TDS & TCS Rate Chart

What TDS is, and why it exists

The Income-tax Act does not wait for a year to end. Chapter XVII requires a long list of payers to withhold tax when they pay certain sums, deposit it with the government against the payee's PAN, and report it. The payee sets that credit off against their own liability when they file, and gets a refund if too much was withheld.

Two purposes sit behind it. The obvious one is cash flow for the exchequer. The less obvious and more consequential one is the audit trail: every deduction is a record, filed by somebody with no interest in understating it, of income received by somebody who might prefer not to declare it. That is why the reported deduction shows up in the payee's Form 26AS and Annual Information Statement, and why a mismatch there is the single most common reason a return gets queried.

The deductor is not paying their own tax. They are holding somebody else's money for a few weeks. That is worth remembering, because the consequences of getting it wrong are framed accordingly — failing to deduct is treated as a default, not as an underpayment.

• The payer deducts, deposits, and files a statement reporting it.
• The payee is credited on the basis of that statement, matched on PAN.
• TDS is not a final tax for a resident. It is an instalment against a liability computed in the normal way.
• Deduct on the amount before GST where the GST is shown separately on the invoice. GST is not the payee's income.

Credit reaches the payee from the quarterly statement, not from the challan. Money deposited under the right PAN but reported under the wrong one is money the payee cannot claim, and the deductor is the only person who can fix it.

Which year a rate belongs to — the financial year and the assessment year

A rate chart is unreadable without a year attached to it, and every deduction carries two. The financial year is the one you deduct in: 1 April to 31 March, the year the payment or the credit falls in, the year the challan and the quarterly statement are labelled with. The assessment year is the one immediately after it, and it is the year the income of that financial year is assessed — the year the payee files their return and claims credit for what you withheld. FY 2025-26 is AY 2026-27, and the pair is arithmetic: there is never a choice to make about it.

Which label you need depends on which document you are looking at. Challans, TDS statements and Form 16A are labelled by financial year and quarter. Form 26AS and the Annual Information Statement are indexed by assessment year on the portal, so a deduction you made in June 2025 is found by opening AY 2026-27, not FY 2025-26 — and a practitioner hunting a missing entry under the wrong label usually concludes the deductor never filed. Both labels are on this chart's rows for exactly that reason.

The year is where the rate lives, not just where the payment sits. A rate is the rate for a financial year, so a payment made in an earlier year is judged on the figure in force then, whatever the chart shows today. That is why the chart keeps the history column and keeps rows for sections that no longer exist: section 206C(1H) was omitted with effect from 1 April 2025, but a sale in FY 2024-25 reopened today is still tested against it.

A change that lands mid-year does not colour the whole year. The October 2024 rate cuts are the clearest case — 194-IB, 194-O, 194H, 194DA and 194M all came down on 1 October 2024, so the same financial year carries two rates and the deduction date decides which one applies. The date that matters is the date the tax became deductible, which is the earlier of credit and payment, not the date printed on the invoice: a September invoice booked and paid in November is on the November rate. Those rows carry the exact date under the year in the applicable-from column rather than only the year itself.

The largest transition of all is read the same way. The Income-tax Act, 2025 came into force on 1 April 2026, so it governs FY 2026-27 onwards — assessment year 2027-28 and later. A credit or payment made on or before 31 March 2026 stays with the 1961 Act, its section numbers and its forms, and a deductor reopening such a payment works from the old numbering throughout.

• Financial year plus one gives the assessment year. Nothing else decides it.
• The chart is searchable by year — typing 2025-26 narrows it to the rows that took effect then.
• A row that reads "or earlier" is one whose figure certainly held for the year named but whose first year cannot be pinned from the record. It is not a claim that the figure started then.
• A row that reads "Up to" is a section that has been omitted, kept because a reopened earlier year is still judged on it.

Do not quote a rate for a past payment off the current chart. Read the row's own applicable-from year first, and where that year is the same as the payment's, check whether the change landed mid-year — a deduction made in the wrong half of FY 2024-25 at the wrong one of two rates is a short deduction with interest running from the original date.

The chart, section by section

Search by what the payment is for rather than by the section number — most people arrive at this knowing they are paying a consultant, not knowing that consultants are section 194J. The last column carries the revisions: a row marked as changed is one you should not quote from memory.

Where a section splits by sub-section — 194I(a) for plant and machinery against 194I(b) for land and buildings, or the several limbs of 206C — each limb appears as its own row, because the rate follows the limb. Where a section splits by who is being paid rather than by sub-section, as 194C does at 1% for an individual or HUF and 2% for everybody else, that too is a separate row.

The section numbers on the chart are the 1961 Act numbers. They are no longer the operative ones, and they are kept anyway — they are what a deductor searches for, what a vendor master was tagged with years ago, and what a certificate for an earlier year says. The section just below the chart sets out where each of them now lives.

The numbers changed on 1 April 2026

The Income-tax Act, 2025 came into force on 1 April 2026 and repealed the 1961 Act. For anybody who deducts tax this is mostly a renaming exercise — the rates and thresholds were carried across, and the mechanism described on the rest of this page is the same mechanism. But almost nothing keeps its old number.

Deduction is consolidated into a single section 393, which carries the whole of the old 194-series in three tables — one for residents, one for non-residents, and one for payments to any person. Salary sits separately in 392, and collection at source in 394. So there is no section 194J any more; there is an entry in a table inside section 393. In practice everybody, including the department's own transition material, still says 194J.

The transition rule follows the ordinary trigger: whichever of credit or payment comes first, on or after 1 April 2026, falls under the new Act. A March invoice booked in March stays with the old one.

The forms were renumbered too — Form 15G and 15H became Form 121, and the quarterly statements and certificates each took new numbers. That much is confirmed. The precise new number for a given form, and for the interest and penalty provisions, is worth checking on the department's own site rather than taking from any chart: this page uses the old numbers throughout because they are the ones still in common use, not because they are the ones now printed in the Act.

TAN, and who has to deduct

Anybody required to deduct must first hold a Tax Deduction and Collection Account Number under section 203A, applied for in what was Form 49B and has been renumbered under the new Act. The TAN goes on every challan, every quarterly statement and every certificate, and it is separate from PAN — a company deducting tax quotes both, for different purposes. A deduction deposited without a TAN is difficult to trace and harder still to get credited.

Whether an individual or a Hindu undivided family has to deduct at all turns on turnover. For the ordinary business sections — contract payments under 194C, commission under 194H, professional and technical fees under 194J, rent under 194I, interest under 194A — an individual or HUF is only brought in if their books were subject to tax audit under section 44AB in the immediately preceding financial year. A small proprietor paying an auditor's fee is outside those sections entirely.

That relief is not general, and the exceptions are where private individuals get caught out. Every employer deducts under section 192 regardless of size. A buyer of immovable property deducts under 194-IA whoever they are. A tenant above the monthly limit deducts under 194-IB. A person making large contract or professional payments outside the business sections deducts under 194M. Anybody paying a sum chargeable to tax to a non-resident deducts under section 195, with no threshold at all.

Section 194T is newer than the rest and works the same way: a firm or LLP paying salary, remuneration, commission, bonus or interest to its own partners deducts, whatever its size, once the year's payments to that partner cross the threshold. A partner's share of profit is not caught, and neither is a repayment of capital. It caught a great many small firms out in its first year, because crediting remuneration to a partner's capital account at the year end is credit, and credit is the trigger.

The tax audit limits themselves have moved, and a higher limit applies to a business whose cash receipts and cash payments are each within a small percentage of the total. Whether an individual was subject to audit in the preceding year is therefore a question to answer from that year's accounts, not from a remembered figure.

When the liability arises — payment or credit, whichever is earlier

This is the part that catches people out, and it costs more money than any rate error. Most deduction sections are worded as payment or credit to the account of the payee, whichever happens first. Booking an invoice creates the credit. The deduction is due then, in that month, even though nothing has left the bank and the invoice may not be paid for another sixty days.

The sections close the obvious escape as well: crediting the sum to a suspense account, to a provision, or to any account by any other name is expressly treated as credit to the payee's account. A year-end provision for audit fees, for unbilled professional services, or for expenses incurred but not invoiced, all attract deduction at the moment the provision is made.

A handful of sections work on payment alone, and the difference is deliberate. Salary is deducted when it is paid, because until then there is nothing in the employee's hands to tax. Winnings and provident fund withdrawals are the same. Everything else, assume credit counts.

An advance paid before any invoice exists is a payment, so deduct on the advance. Deducting again on the full invoice later is a double deduction; adjust for what was already withheld.

Depositing what you deducted

Tax deducted in any month is due by the seventh day of the following month. March is the exception and the one people miss: tax deducted in March gets until the thirtieth of April, because the year has just closed and the books are still being finalised. Every other month gets seven days.

The sections that need no TAN work differently. Deduction under 194-IA, 194-IB, 194M and 194S is deposited with a challan-cum-statement — Forms 26QB, 26QC, 26QD and 26QE respectively — within thirty days from the end of the month in which the deduction was made. That single form is the payment and the return together, so there is no separate quarterly statement for it.

Government deductors have their own timing, and an assessing officer may, with prior approval, permit quarterly deposit in special cases under a handful of sections. Neither is the ordinary case.

Late deposit is charged from the date of deduction to the date of deposit, counting part of a month as a whole month. A deposit made on the eighth rather than the seventh crosses into a second month for that purpose more often than people expect.

The quarterly statements

Depositing the money is only half the obligation. The payee gets no credit until the deduction is reported in a quarterly statement, matched to the challan and to their PAN. Four forms cover the ground, split by what was paid rather than by who paid it.

A deductor who pays both salaries and vendors files 24Q and 26Q for the same quarter — they are not alternatives. Errors are put right by filing a correction statement against the original token number, and a correction can be filed after the due date without a fresh late fee, since the fee attaches to the original filing.

• Quarter ending 30 June — statement due 31 July.
• Quarter ending 30 September — statement due 31 October.
• Quarter ending 31 December — statement due 31 January.
• Quarter ending 31 March — statement due 31 May.
• 27EQ has run on a shorter cycle: the fifteenth of the month following each quarter, and 15 May for the quarter ending in March. There is reporting that the collection statement has since been aligned to the same calendar as the deduction statements. The earlier and tighter date is the one given here, because filing early costs nothing and filing late costs ₹200 a day.

All four statements were renumbered under the Income-tax Act, 2025, and the collection statement's due date may have moved with the renumbering. These dates are also extended by circular in particular years, sometimes at short notice, and an extension for one quarter does not carry to the next. Confirm both the form number and the date for the quarter you are filing.

Form 16 and Form 16A

The certificate is the payee's evidence. Form 16 is issued to an employee for tax deducted from salary, in two parts — Part A generated from the department's own records showing the tax deposited quarter by quarter, and Part B setting out the salary computation. It is due by the fifteenth of June following the financial year.

Form 16A covers everything else deducted from a resident, and is issued quarterly, within fifteen days of the due date for the statement that reports it. It cannot be typed up by the deductor: both certificates must be downloaded from the TRACES portal, so a certificate for a quarter whose statement was never filed simply does not exist.

The no-TAN sections have their own certificates on the same pattern — Form 16B for a property purchase, 16C for rent, 16D for a 194M payment and 16E for a virtual digital asset, each downloaded after the challan-cum-statement is processed. Tax collected at source is certified in Form 27D.

The certificates were renumbered along with everything else under the Income-tax Act, 2025, and the four challan-cum-statement forms appear to have been consolidated into one. The names used here are the ones still in common use. Separately: an employee who changed jobs during the year holds two Form 16s, and the second employer's estimate is only right if the first employer's salary was declared to them in Form 12B. Where it was not, the total tax deducted will fall short of the tax due and the shortfall lands on the employee at filing.

What it costs to get it wrong

The consequences stack. A single failure can attract interest, a late fee, a penalty and a disallowance at the same time, and they are computed independently of one another.

Interest under section 201(1A) runs at one rate for failing to deduct and a higher rate for deducting and not depositing, and the difference is deliberate — the second is holding money that belongs to the government. Both are computed month by month with any part of a month counted as a full one.

The disallowance under section 40(a)(ia) is the one with real teeth for a business. Where tax was deductible on a payment to a resident and was not deducted, or was deducted and not paid by the due date for filing the return, a proportion of that expenditure is disallowed in computing business income — so the tax cost is not the deduction that was missed but a slice of the whole expense. For a payment to a non-resident, section 40(a)(i) disallows the entire expenditure, not a proportion. The disallowance is reversed in the year the tax is eventually paid, which recovers the deduction late rather than losing it.

The proportion has not changed, but the provision has moved: under the Income-tax Act, 2025 the same rule is understood to sit in section 35(b). Worth knowing if you are reading a notice that cites a number you do not recognise. Deducting under the wrong section code is treated the same way as not deducting at all, which is why the code on the statement matters as much as the amount.

There is relief, and it is worth knowing. Under the proviso to section 201(1), a deductor who failed to deduct is not treated as an assessee in default if the payee is a resident who has filed their return, included the sum in it and paid the tax due — certified by an accountant in Form 26A. The disallowance under 40(a)(ia) falls away with it. The interest for the intervening period does not.

Higher rates: no PAN, and non-filers

Section 206AA overrides everything else. Where the payee does not furnish a valid PAN, tax is deducted at the highest of the rate in the relevant section, the rate in force, or twenty per cent. Two sections carry a lower override figure of five per cent instead of twenty — the e-commerce deduction under 194-O and the purchase-of-goods deduction under 194Q — because twenty per cent of a gross sale value would be absurd against a rate of a tenth of a per cent.

The provision bites harder than its wording suggests, because a lower deduction certificate under section 197 is void without a PAN, and so is a declaration in Form 15G or 15H. It now also reaches a PAN that has become inoperative for want of Aadhaar linkage. That is where most unexpected short-deduction notices come from: the PAN was perfectly valid when the vendor master was set up, and stopped being valid without anybody telling the deductor. Section 206CC does the same job for tax collected at source, at twice the rate or five per cent, whichever is higher.

Sections 206AB and 206CCA were a different idea — a higher rate not for want of a PAN but for want of a filed return, aimed at payees who had been deducted from and had never filed. They required the deductor to check each payee's filing status through the department's compliance utility before every payment, which proved to be a substantial burden for what it collected. Both were omitted with effect from 1 April 2025 and neither was re-enacted, so no deductor needs the compliance check any more. They very much applied to earlier years, though, and an old payment reopened is judged against the law as it then stood, so the rows for them remain on the chart with their history.

Two things survived that repeal and are easy to confuse with it. Section 206AA, above, is untouched — it is about the PAN, not about filing. And section 194N carries its own non-filer rule inside itself: a lower cash-withdrawal threshold and a steeper rate for somebody who has not filed for the prescribed preceding years. That one sits in the cash-withdrawal section rather than in the repealed pair, so it should have survived, and it is treated here as surviving. Confirm it before releasing a large cash withdrawal without deduction.

• 206AA never applied where the payee is a non-resident furnishing the prescribed particulars in place of a PAN — name, address, contact details, a tax residency certificate and the tax identification number of their own country.
• 206AB never applied to salary under 192, provident fund under 192A, winnings under 194B and 194BB, or cash withdrawal under 194N.
• Where both 206AA and 206AB applied to the same payee, the higher of the two rates governed.

Verify a vendor's PAN status before the first payment of each year, not once at onboarding. An inoperative PAN produces a short deduction that surfaces months later as a demand, with interest running from the original date.

TCS, and where it differs from TDS

Tax collected at source runs the other way. Under section 206C, the seller adds the tax to what the buyer owes and collects it along with the price, rather than withholding it from a payment out. It appears as a line on the invoice, and the buyer takes credit for it in their own return exactly as a payee takes credit for TDS.

The timing rule differs too, and the difference matters when the same trade could fall under both regimes. Collection is due at the time of debiting the buyer's account or receiving the money, whichever is earlier — so on a credit sale it usually falls when the invoice is raised, but on the receipt basis for the sections that say so. Collections are reported in Form 27EQ and certified in Form 27D. A buyer purchasing goods for manufacturing rather than trading can give a declaration in Form 27C to stop collection on the section 206C(1) items.

The rates moved sharply in the most recent round. Section 206C(1) used to carry a different figure for almost every item it covered — scrap, liquor and the minerals at one per cent, timber at a higher one, tendu leaves higher still. Those have been levelled at a single two per cent. For scrap and for coal, lignite and iron ore that is a doubling, so a collector working from an older chart is collecting at half of what is due, and the shortfall is theirs to make good.

The one interaction worth learning properly is between section 194Q, where the buyer deducts on purchases of goods above a threshold, and section 206C(1H), where the seller collected on sales of goods above a threshold. They covered the same trade from opposite ends, and the statutory rule was that the buyer's deduction takes priority: where the buyer was liable under 194Q, the seller did not collect. Two mechanisms for one transaction was one too many, and the seller-side provision was omitted with effect from 1 April 2025, leaving the buyer's deduction under 194Q as the operative rule. Section 194Q itself was not touched, and carries over into the new Act unchanged.

Collecting TCS the buyer does not owe is as much a problem as failing to collect it — the buyer will not accept the invoice, and unwinding a collection already deposited means a refund claim in the buyer's return. Establish which side of the 194Q boundary a customer sits on before the first invoice of the year, not after it.