TDS for FY 2026-27 — Old Section Numbers, New Law, One Reference Table
From 1 April 2026 the Income Tax Act 2025 replaced the 1961 Act, and with it the section numbers every accountant knows by reflex. Salary TDS moved from Section 192 to Section 392; the long 193–194T family of domestic payment sections was consolidated under Section 393(1); payments to non-residents now sit in Section 393(2); and TCS lives in Section 394. Past returns, TRACES records and old certificates still speak the 1961 numbering — current filings use the new one. This chart shows both, side by side, for every payment type.
The transition also carried rate and threshold changes worth money. Commission, brokerage and insurance commission rates dropped from 5% to 2%; e-commerce operator deductions fell to 0.1%; the professional fees threshold rose to ₹50,000; and thresholds for dividends, interest and rent moved up as well. A deductor applying last year's memorised rate to this year's invoice is the single most common TDS error we correct in client reviews.
Mechanics remain familiar: deduct at payment or credit, deposit by the 7th of the following month using challan ITNS 281 with the correct nature-of-payment code (each code is listed in the table), and report quarterly — 24Q for salary, 26Q for resident payments, 27Q for non-resident payments. Where the payee furnishes no PAN, Section 397(2) — the successor to 206AA — forces deduction at 20% or twice the applicable rate, whichever is higher.
Cross-border payments deserve their own caution: the chart's Section 393(2) rates are the domestic ceiling, and India's tax treaties frequently bring the effective rate down once the payee provides a tax residency certificate and Form 10F. Our team at PGA & Co. issues the Form 15CB certificates these remittances need, so the notes column reflects questions we answer daily. For the collection-side mirror of this table, see our TCS Rate Chart.
For resident payments, TDS is at base rate (no surcharge/cess). For non-resident payments (Sec. 393(2) / old Sec 195 onwards), applicable surcharge and 4% H&E Cess are added on top.
If the deductee does not furnish a PAN, TDS is at the higher of: (a) prescribed rate, or (b) 20% under Sec. 397(2) of IT Act 2025 (old: Sec 206AA of IT Act 1961).
Deductees can apply to the Assessing Officer for a certificate permitting lower/nil TDS deduction under Sec. 351 of IT Act 2025 (old: Sec 197 of IT Act 1961).
Individuals/HUFs can submit Form 15G (below 60 yrs) or Form 15H (senior citizens) to the deductor for nil TDS where income is below the basic taxable limit.
Frequently Asked Questions
Are the old TDS section numbers like 194C and 194J gone?
They no longer exist in current law — the Income Tax Act 2025 consolidated them under Section 393 with schedule tables — but they remain everywhere in practice: old returns, TRACES histories, contracts and lower-deduction certificates issued before April 2026 all reference 1961 numbering. Deductors effectively need bilingual fluency for a few years, which is why this chart maps every old section to its new reference.
What rate applies if the payee does not give me a PAN?
Section 397(2) of the IT Act 2025 (the old Section 206AA rule) requires deduction at the higher of twice the normal rate or 20%. For a 2% contractor payment, no PAN means 20% — a tenfold jump. Certain non-residents can escape the PAN requirement by providing treaty documentation under Rule 37BC, but for domestic payees there is no workaround.
When do I deposit TDS and file the return?
Deposit by the 7th of the month after deduction — except March deductions, which get until 30 April. Quarterly statements follow: 24Q for salary TDS, 26Q for other resident payments, 27Q for non-resident payments, due at the end of the month following each quarter (31 July, 31 October, 31 January, 31 May). Late deposit attracts 1.5% per month interest; late filing costs ₹200 per day under Section 234E.
Which thresholds changed for FY 2026-27?
The notable moves: professional and technical fees threshold raised to ₹50,000, dividend and mutual fund income thresholds raised to ₹10,000, senior citizens' bank interest threshold at ₹1,00,000, and rationalised slabs for rent and contractor payments. Each row of the chart carries its current threshold, so check the table rather than relying on remembered figures.
How does TDS work on payments to non-residents?
Every taxable payment to a non-resident — fees, royalties, interest, property purchase consideration — falls under Section 393(2) (old Section 195), with no minimum threshold in most cases. The chart rate applies unless a tax treaty provides lower, which requires the payee's tax residency certificate and Form 10F. Most remittances also need a CA-certified Form 15CB and Form 15CA filing before the bank will process them.