This article provides a complete understanding of TDS
& TCS rates, section mapping, thresholds, and practical implications,
along with detailed remarks for each provision.
🔹
1. Key Structural Changes
✔
Consolidation of Sections
- Section 392 → Salary
- Section 393 → Non-Salary TDS
- Section 394 → TCS
✔
Terminology Change
- Assessment Year (AY) → Tax Year
(TY)
- Example: FY 2026–27 = TY 2026–27
✔
Change in Forms
- Form 16 → Form 130
- Form 16A → Form 131
- Form 27D → Form 133
🔹
2. TDS Rate Chart (FY 2026–27)
1.
Salary & Employee Payments
|
Old |
New |
Nature |
Rate |
Threshold |
Remarks |
|
192 |
392 |
Salary |
Slab |
Slab |
Based on
employee declarations, deductions & tax regime selection |
|
192A |
392 |
EPF Withdrawal |
10% |
₹50,000 |
No TDS if
5 years continuous service; PAN required |
2.
Interest & Dividend
|
Old |
New |
Nature |
Rate |
Threshold |
Remarks |
|
193 |
393 |
Interest on Securities |
10% |
₹10,000 |
Excludes
Govt securities & notified entities |
|
194 |
393 |
Dividend |
10% |
₹10,000 |
No TDS for
LIC, insurers, business trust |
|
194A |
393 |
Bank Interest |
10% |
₹50,000 |
Higher
threshold for senior citizens |
|
194A |
393 |
Other Interest |
10% |
₹10,000 |
Form 121(earlier
15G/15H) can avoid TDS |
3.
Winnings & Games
|
Old |
New |
Nature |
Rate |
Threshold |
Remarks |
|
194B |
393 |
Lottery/Gambling |
30% |
₹10,000 |
On net
winnings after deducting stake |
|
194BA |
393 |
Online Gaming |
30% |
No limit |
Applicable
on net winnings at withdrawal/end of FY |
|
194BB |
393 |
Horse Racing |
30% |
₹10,000 |
Aggregate
winnings during FY considered |
4.
Contracts, Insurance & Commission
|
Old |
New |
Nature |
Rate |
Threshold |
Remarks |
|
194C |
393 |
Contractor |
1%/2% |
₹30K / ₹1L |
1% for
Ind/HUF, 2% others; applies on aggregate |
|
194D |
393 |
Insurance Commission |
2% |
₹20,000 |
Applies to
agents/intermediaries |
|
194DA |
393 |
Life Insurance |
2% |
₹1,00,000 |
On income
portion, not total payout |
|
194E |
393 |
Non-resident Sportsman |
20% |
No limit |
No
threshold exemption |
|
194G |
393 |
Lottery Commission |
2% |
₹20,000 |
Paid to
distributors/agents |
|
194H |
393 |
Brokerage |
2% |
₹20,000 |
Excludes
commission on securities |
5.
Rent & Property
|
Old |
New |
Nature |
Rate |
Threshold |
Remarks |
|
194I |
393 |
Rent |
2% / 10% |
₹50K/month |
2%
P&M, 10% Land/Building |
|
194IA |
393 |
Property Purchase |
1% |
₹50 Lakhs |
On higher
of sale value or stamp duty value |
|
194IB |
393 |
Rent (Ind/HUF) |
2% |
₹50K/month |
Applicable
for non-tax audit individuals |
6.
Professional & Business Payments
|
Old |
New |
Nature |
Rate |
Threshold |
Remarks |
|
194J |
393 |
Professional Fees |
10% |
₹50,000 |
No limit
for director remuneration; call centers @2% |
|
194M |
393 |
Ind/HUF Payments |
2% |
₹50 Lakhs |
When not
covered under other sections |
7.
Special Provisions
|
Old |
New |
Nature |
Rate |
Threshold |
Remarks |
|
194LA |
393 |
Land Compensation |
10% |
₹2.5 Lakhs |
No TDS on
agricultural land |
|
194N |
393 |
Cash Withdrawal |
2% / 5% |
>₹1 Cr |
Higher
rate for non-filers |
|
194O |
393 |
E-commerce |
0.10% |
₹5 Lakhs |
On gross
sale value |
|
194P |
393 |
Senior Citizens |
Slab |
— |
Bank
handles TDS for eligible 75+ individuals |
|
194Q |
393 |
Purchase of Goods |
0.10% |
₹50 Lakhs |
Buyer
turnover > ₹10 Cr |
|
194R |
393 |
Perquisites |
10% |
₹20,000 |
Non-cash
benefits also covered |
|
194S |
393 |
Crypto |
1% |
₹50K/₹10K |
Applies on
transfer value |
|
194T |
393 |
Partner Payments |
10% |
₹20,000 |
Covers
salary, bonus, interest |
8.
Non-Resident Payments
|
Old |
New |
Nature |
Rate |
Threshold |
Remarks |
|
195 |
393 |
Non-Resident Payment |
DTAA |
No limit |
Apply
lower treaty rate if available |
🔹
3. TCS Rate Chart (FY 2026–27)
1.
General Goods & Services
|
Old |
New |
Nature |
Rate |
Remarks |
|
206C(1) |
394 |
Liquor, Scrap, Minerals |
2% |
Rates
standardized across categories |
|
206C(1C) |
394 |
Parking, Toll |
2% |
Applicable
on lease/license basis |
2.
Sale Transactions
|
Old |
New |
Nature |
Rate |
Threshold |
Remarks |
|
206C(1F) |
394 |
Motor Vehicle |
1% |
>₹10L |
Per
transaction basis |
|
206C(1F) |
394 |
Luxury Goods |
1% |
>₹10L |
Includes
watches, yachts, etc. |
3.
Foreign Remittance (LRS)
|
Old |
New |
Nature |
Rate |
Threshold |
Remarks |
|
206C(1G) |
394 |
Education/Medical |
2% |
>₹10L |
No TCS
below ₹10L |
|
206C(1G) |
394 |
Other |
20% |
>₹10L |
Higher
rate for non-specified use |
|
206C(1G) |
394 |
Tour Package |
2% |
No limit |
Flat rate |
🔹
4. Comparison Snapshot
|
Particulars |
FY 2025–26 |
FY 2026–27 |
|
Sections |
Multiple |
Consolidated |
|
TCS |
206C |
394 |
|
Structure |
Complex |
Simplified |
|
Rates |
Same |
Same |
|
Thresholds |
Lower |
Increased in few cases |
🔹
5. Practical Impact
For
Businesses
- Mandatory system updates
- Correct section mapping
- Stronger compliance tracking
For
Professionals
- Reduced small transaction burden
- Increased clarity
For
Individuals
- Minimal impact on tax liability
- Improved transparency
🔹
6. Conclusion
The TDS
& TCS framework for FY 2026–27 represents a structural simplification
reform rather than a rate change reform. The consolidation into Sections 392,
393, and 394 enhances clarity and ease of compliance.
📌
Final Note
“While the
structure of TDS/TCS provisions has been simplified under the new law,
taxpayers must carefully identify the nature of transactions to ensure correct
application of rates, thresholds, and compliance requirements.”
