Income tax · TDS and TCS
What are the TDS rates and thresholds for rent, contractors, professionals, interest and commission?
Short answer
For tax year 2026-27, under section 393 of the Income-tax Act, 2025: rent of land or buildings 10% above ₹50,000 a month; contractors 1% (individual or HUF) or 2% (others) above ₹30,000 a bill or ₹1 lakh a year; professional fees 10% and technical fees 2% above ₹50,000 a year; bank interest 10% above ₹50,000 a year (₹1 lakh for senior citizens); commission 2% above ₹20,000 a year. The 1961 Act sections 194-I, 194C, 194J, 194A and 194H applied before 1 April 2026.
The common rates (payments to residents)
| Payment | 1961 Act | 2025 Act | Threshold | Rate |
|---|---|---|---|---|
| Rent: land, building, furniture | 194-I(b) | 393(1), Sl. 2(ii) | ₹50,000 a month | 10% |
| Rent: plant, machinery, equipment | 194-I(a) | 393(1), Sl. 2(ii) | ₹50,000 a month | 2% |
| Rent paid by an individual or HUF not liable to audit | 194-IB | 393(1), Sl. 2(i) | ₹50,000 a month | 2% |
| Contractors (including manpower supply): individual or HUF | 194C | 393(1), Sl. 6(i) | ₹30,000 a bill; ₹1,00,000 a year | 1% |
| Contractors: others | 194C | 393(1), Sl. 6(i) | ₹30,000 a bill; ₹1,00,000 a year | 2% |
| Professional fees, royalty, non-compete fees | 194J(b) | 393(1), Sl. 6(iii) | ₹50,000 a year | 10% |
| Technical services, call centres | 194J(a) | 393(1), Sl. 6(iii) | ₹50,000 a year | 2% |
| Director's fees (not salary) | 194J | 393(1), Sl. 6(iii) | Nil | 10% |
| Bank, co-operative bank and post office interest | 194A | 393(1), Sl. 5(ii) | ₹50,000 a year (₹1,00,000 for senior citizens) | 10% |
| Other interest | 194A | 393(1), Sl. 5(iii) | ₹10,000 a year | 10% |
| Dividend | 194 | 393(1), Sl. 7 | ₹10,000 a year | 10% |
| Commission or brokerage | 194H | 393(1), Sl. 1(ii) | ₹20,000 a year | 2% |
| Purchase of goods (buyer's turnover above ₹10 crore) | 194Q | 393(1), Sl. 8(ii) | ₹50 lakh a year per seller | 0.1% on the excess |
| Partner's salary, commission or interest | 194T | 393(3), Sl. 7 | ₹20,000 a year | 10% |
The full chart, including property, e-commerce, lottery and cash withdrawals, is in our rates and tables.
Points that decide whether to deduct
- Credit or payment, whichever is earlier. TDS is due when you credit the party's account (including a provision at the year end) or pay, whichever comes first.
- GST is excluded from the amount if shown separately on the invoice.
- Individuals and HUFs not liable to tax audit generally need not deduct under most heads, except the special rent and contract provisions (rent above ₹50,000 a month; contract or professional payments above ₹50 lakh a year at 2%).
- No PAN or an inoperative PAN means a higher rate: see higher TDS.
- Payments to non-residents follow different rules (section 195, now 393(2)).
If you fail to deduct
Interest at 1% a month for not deducting and 1.5% a month for deducting but not depositing (section 201(1A), now 398(3)); disallowance of 30% of the expense (100% for non-residents) in your own tax computation until the TDS is paid; and you may be treated as an assessee in default for the tax.
Legal basis
- Section 393(1), Income-tax Act, 2025 (payments from 1 April 2026); sections 193 to 194T, Income-tax Act, 1961 (earlier payments)
- Section 398(3), Income-tax Act, 2025 (interest), formerly section 201(1A)
Official sources
Related questions
- When are TDS payments and TDS returns due, and what is the late fee and interest?TDS deducted in a month is paid by the 7th of the next month (30 April for March). Quarterly TDS statements are due by 31 July, 31 October, 31 January...
- How do I get TDS deducted at a lower rate or not at all (Form 13, 15G and 15H)?If your total tax for the year will be nil, give the payer a declaration so no TDS is deducted on interest, dividends, rent and similar income: Form...
- Why is higher TDS deducted when PAN and Aadhaar are not linked, or for non-filers?If you do not give your PAN, or your PAN is inoperative because it is not linked to Aadhaar, TDS is deducted (section 206AA, now 397(2)(b)) at the...