Tax Deducted at Source (TDS) is one of the major means through which the Income Tax Department is able to collect taxes on time. Rather than collecting taxes only during the filing of the income tax returns, the government has introduced a mechanism whereby certain individuals, based on the payments made by them, are required to make deductions at source of payments made by them in the form of a certain percentage (TDS rate).
For companies, businesses, employers, professionals, and other forms of deductors, it is essential to know what TDS rates they must apply so that the TDS is being properly deducted in a timely manner and they do not incur any penalties. Therefore, every taxpayer should check the relevant TDS rates, threshold limits, due dates for TDS payment, and return-filing requirements applicable to them each year so that they remain in compliance with the Income Tax Act.
This guide presents an updated TDS rate chart applicable to the financial year 2026-27 and identifies some key information about TDS, i.e., the various TDS sections, corresponding TDS rates, threshold limits, Forms 24Q, 26Q, due dates for TDS payment, filing requirements, and compliance tips.
TMWala simplifies the process of TDS compliance by actively helping businesses apply the correct TDS rates, identify the applicable TDS sections, file Form 24Q and Form 26Q, deposit TDS within the prescribed TDS payment due dates, and complete timely TDS return filing.
What Is Tax Deduction At Source (TDS)?
A method of collecting income tax at the time of payment or receipt is known as Tax Deducted at Source (TDS). The payer is responsible for deducting TDS from payment when payment is made to an individual for salary, professional fees, contractor payments, commission, rent, interest, dividend, and other payments specified in the provisions of TDS.
After deducting TDS from the payment, the payer is required to deposit TDS with the Central Government on behalf of the payee. The payee will claim tax credit for the amount of TDS deducted by the payer in their Income Tax Return (ITR).
The goal of the TDS scheme is to:
1) To collect taxes consistently
2) To reduce the instances of non-compliance with tax laws;
3) To increase the number of people who pay taxes;
4) To make it easier for people to comply with the law.
5) To provide for regular advance payments of income tax throughout the year.
Why Is The TDS Rate Chart Important?
The TDS Rate Chart provides deductions with a quick reference:
- The applicable TDS section
- The type of payment that was made
- The threshold limit
- The applicable TDS deduction rate
- The requirements for compliance
- Incorrect or non-deduction could lead to assessments of:
- Interest under the Income Tax Act
- Late filing fees
- Penalty proceedings
- Disallowing the deduction of expenses in some cases
Thus, every deductor should refer to the most current TDS Rate Chart before issuing any payments.
Common TDS Sections
Section 192: TDS Deductions on Compensation for Work Completed by Your Company for its Employees
Employers with employees can deduct their TDS on salary payments based on each employee’s estimated Income Tax liability and the applicable Income Tax liability rates from the time the employee joined.
Section 194C: TDS Deductions on Payments to Contractors and Subcontractors
This section covers the TDS liabilities developed when you make payments to contractors and subcontractors for work performed for your business, including payments for labor contracts.
Section 194H: TDS Deductions on Payments for Commission or Brokerage
All commissions or brokerage that you make to agents, intermediaries, and other individuals who are receiving a commission or are paying for services, all of which were greater than the prescribed limit during the year, must have TDS deducted.
Section 194I: TDS Deductions on Rent
This section of the Income Tax Act covers rent that is paid for the following types of property and fixed assets: land, buildings, equipment (including machinery, plant, furniture, and fixtures).
Section 194J: TDS Deductions on Payments for Professional and Technical Services
Professional and technical services that fit within the description as defined under section 194J are subject to TDS deductions, unless there is an exception that applies. Legal, medical, engineering, architectural, consulting, technical, and other professional services are the types of professional and technical services that fall under this category.
Section 194Q: TDS on Purchase of Goods exceeding Rs. 50 Lakh
A buyer whose turnover exceeds the prescribed limit in the preceding financial year is required to deduct TDS on purchases of goods exceeding the specified threshold from a resident seller.
Section 194S: TDS Deductions for Transfer of Virtual Digital Assets
When you transfer virtual digital assets, such as cryptocurrencies and specific NFTs, you must deduct TDS from those types of payments if the total payment to the recipient is greater than or equal to the prescribed threshold limit in accordance with the rules as specified by law.
Updated TDS Rate Chart For FY 2026–27
The table below provides the commonly applicable TDS rates for major payments.
| TDS Section | Nature of Payment | Threshold Limit | TDS Rate |
| Section 192 | Salary | As per the applicable tax slab | Average income tax rate |
| Section 192A | Premature withdrawal from EPF | ₹50,000 | 10% |
| Section 193 | Interest on Securities | As prescribed | 10% |
| Section 194 | Dividend | ₹10,000 | 10% |
| Section 194A | Interest other than securities | Applicable threshold | 10% |
| Section 194C | Payment to Contractors | ₹30,000 per contract or ₹1,00,000 annually | 1% (Individual/HUF), 2% (Others) |
| Section 194D | Insurance Commission | Prescribed threshold | 5% |
| Section 194H | Commission or Brokerage | ₹20,000 | 2% |
| Section 194I | Rent | Prescribed threshold | 2% or 10%, depending on the asset |
| Section 194IA | Purchase of Immovable Property | ₹50 lakh | 1% |
| Section 194IB | Rent by Individuals/HUF | ₹50,000 per month | 5% |
| Section 194J | Professional or Technical Services | Applicable threshold | 2% or 10%, depending upon the nature of the service |
| Section 194K | Income from Mutual Funds | ₹10,000 | 10% |
| Section 194O | E-commerce Participants | Applicable threshold | 0.1% |
| Section 194Q | Purchase of Goods | ₹50 lakh | 0.1% |
| Section 194S | Transfer of Virtual Digital Assets | ₹10,000/₹50,000 | 1% |
For more information, visit: https://www.incometaxindia.gov.in/w/tds-rates-1.
Form 24Q – TDS Return For Salary
Form 24Q is the quarterly TDS return filed by employers for tax deducted on salary payments under Section 192.
The form contains details such as:
- Employer information
- Employee details
- PAN of employees
- Salary paid
- TDS deducted
- TDS deposited
Form 24Q consists of three annexures that capture employee-wise salary details and tax deductions for the financial year.
Form 26Q – TDS Return For Non-Salary Payments
Form 26Q is filed for TDS deducted on payments other than salary.
It covers payments such as:
- Contractor payments
- Professional fees
- Commission
- Rent
- Interest
- Brokerage
- Director remuneration
- Other specified payments
Every deduction making non-salary payments liable to TDS must file Form 26Q quarterly within the prescribed due dates.
TDS Payment Due Dates
| Month of Deduction | Due Date |
| April 2026 | 7 May 2026 |
| May 2026 | 7 June 2026 |
| June 2026 | 7 July 2026 |
| July 2026 | 7 August 2026 |
| August 2026 | 7 September 2026 |
| September 2026 | 7 October 2026 |
| October 2026 | 7 November 2026 |
| November 2026 | 7 December 2026 |
| December 2026 | 7 January 2027 |
Quarterly Due Dates For TDS Return Filing
| Quarter | Period | Due Date |
| Q 1 | April – June 2026 | 31 July 2026 |
| Q 2 | Jul – Sep 2026 | 31Oct 2026 |
| Q 3 | Oct – Dec 2026 | 31Jan 2027 |
| Q 4 | Jan – Mar 2027 | 31 May 2027 |
TDS filed after the due date may attract fees under Section 234E and penalties under the Income Tax Act.
Steps For TDS Return Filing
The TDS return filing process generally involves the following steps:
Stage 1: Deduct TDS – Determine if the payment is subject to TDS and deduct TDS from the payment at the applicable rate(s).
Stage 2: Deposit TDS – Submit the TDS deduction amount to the Government of India by depositing TDS into the designated bank account within the required time period using a prescribed deposit form.
Stage 3: Prepare TDS Returns – Prepare the quarterly return using the TIN-NSDL Return Preparation Utility (RPU), ensuring you provide all relevant deductee information.. Produce the quarterly return in accordance with the appropriate format using the required software utility, ensuring you provide all relevant deductee information, including name, address, PAN, details of the deducted TDS, and details of the deposit form.
Stage 4: Validate TDS Return – Validate Your TDS Return prior to submitting your quarterly TDS return, you must validate your return using a validation software tool.
Stage 5: Upload TDS Return – After your TDS return has been validated, you will be required to upload it to either the Income Tax Department’s reporting system or through a TIN facilitator.
Stage 6: Download Acknowledgement Receipt – Download TDS Return. Upon successful submission of your TDS return, you should retain a copy of the acknowledgement receipt and filing receipt to use for reference in the future.
Consequences Of Non-Compliance
Failure to comply with TDS provisions may lead to:
- Interest for late deduction.
- Interest for delayed payment.
- Late filing fees.
- Penalty under the Income Tax Act.
- Prosecution in serious cases.
- Disallowance of business expenditure under certain provisions.
Businesses should therefore establish robust internal processes to ensure complete TDS compliance.
Best Practices For Managing TDS Compliance
To simplify TDS management, businesses should:
- Maintain updated vendor master records.
- Collect PAN details of your vendor before making payments.
- Verify applicable TDS sections before processing invoices.
- Conduct monthly TDS reconciliations.
- Use compliance calendars to track when TDS payments are due.
- File quarterly returns well before the due dates.
- Retain copies of your challans, acknowledgements, and TDS certificates for future reference.
These practices reduce compliance risks and improve overall tax governance
Conclusion
For every employer, business, professional and deductor who pays out payments that create a tax liability at the point of collection, it is critical to understand the TDS rate chart in order to comply with the proper use of TDS to maintain TDS compliance by assessing TDS rate accurately, determining the proper TDS section, timely remitting the taxes that were deducted, and making accurate filings using TDS forms, i.e., 24Q and 26Q.
Because TDS laws change frequently through the enactment of Finance Acts and notifications, it is important for businesses to stay up-to-date with the most current TDS deduction rate(s), threshold limits and TDS due dates so that there is no non-compliance with TDS laws, which would subject the business and its owners to penalties and a less efficient tax administration process by maintaining adequate records and implementing sufficient TDS compliance processes.
TMWala simplifies TDS compliance by providing end-to-end support for businesses of all sizes. Whether you are an employer, startup, MSME, or established enterprise, TMWala helps you stay compliant with the latest tax regulations through reliable and timely compliance services.
FAQs
- What is TDS?
TDS (Tax Deducted at Source) is tax deducted by the payer before making specified payments to the recipient. - Who is required to deduct TDS?
Employers, businesses, companies, and specified individuals making eligible payments are required to deduct TDS. - What is the purpose of a TDS rate chart?
A TDS rate chart provides the applicable TDS rates, threshold limits, and relevant sections for different types of payments. - What is Form 24Q?
Form 24Q is the quarterly TDS return filed for tax deducted on salary payments. - What is Form 26Q?
Form 26Q is the quarterly TDS return for non-salary payments such as professional fees, rent, and contractor payments. - When should TDS be deposited?
Generally, TDS must be deposited by the 7th of the following month, except for March deductions. - What happens if TDS is not deducted or deposited?
Non-compliance may attract interest, penalties, and other consequences under the Income Tax Act. - Is TDS return filing mandatory?
Yes, every deductor must file quarterly TDS returns within the prescribed due dates. - How can I check my TDS credit?
You can verify your TDS credit through Form 26AS or the Annual Information Statement (AIS) on the Income Tax portal. - How can TMWala help with TDS compliance?
TMWala assists with TDS calculation, return filing, payment, and end-to-end compliance to help businesses avoid penalties.