From April 1, 2026, all TDS deductions reference new section numbers under the Income Tax Act 2025. Old codes like "194C", "194J", and "194Q" are now sub-provisions within Section 393. TDS returns filed with old section codes for Q1 FY 2026-27 and beyond will be rejected by the CPC.
FY 2026-27 is the first full year under the Income Tax Act 2025, which replaced the Income Tax Act 1961 from April 1, 2026. For TDS, the change is structural: old Sections 192 to 196D have been consolidated into Section 392 (salary TDS) and Section 393 (all other TDS payments). Rates and thresholds are largely unchanged, except for three rate cuts and one new TDS obligation under Section 194T for partnership and LLP partner payments.
This guide provides the complete master table, section-wise breakdown, and filing deadlines your accounts and payroll teams need for FY 2026-27.
Looking for expert help with expert TDS filing and quarterly return compliance services FY 2026-27? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant end-to-end: filings, notices, and advisory, all in one place.
TDS Rate Chart FY 2026-27: Complete Master Table
Tax Rate Chart
Key TDS Rates FY 2026-27 (Section 393)
Rates applicable to deductees with valid PAN. No-PAN rate is 20% or applicable rate, whichever is higher.
Purchase of Goods (194Q)
Buyer turnover > Rs 10 cr; aggregate purchase > Rs 50 lakh
E-Commerce Operator Payments (194O)
Reduced from 1%; threshold Rs 5 lakh/year per seller
Contractor — Individual/HUF (194C)
Single contract > Rs 30,000 OR aggregate > Rs 1 lakh
Rent — Individual/HUF (194IB)
Reduced from 5%; monthly rent > Rs 50,000
Professional Fees (194J)
CA, doctor, lawyer, consultant; threshold Rs 30,000/year
Interest — Bank/Post Office (194A)
Threshold Rs 50,000 (Rs 1 lakh for senior citizens)
Partner Payments — NEW (194T)
Salary, remuneration, interest to partners; aggregate > Rs 20,000
Lottery / Winnings (194B)
Per transaction > Rs 10,000
Source: Income Tax Act 2025, Sections 392–393; Finance Act 2025
All rates below apply to deductees who have furnished a valid PAN. If no PAN is provided, TDS must be deducted at 20% or the applicable rate, whichever is higher (Section 206AA equivalent under the new Act).
| Payment Type | Old Section (1961 Act) | New Section (2025 Act) | Rate | Threshold |
|---|---|---|---|---|
| Salary | 192 | 392 | Slab rate | Above basic exemption |
| Premature PF Withdrawal | 192A | 392 | 10% | > Rs 50,000 |
| Interest on Securities | 193 | 393 | 10% | > Rs 10,000 |
| Dividend (Resident) | 194 | 393 | 10% | > Rs 5,000 |
| Interest: Bank / Post Office / Co-op | 194A | 393 | 10% | > Rs 50,000 (> Rs 1 lakh for senior citizens) |
| Interest: Other Sources | 194A | 393 | 10% | > Rs 5,000 |
| Winnings: Lottery / Crossword / Card Game | 194B | 393 | 30% | > Rs 10,000 per transaction |
| Winnings: Horse Race | 194BB | 393 | 30% | > Rs 10,000 per event |
| Contractor: Individual or HUF | 194C | 393 | 1% | > Rs 30,000 per contract OR > Rs 1 lakh aggregate |
| Contractor: Company / Firm / Others | 194C | 393 | 2% | > Rs 30,000 per contract OR > Rs 1 lakh aggregate |
| Insurance Commission (Agents) | 194D | 393 | 5% | > Rs 15,000 |
| Insurance Maturity / Survival Proceeds | 194DA | 393 | 2% (down from 5%) | > Rs 1,00,000 |
| NSS Withdrawals | 194EE | 393 | 10% | > Rs 2,500 |
| Repurchase of MF / UTI Units | 194F | 393 | 20% | Any amount |
| Commission on Lottery Tickets | 194G | 393 | 5% | > Rs 15,000 |
| Commission / Brokerage | 194H | 393 | 5% | > Rs 15,000 |
| Rent: Plant, Machinery, Equipment | 194I(a) | 393 | 2% | > Rs 2.40 lakh/year |
| Rent: Land / Building / Furniture | 194I(b) | 393 | 10% | > Rs 2.40 lakh/year |
| Property Purchase (Buyer deducts) | 194IA | 393 | 1% | > Rs 50 lakh |
| Rent by Individual / HUF (not audit) | 194IB | 393 | 2% (down from 5%) | > Rs 50,000/month |
| Joint Development Agreement | 194IC | 393 | 10% | Any amount |
| Professional / Technical Fees | 194J | 393 | 10% | > Rs 30,000 |
| Technical Services: Call Centre | 194J | 393 | 2% | > Rs 30,000 |
| Director Fees (non-salary) | 194J | 393 | 10% | Any amount |
| Compulsory Acquisition Compensation | 194LA | 393 | 10% | > Rs 2.50 lakh |
| Cash Withdrawal | 194N | 393 | 2% | > Rs 1 crore |
| Cash Withdrawal: Non-ITR Filers | 194N | 393 | 2% | > Rs 20 lakh |
| E-Commerce Operator Payments | 194O | 393 | 0.1% (down from 1%) | > Rs 5 lakh/year per seller |
| Purchase of Goods (Large Buyers) | 194Q | 393 | 0.1% | > Rs 50 lakh aggregate (buyer turnover > Rs 10 cr) |
| Benefits / Perquisites in Kind | 194R | 393 | 10% | > Rs 20,000/year |
| Virtual Digital Assets / Crypto | 194S | 393 | 1% | > Rs 50,000 (> Rs 10,000 specified persons) |
| Partner Payments: NEW (FY 2025-26+) | 194T | 393 | 10% | > Rs 20,000/year per partner |
| Non-Residents: General Remittance | 195 | 393 | DTAA or 40% | Any amount |
No PAN / Invalid PAN: TDS must be deducted at 20% or the applicable rate, whichever is higher. If the deductee is also a non-filer of ITR (last two years, TDS > Rs 50,000/year), TDS is deducted at twice the normal rate or 5%, whichever is higher.
TDS Rate Changes for FY 2026-27
Three rates were reduced by the Finance Act 2025, effective April 1, 2026.
1. Rent by Individual / HUF: 2% (was 5%)
Old Section 194IB required individuals and HUFs not subject to tax audit to deduct TDS at 5% on monthly rent exceeding Rs 50,000. Effective April 1, 2026, the rate is cut to 2%. The threshold (Rs 50,000/month) is unchanged. New section: 393.
2. Insurance Maturity Proceeds: 2% (was 5%)
TDS on life insurance maturity, survival benefit, and bonus payments (old Section 194DA) is reduced from 5% to 2% for amounts exceeding Rs 1,00,000. This applies to non-exempt policies, meaning those where the annual premium exceeded 10% of the sum assured. New section: 393.
3. E-Commerce Operator Payments: 0.1% (was 1%)
TDS deducted by e-commerce operators on seller payments (old Section 194O) is reduced from 1% to 0.1%, a 90% reduction. The annual threshold of Rs 5 lakh per seller is unchanged. Platform sellers on Amazon, Flipkart, and similar marketplaces benefit from improved cash flow. New section: 393.
New TDS Section: 194T on Partner Payments (FY 2025-26 Onwards)
Section 194T was introduced by the Finance Act 2024, effective April 1, 2025. It applies for FY 2026-27 as well, now consolidated within Section 393 of the Income Tax Act 2025.
Who it applies to: All partnership firms and LLPs that pay the following to partners:
- Salary or remuneration
- Bonus or commission
- Interest on capital or loan account
Rate: 10%
Threshold: Aggregate payments to a single partner exceed Rs 20,000 in the financial year
How it works: Deduct TDS at the time of credit or payment, whichever is earlier. Deposit the challan by the 7th of the following month. Report in Form 140 quarterly.
PAN requirement: If the partner does not furnish a PAN, deduct at 20% (Section 206AA equivalent).
This is the first time partners of Indian firms are brought into the TDS framework directly. Every partnership and LLP paying remuneration to partners must assess whether the Rs 20,000 annual threshold is crossed.
Looking for expert help with TDS on partner salary remuneration interest in partnership firm FY 2026-27? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant end-to-end: filings, notices, and advisory, all in one place.
Section 194Q: TDS on Purchase of Goods (New Section 393)
For buyers whose previous year turnover exceeded Rs 10 crore, TDS under Section 194Q (now Section 393) applies on goods purchases from resident sellers.
| Condition | Detail |
|---|---|
| Buyer eligibility | Total sales / turnover > Rs 10 crore in preceding FY |
| Trigger threshold | Aggregate purchase from single seller > Rs 50 lakh in current FY |
| Rate | 0.1% on amount exceeding Rs 50 lakh |
| GST treatment | Excluded from TDS base if separately stated in invoice (CBDT Circular 13/2021) |
| No PAN | 5% (Section 206AA equivalent) |
| Consequence of non-deduction | 30% disallowance of purchase under Section 40(a)(ia) |
| New section under IT Act 2025 | Section 393 |
Section 206C(1H) (TCS on sale of goods by the seller) was removed from April 1, 2025. Only Section 194Q (buyer-side TDS) now governs high-value goods transactions. For the complete guide, see TDS on Purchase of Goods: Section 194Q / 393 Guide.
Section 194J: Professional Fees TDS Rate FY 2026-27
Section 194J (now Section 393) applies two distinct rates:
| Payment Type | Rate | Threshold |
|---|---|---|
| Professional services (CA, doctor, lawyer, architect, engineer, consultant) | 10% | > Rs 30,000/year |
| Technical services: call centre operations | 2% | > Rs 30,000/year |
| Royalty | 10% | > Rs 30,000/year |
| Non-compete fees | 10% | > Rs 30,000/year |
| Director fees (non-salary basis) | 10% | Any amount |
Common error: Classifying software development or IT support (technical services) as professional fees and applying 10% instead of 2%. Most software vendor contracts qualify as technical services (2%), not professional services (10%).
For the dedicated guide, see TDS on Professional and Technical Fees: Section 194J / 393 Guide.
Section 194C: Contractor TDS Limit and Rate FY 2026-27
Section 194C (now Section 393) applies to payments for carrying out any work, including manufacturing to specification, advertising, broadcasting, transport, catering, labour supply, and sub-contracting.
| Deductee Type | Rate | Single Contract Threshold | Annual Aggregate Threshold |
|---|---|---|---|
| Individual or HUF | 1% | > Rs 30,000 | > Rs 1 lakh |
| Company, Firm, LLP, AOP, BOI | 2% | > Rs 30,000 | > Rs 1 lakh |
Both thresholds are independent. If either is crossed, TDS applies to the full payment, not just the excess. If you pay Rs 35,000 for a single contract, TDS applies on the entire Rs 35,000, not just Rs 5,000.
Transport exemption: No TDS if the transporter furnishes their PAN and owns 10 or fewer goods carriages. Collect and retain the declaration each year.
For the full guide, see TDS on Contractor Payments: Section 194C / 393 Guide.
Section 194A: TDS on Interest FY 2026-27
| Source of Interest | Rate | Threshold |
|---|---|---|
| Bank / post office / co-operative bank | 10% | > Rs 50,000/year (> Rs 1 lakh for senior citizens) |
| Other sources (company deposits, NBFCs, etc.) | 10% | > Rs 5,000/year |
The higher limit of Rs 1 lakh for senior citizens (age 60+) applies only to interest from banks, post offices, and co-operative banks, not from NBFCs or company fixed deposits.
For the complete guide, see TDS on Interest: Section 194A / 393 Guide for FY 2026-27.
Filing Deadlines: Challans and Returns
Monthly TDS Challan Deposits
April to February
7th of Next Month
March Deduction
April 30th
Quarterly TDS Return Due Dates
| Quarter | Form 138 / 140 Due Date |
|---|---|
| Quarter 1 | July 31, 2026 |
| Quarter 2 | Oct 31, 2026 |
| Quarter 3 | Jan 31, 2027 |
| Quarter 4 | May 31, 2027 |
New form names, mandatory from Q1 FY 2026-27 (April to June 2026):
| Old Form | New Form | Purpose |
|---|---|---|
| Form 24Q | Form 138 | Salary TDS quarterly return |
| Form 26Q | Form 140 | Non-salary resident TDS return |
| Form 27Q | Form 144 | Non-resident TDS return |
| Form 27EQ | Form 144A | TCS quarterly return |
Returns filed under old form names for periods from April 1, 2026 will be rejected.
TDS Certificates for FY 2025-26
- Form 130 (replaces Form 16): Issue to salaried employees by June 15, 2026 for FY 2025-26 deductions
- Form 16A: Continues for non-salary TDS certificates with updated section references under the new Act
Interest and Penalty for TDS Defaults
| Default Type | Consequence |
|---|---|
| Failure to deduct (non-deduction) | 1% per month interest from payment date to deduction date |
| Failure to deposit after deduction | 1.5% per month interest from deduction date to deposit date |
| Late filing of TDS return | Rs 200 per day under Section 234E, capped at TDS amount in return |
| Failure to file TDS return for over 1 year | Penalty of Rs 10,000 to Rs 1,00,000 |
| Disallowance for non-deduction on payments | 30% of expenditure disallowed under Section 40(a)(ia) |
Frequently Asked Questions
What is the new section number for TDS under the Income Tax Act 2025?
Most TDS deductions (contractor: old 194C, professional fees: old 194J, purchase of goods: old 194Q, interest: old 194A, rent: old 194I, partner payments: old 194T) now fall under Section 393 of the Income Tax Act 2025. Salary TDS (old Section 192) now falls under Section 392. The old 194-series codes no longer exist as standalone sections; they are sub-provisions within the new consolidated framework.
What is the 194Q new section for FY 2026-27?
Section 194Q (TDS on purchase of goods at 0.1%) is now part of Section 393 under the Income Tax Act 2025, effective April 1, 2026. The rate (0.1%) and threshold (Rs 50 lakh aggregate purchase from a single seller, for buyers with turnover above Rs 10 crore) remain unchanged.
What is the TDS rate for professional fees (194J) for FY 2026-27?
10% for professional services (doctors, lawyers, CAs, architects, consultants) and royalty. 2% for technical services including call centre work. The threshold is Rs 30,000 per payee per year. Under the Income Tax Act 2025, this is now within Section 393.
What is the TDS limit for contractor payments under 194C for FY 2026-27?
TDS under Section 194C (now Section 393) applies when: (a) a single contract payment exceeds Rs 30,000, OR (b) total payments to the same contractor in the year exceed Rs 1 lakh. If either limit is crossed, TDS applies on the entire payment: 1% for individual or HUF contractors, and 2% for companies, firms, and LLPs.
Is Section 194T applicable in FY 2026-27?
Yes. Section 194T (now within Section 393 of the Income Tax Act 2025) requires partnership firms and LLPs to deduct TDS at 10% on salary, remuneration, bonus, commission, or interest paid to partners if the aggregate exceeds Rs 20,000 in the financial year. This section has been in force since April 1, 2025.
What is the TDS rate for rent under 194I and 194IB for FY 2026-27?
For land, building, or furniture: 10% (old Section 194I(b), threshold Rs 2.40 lakh/year). For plant, machinery, or equipment: 2% (old Section 194I(a), threshold Rs 2.40 lakh/year). For rent paid by individual or HUF not subject to audit: 2% (old Section 194IB), reduced from 5% effective April 1, 2026, threshold Rs 50,000/month. All now under Section 393.
What form should I file for non-salary TDS returns for Q1 FY 2026-27?
Form 140, which replaces Form 26Q. The Q1 due date is July 31, 2026. Use Form 138 for salary TDS (replaces Form 24Q) and Form 144 for non-resident TDS (replaces Form 27Q). Using old form names for periods from April 1, 2026 will cause CPC rejection.
What happens if a contractor does not provide PAN for FY 2026-27?
TDS must be deducted at 20% or the applicable rate (1% or 2%), whichever is higher. Under Section 206AA (equivalent provision in the 2025 Act), the absence of a valid PAN triggers the higher rate. Collect and verify PAN before making the first payment to any new vendor.
Work with the Trusted Tax & Compliance Services in Kondapur, Hyderabad - Tax Garden for expert GST filing, ITR, TDS, ROC, and startup compliance support.
Frequently Asked Questions: Tax Services in Kondapur & Hyderabad
What makes Tax Garden a preferred GST consultant in Kondapur?
Tax Garden is ISO 9001:2015 certified, maintains a 5-star client rating, and backs every engagement with Kavach, our ₹50,000 error-protection cover. Our flat-fee, no-surprise pricing and dedicated account manager make us a preferred choice for startups and SMEs in Kondapur's HITEC City corridor.
Why is Tax Garden considered a trusted CA firm in Hyderabad?
Trust comes from three pillars at Tax Garden. First, transparency: you know the exact fee before you sign up, and it never changes mid-year. Second, certified expertise: our compliance team is qualified, and the firm holds ISO 9001:2015 certification. Third, accountability: Kavach, our unique error-protection plan, covers up to ₹50,000 in service charges for any clerical mistake made by our team. No other tax consultant in Hyderabad offers this level of assurance.
Is there a reliable tax consultant near me in Kondapur?
Yes. Tax Garden's office is in Kondapur itself (CWS One Building, Hanuman Nagar). You can book an in-person consultation or get everything done fully online via WhatsApp and our client portal. We serve walk-in clients by appointment and remote clients across all of Hyderabad and Telangana.
I want a friendly CA who explains things clearly. Is that Tax Garden?
Absolutely. Every client gets a dedicated account manager reachable on WhatsApp, plain-language explanations of what is filed and why, and proactive reminders before every deadline. No jargon, no surprises, just friendly, expert compliance support from Kondapur.
Where is Tax Garden located in Hyderabad?
Tax Garden is located at 4th Floor, South Block, CWS One Building, Hanuman Nagar, Kondapur, Hyderabad, Telangana 500084. We serve clients across Kondapur, HITEC City, Gachibowli, Madhapur, Jubilee Hills, Banjara Hills, and all of Hyderabad.
Can I get GST filing and registration services in Kondapur?
Yes. Tax Garden offers end-to-end GST services from our Kondapur office: GST registration, GSTR-1, GSTR-3B, GSTR-9 annual returns, ITC reconciliation, e-invoicing setup, and GST notice handling for businesses of all sizes in Kondapur and Hyderabad.
Do you file ITR for salaried employees and businesses in Hyderabad?
Yes. Our Kondapur team files ITR for salaried employees, freelancers, consultants, business owners, LLPs, and companies across Hyderabad. We cover ITR-1 through ITR-6 with complete Chapter VI-A deduction optimisation, AIS reconciliation, and advance tax planning.
Which areas in Hyderabad does Tax Garden serve?
Tax Garden's Kondapur office serves clients across Hyderabad including HITEC City, Gachibowli, Madhapur, Jubilee Hills, Banjara Hills, Begumpet, Secunderabad, Ameerpet, Kukatpally, Uppal, LB Nagar, and all of Telangana. Most services are available fully online.
What compliance services does Tax Garden offer for startups in Kondapur?
Tax Garden is the preferred compliance partner for startups in Kondapur and Hyderabad's HITEC City corridor. We handle company incorporation, GST registration, TDS filings, payroll, ROC annual filings, director KYC, and startup-specific income tax advisory, all under one flat-fee plan.
How is Tax Garden different from other CA firms and accountants in Hyderabad?
Unlike traditional Hyderabad CA firms that charge by the hour and are difficult to reach, Tax Garden operates on flat-fee subscription plans with a dedicated account manager, monthly compliance updates, and WhatsApp-first communication. Our AI-powered workflow catches errors before filings are submitted, and Kavach error-protection ensures you are never left alone if something goes wrong.
