptions and TDS Compliance under the Income-tax Act
In this insightful video, a practicing Chartered Accountant analyses two important recent judicial pronouncements that provide significant clarity on the taxation of charitable trusts and the obligations of tax deductors under the Income-tax Act, 1961.
1. ACIT vs. Everwin Educational & Charitable Trust (Chennai ITAT) – Order dated 24.02.2026
Time Stamp: 0:42 – 4:05
The case examined whether a charitable trust could be denied exemption under Section 11 on the ground that it had entered into transactions with “specified persons” covered under Section 13(3), allegedly attracting the provisions of Sections 13(1)(c) and 13(2)(g).
Key Ruling:
The Chennai Tribunal held that the mere existence of transactions with related or specified persons does not automatically result in denial of exemption available to a charitable trust.
Significance of the Decision:
- The burden of proving misuse of trust funds or diversion of benefits lies on the Revenue authorities.
- Exemption cannot be denied merely on suspicion or the existence of related-party transactions.
- Where transactions are undertaken at arm’s length, supported by commercial justification, and serve the objectives of the trust, the provisions of Section 13 cannot be invoked to deny benefits under Section 11.
2. CIT (TDS) vs. National Highways Authority of India (Madhya Pradesh High Court) – Judgment dated 06.03.2026
Time Stamp: 4:07 – 7:06
The dispute concerned whether the National Highways Authority of India (NHAI) could be treated as an “assessee in default” under Section 201 for alleged short deduction of tax at source, despite the payees having obtained valid lower or nil deduction certificates under Section 197.
Key Ruling:
The Madhya Pradesh High Court reaffirmed that a certificate issued under Section 197 is binding upon the deductor and must be acted upon as issued.
Significance of the Decision:
- A deductor is not expected to re-examine or question the correctness of a valid Section 197 certificate.
- Once such a certificate is issued by the competent authority, the deductor is legally protected while deducting tax in accordance with its terms.
- The deductor cannot subsequently be treated as an assessee in default for relying on and complying with a valid certificate issued under the Act.
Why These Decisions Matter
Both rulings reinforce important legal principles that safeguard taxpayers against arbitrary action:
- Charitable trusts cannot be denied exemption merely because they engage in transactions with specified persons unless actual benefit or diversion is established by the Revenue.
- Deductors acting in accordance with valid statutory certificates issued by the Income-tax Department are entitled to legal protection and cannot be penalized for following such directions in good faith.
Watch the complete analysis to understand the practical implications of these decisions and their impact on tax compliance and litigation strategy.
Frequently Asked Questions (FAQs)
Q1. When do the revised TDS provisions under the Income Tax Act, 2025 come into effect?
The revised TDS provisions under the Income Tax Act, 2025 are effective from 1 April 2026 and apply for Financial Year 2026-27 onwards.
Q2. Have the TDS rates changed under the Income Tax Act, 2025?
In most cases, the TDS rates remain the same as under the earlier law. However, the section numbers and payment codes have been revised, making it important for deductors to use the correct new section while depositing TDS and filing TDS returns.
Q3. What are the major threshold limits for TDS under the new provisions?
Some key threshold limits include:
- Interest for senior citizens: ₹1,00,000
- Interest for other individuals: ₹50,000
- Contractor payments: ₹30,000 per contract or ₹1,00,000 annually
- Professional or technical fees: ₹50,000
- Purchase of goods under Section 393(1): ₹50 lakh
- Partnership firm payments to partners: ₹20,000
Q4. What is the TDS rate on purchase of goods under the Income Tax Act, 2025?
TDS on the purchase of goods is applicable at 0.1% where the aggregate value of purchases from a seller exceeds ₹50 lakh during the financial year.
Q5. Why should deductors refer to the new section codes under the Income Tax Act, 2025?
From 1 April 2026, deductors must quote the new TDS section codes and corresponding payment codes while depositing TDS, filing TDS statements, and ensuring compliance under the Income Tax Act, 2025. Using the correct codes helps avoid filing errors and compliance issues.
***
Watch Video: https://www.youtube.com/watch?v=YSr83_vMCjU
Subscribe to TaxGuru YouTube Channel: https://www.youtube.com/@TaxGuruSolutions
Author Bio
please sent pdf statement of fy 26-27
Respected Sir,
What is the new TDS rule of 2026-27 for 194 N Cash withdrawal. Please help me with this Knowledge.
THANK YOU
YOURS RESPECTFULLY
ROSHAN MISHRA