If you pay a contractor, a professional, rent, commission or interest, you are probably a tax deductor — and "TDS rate chart" is the reference you'll open twenty times a year. The rates below are those in force for FY 2026-27 (tax year 2026-27 under the Income Tax Act 2025, which renumbered sections but kept the rates from Finance Act 2025).
The table
| Payment | Section (old / new Act) | Rate | Threshold |
|---|---|---|---|
| Contractor / sub-contractor | 194C / 393 | 1% (individual, HUF payee) · 2% (others) | ₹30,000 per contract or ₹1,00,000 in the year |
| Professional fees | 194J(b) | 10% | ₹50,000/year |
| Technical services, call centre | 194J(a) | 2% | ₹50,000/year |
| Rent — land, building, furniture | 194-I(b) | 10% | ₹6,00,000/year |
| Rent — plant & machinery | 194-I(a) | 2% | ₹6,00,000/year |
| Rent by individual/HUF not under audit | 194-IB | 2% | ₹50,000/month |
| Commission / brokerage | 194H | 2% | ₹20,000/year |
| Interest (non-bank) | 194A | 10% | ₹10,000/year |
| Interest from bank/post office | 194A | 10% | ₹50,000 (₹1,00,000 for senior citizens) |
| Purchase of goods (buyer turnover > ₹10 cr) | 194Q | 0.1% | On purchases above ₹50 lakh/year per seller |
| Salary | 192 | Slab rates | Basic exemption |
| Dividend | 194 | 10% | ₹10,000 |
| Lottery / online gaming winnings | 194B/194BA | 30% | ₹10,000 per transaction (gaming: net winnings, no threshold) |
| Payment to non-resident | 195 | As per DTAA / Act | No threshold |
No PAN → 20% (or the section's rate, whichever is higher) under Section 206AA. Non-filers (no ITR for the previous year and TDS ≥ ₹50,000) → double the rate, minimum 5%, under 206AB.
Compute any of these with the TDS calculator; it applies the individual/HUF distinction and the no-PAN rule.
Who must deduct
- Companies, firms, LLPs — always.
- Individuals and HUFs — only if their business turnover exceeded ₹1 crore (or professional receipts ₹50 lakh) in the previous year, except 194-IB (rent) and 194M (contractor/professional payments above ₹50 lakh), which apply to everyone.
When to deposit and file
| Event | Deadline |
|---|---|
| Deposit TDS | 7th of the following month (30 April for March deductions) |
| Quarterly return (26Q non-salary, 24Q salary) | 31 July, 31 October, 31 January, 31 May |
| Issue Form 16A to payees | Within 15 days of filing the quarterly return |
| 194-IB / 194M (Form 26QC / 26QD) | Within 30 days of the month of deduction |
Interest and penalties
- Late deduction: 1% per month from the date it should have been deducted.
- Late deposit: 1.5% per month from the date of deduction.
- Late return filing: ₹200/day (Section 234E), capped at the TDS amount.
- Failure to deduct: the expense can be disallowed 30% under Section 40(a)(ia) until TDS is paid.
Practical rules for small businesses
- Collect PAN before the first payment. Put it on the purchase order and vendor master.
- Deduct on the amount excluding GST if GST is shown separately on the invoice.
- Threshold is per payee per year — a freelancer paid ₹20,000 three times crosses ₹50,000 on the third payment; deduct on the whole ₹60,000 then.
- 194Q vs 206C(1H): if you're a large buyer, 194Q takes priority over the seller's TCS.
- Get a TAN before you need it — it takes a week.
FAQ
Do I deduct TDS on a freelancer's invoice with GST?
Yes, at 10% (or 2% for technical services) on the value excluding GST, once payments to that freelancer cross ₹50,000 in the year.
Is TDS applicable on payment to a transporter?
Not if the transporter owns ≤ 10 goods carriages and furnishes a declaration with PAN; otherwise 194C applies.
My landlord is a company; is it 194-I or 194-IB?
194-I if you are required to deduct (business above audit limits); 194-IB applies to individuals/HUFs not under audit paying more than ₹50,000/month.
Can the payee get a lower-deduction certificate?
Yes, under Section 197 — common for contractors with thin margins. Deduct at the rate on the certificate.