TDS Rate Chart 2026-27: Rates Under the Income-tax Act 2025

Quick answer: The TDS rate chart for 2026-27 is set by section 393 of the Income-tax Act, 2025, which replaced sections 194A to 194T from 1 April 2026. Key TDS rates: professional fees 10 percent, technical services 2 percent, contractors 1 or 2 percent, commission 2 percent, rent of buildings 10 percent, rent of machinery 2 percent and purchase of goods 0.1 percent.

India's TDS system kept most of its rates when the new law arrived, but nearly everything else changed: section numbers, the layout of the rules and the forms. If you pay contractors, landlords or professionals, or if you invoice Indian businesses that deduct tax from your payments, you need an up-to-date TDS rates table under the Income-tax Act 2025. This guide gives you that chart with the old section numbers alongside, explains thresholds and the no-PAN rule, and shows how TDS interacts with invoices you create in our free invoice generator.

This is general information, not tax advice. Rates below are from published 2026-27 TDS charts based on the Income-tax Act, 2025 as of October 2026. Verify against the Act and CBDT notifications before you deduct.

What changed for TDS on 1 April 2026

The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026. For TDS, the main changes are structural:

• Salary TDS (old section 192) moves to section 392.
• Almost all other TDS moves to section 393, split into tables: payments to residents (393(1)), to non-residents (393(2)) and to any person (393(3)).
• Higher deduction without PAN (old section 206AA) is reported to move to section 397.
• Nil-deduction declarations (old Forms 15G and 15H) sit under section 393(6).
• Forms are renumbered under the Income-tax Rules, 2026. For example, the annual tax credit statement formerly called Form 26AS is Form 168, and the non-salary TDS certificate formerly Form 16A is Form 131.

The transition rule is based on timing. If a payment was credited or paid on or before 31 March 2026, the old section applies; if the earlier of credit or payment is on or after 1 April 2026, section 393 applies. The department has published section pages for the new Act, including section 393 on the Income Tax Department website.

TDS rate chart 2026-27: payments to residents

The table below maps the most common payments to their old section, the new location in section 393 and the rate and threshold reported in published 2026-27 charts.

Nature of payment	Old section (1961 Act)	New section (2025 Act)	Threshold	TDS rate
Salary	192	392	Basic exemption limit	Slab rates
Contractor: individual or HUF	194C	393(1)	Rs 30,000 single / Rs 1,00,000 yearly	1%
Contractor: others	194C	393(1)	Rs 30,000 single / Rs 1,00,000 yearly	2%
Commission or brokerage	194H	393(1)	Rs 20,000 yearly	2%
Rent: land, building, furniture	194-I(b)	393(1)	Rs 50,000 per month	10%
Rent: plant and machinery	194-I(a)	393(1)	Rs 50,000 per month	2%
Rent paid by individuals/HUFs not under the general rule	194-IB	393(1)	Rs 50,000 per month	2%
Professional fees	194J(b)	393(1)	Rs 50,000 yearly	10%
Fees for technical services	194J(a)	393(1)	Rs 50,000 yearly	2%
Director remuneration (non-salary)	194J	393(1)	No threshold	10%
Contract or professional fees by individuals/HUFs not under audit	194M	393(1)	Rs 50 lakh yearly	2%
Purchase of goods	194Q	393(1)	Above Rs 50 lakh yearly	0.1%
E-commerce sales via operator	194-O	393(1)	As prescribed	0.1%
Business perquisites	194R	393(1)	Rs 20,000 yearly	10%
Dividends	194	393(1)	As prescribed	10%
Virtual digital assets	194S	393(1)	As prescribed	1%
Payments to partners (salary, interest, commission)	194T	393(3)	Rs 20,000 yearly	10%

Three points help when reading the chart. Thresholds are per payee, so ten small payments to the same contractor count together once the yearly total is crossed. Rates apply to the base amount, normally excluding GST where it is shown separately. And the deduction happens at the earlier of crediting the expense in your books or making the payment, so an accrual booked on 31 March can trigger TDS before any money moves.

Interest other than on securities (old 194A) remains subject to TDS at the rates in force, with thresholds that published charts put at Rs 50,000 generally and Rs 1,00,000 for senior citizens on bank deposits.

TDS rates under the Income-tax Act 2025 for non-residents

Payments to non-residents (old section 195 and related sections) fall under section 393(2). Rates depend on the type of income and are often reduced by a tax treaty if the non-resident provides a tax residency certificate and other documents. Published charts list, for example, 20 percent for non-resident sportsmen and entertainers and "rates in force" for most other sums. Because treaty rates, surcharge and cess all affect the final rate, payments abroad usually need professional review.

How to use the TDS chart: step by step

1. Identify the nature of the payment. Is it a contract for work, a professional fee, a technical service, rent or commission? The classification decides the rate.
2. Check the payee's status. Resident or non-resident, individual or company, and whether a valid PAN is available.
3. Check the threshold. Add up payments to the same payee for the year, or per month for rent.
4. Calculate TDS on the right base. Normally the fee excluding GST when GST is shown separately on the invoice.
5. Deduct at the earlier of credit or payment and pay the net amount to the payee.
6. Deposit the TDS with the government by the due date and file the quarterly TDS statement.
7. Issue the TDS certificate (Form 131 for non-salary payments) so the payee can match the credit in Form 168.

Contract, professional or technical service?

Classification causes more TDS disputes than any rate change. A few rules of thumb used under the old law still guide most practitioners:

• Contract work covers carrying out work under a contract, such as printing, catering, transport, advertising production, labour supply and manufacturing to the customer's specification. Rates are 1 or 2 percent.
• Professional services are services by people in specified professions such as legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration and advertising, plus other notified professions. The rate is 10 percent.
• Technical services cover managerial, technical or consultancy services that are not professional services in the sense above, as well as payments to call centres. The rate is 2 percent.

Software development, design and marketing work can fall into different buckets depending on the contract, so agree the classification with the client before the first invoice and keep it consistent through the year.

Lower or nil deduction

If your final tax will be much lower than the TDS clients deduct, you can apply on the income tax portal for a certificate allowing a lower rate or no deduction, which the client then applies to your payments. Individuals with income below the taxable limit can give the payer a nil-deduction declaration for certain payments such as interest. Both reduce the money locked up in TDS until you receive a refund.

Worked example: one month of TDS for a small agency

A Pune design agency (a company) makes three payments in July 2026:

Payment	Base amount (Rs)	Rate	TDS (Rs)	Paid to payee (Rs)
Freelance copywriter, professional fee (GST Rs 21,600 shown separately)	1,20,000	10%	12,000	1,29,600
Office rent to landlord	60,000	10%	6,000	54,000
Printing contractor (a company)	2,50,000	2%	5,000	2,45,000
Total	4,30,000		23,000

For the copywriter: invoice total is Rs 1,20,000 plus Rs 21,600 GST, which is Rs 1,41,600. TDS is 10 percent of the fee only, Rs 12,000, so the agency pays Rs 1,41,600 minus Rs 12,000, which is Rs 1,29,600. The agency deposits the total TDS of Rs 12,000 + Rs 6,000 + Rs 5,000 = Rs 23,000 with the government. Rent is assumed to have no GST in this example.

Two checks matter here. The copywriter's fees for the year pass the Rs 50,000 professional fee threshold with this single invoice, so TDS applies in full. The printing contractor is a company, so the 2 percent rate applies; had the printer been an individual proprietor, the rate would have been 1 percent, or Rs 2,500. Under the July calendar, the Rs 23,000 would normally be deposited by 7 August 2026 and reported in the agency's statement for the July to September quarter.

Showing TDS on your invoice as a freelancer

If you are the payee, do not reduce your invoice total for TDS. Invoice the full fee and GST, then add a note showing the expected deduction and the net payable. Our guide to TDS on professional fees has sample wording, and our sibling post on net vs gross amounts on an invoice explains how to present it clearly. For the copywriter above, the invoice would show: fee Rs 1,20,000, GST Rs 21,600, total Rs 1,41,600, and a note "TDS at 10% on fee: Rs 12,000; net payable Rs 1,29,600". In our invoice generator you enter the fee and an 18 percent tax rate, then put the TDS note in the notes field. A plain layout such as the classic invoice template keeps these figures easy to read.

Include your PAN and GSTIN on every invoice so clients deduct at the normal rate rather than the higher no-PAN rate. Our guide to the tax ID on an invoice covers placement, and the GST invoice guide lists the other mandatory fields.

Common TDS mistakes in 2026-27

• Quoting old sections. Using 194J or 194C references on statements for payments after 1 April 2026 can cause validation errors.
• Deducting on GST. When GST is shown separately, TDS is normally on the base fee only.
• Wrong classification. Treating a professional fee as a contract, or technical services as professional services, changes the rate from 2 to 10 percent or the reverse.
• Missing the aggregate threshold. Small contractor payments add up; once the yearly total passes Rs 1,00,000, TDS applies.
• Not collecting PAN. Without it, the deduction rate jumps.
• Late deposit. Interest and fees accrue quickly, and payees lose credit if statements are not filed.

TDS deposit, statements and certificates

Deducting TDS is only half the job. Deductors also have a compliance cycle:

• TAN. Anyone required to deduct TDS needs a tax deduction account number and must quote it on payments and statements.
• Deposit. Under the old rules, tax deducted in a month was deposited by the 7th of the following month, and tax deducted in March by 30 April. Commentary on the Income-tax Rules, 2026 reports similar timelines; check the current calendar on the portal.
• Quarterly statements. TDS statements are filed each quarter with details of every deductee, PAN, amount and section. For payments from 1 April 2026, quote the section 393 table entry, not the old section.
• Certificates. Issue certificates to payees after each statement so they can check the credit.
• Corrections. If a PAN or amount was wrong, file a correction statement promptly; otherwise the payee's credit will be missing.

Late deposit attracts interest, and late statements attract a fee per day of delay, so small businesses that deduct only occasionally should still put the dates in a calendar.

How payees claim TDS credit

For freelancers and small businesses, TDS is an advance payment of your income tax. It appears against your PAN in Form 168 and the annual information statement, and you claim it in your return. If your total TDS is more than your final tax, the excess is refunded. Remember to account for TDS when calculating advance tax due dates and instalments, because advance tax is payable only on tax after TDS. Freelancers using presumptive taxation should also read our guide to section 44ADA (now section 58) and our sibling guide to ITR for freelancers. Businesses that pay suppliers late should also watch the MSME 45-day payment rule.

Create TDS-ready invoices

The TDS rate chart for 2026-27 mostly keeps familiar rates, but it moves them into section 393 under the Income-tax Act 2025, so update your contracts, invoice notes and software. Show GST separately, include your PAN, and add a clear TDS note so clients deduct the right amount. Number invoices consistently with the invoice number generator, register for GST if you cross the limit (see GST registration in India), and create your next invoice with the free invoice generator. When your invoice looks right, download it as a PDF and send it straight to your client.