TDS and TCS Rate Chart FY 2026-27: Sections 392, 393 and 394
• By AskSolique.ai Team • Tax & Regulatory
Under the Income-tax Act, 2025, withholding is split across three sections rather than consolidated into one. Section 392 covers TDS on salary, Section 393 covers TDS on all non-salary payments across six tables, and Section 394 covers TCS. Section 393 is not the universal withholding section, despite being widely described that way.
The three-section structure
This is the point most rate charts currently get wrong, so it is worth stating plainly before any numbers.
| Function | Section | What it covers |
|---|---|---|
| TDS on salary | 392 | Salary payments; provident fund withdrawals at 392(7) |
| TDS, non-salary | 393 | Every other deduction, arranged across six tables. Table 1 covers resident payments; Table 2 covers non-resident payments |
| TCS | 394 | All collections at source, including LRS remittances |
If you take one thing from this page: a salary deduction is Section 392, not Section 393(1), and a TCS collection is Section 394, not Section 393. Charts that route all three through Section 393 are in circulation and they are wrong.
Old-to-new section mapping
| Nature of payment | 1961 Act | 2025 Act | Payment code |
|---|---|---|---|
| Salary — government | 192 | 392 | 1001 |
| Salary — non-government | 192 | 392 | 1002 |
| Provident fund withdrawal | 192A | 392(7) | 1004 |
| Commission / brokerage | 194H | 393(1), Table 1, Sl. 1(ii) | 1006 |
| Rent — plant and machinery | 194-I(a) | 393(1), Table 1, Sl. 2(ii) | 1008 |
| Rent — land and building | 194-I(b) | 393(1), Table 1, Sl. 2(ii) | 1009 |
| Transfer of immovable property | 194-IA | 393(1), Table 1, Sl. 3 | 1011 / 1012 |
| Interest | 194A | 393(1), Table 1, Sl. 5(ii)–(iii) | 1020–1022 |
| Contractor payments | 194C | 393(1), Table 1, Sl. 6(i) | 1023 / 1024 |
| Technical services | 194J | 393(1), Table 1, Sl. 6(iii) | 1026 |
| Professional fees | 194J | 393(1), Table 1, Sl. 6(iii) | 1027 |
| Payments to non-residents | 195 | 393(2), Table 2, Sl. 17 | 1057 |
| TCS — LRS, education and medical | 206C(1G) | 394(1), Sl. 7(a) | 1086 |
| TCS — LRS, other purposes | 206C(1G) | 394(1), Sl. 7(b) | 1087 |
Quarterly return forms also changed. Salary TDS moves to Form 138, resident non-salary payments to Form 140, and non-resident payments to Form 144, replacing the earlier 24Q / 26Q / 27Q series.
Rates and thresholds
Thresholds below reflect the position for FY 2026-27, including the threshold increases that took effect from FY 2025-26. Where a threshold has both a single-payment and an aggregate test, both are shown, and either being breached triggers deduction.
| Nature of payment | Section | Threshold | Rate |
|---|---|---|---|
| Salary | 392 | Basic exemption limit | Slab rates |
| Interest — bank, post office, co-operative | 393(1) | ₹50,000 (₹1,00,000 for senior citizens) | 10% |
| Interest — other than above | 393(1) | ₹10,000 | 10% |
| Dividend | 393(1) | ₹10,000 | 10% |
| Contractor — individual / HUF | 393(1) | ₹30,000 single payment or ₹1,00,000 aggregate | 1% |
| Contractor — other than individual / HUF | 393(1) | ₹30,000 single payment or ₹1,00,000 aggregate | 2% |
| Commission / brokerage | 393(1) | ₹20,000 | 2% |
| Rent — land and building | 393(1) | ₹50,000 per month | 10% |
| Rent — plant and machinery | 393(1) | ₹50,000 per month | 2% |
| Professional fees | 393(1) | ₹50,000 | 10% |
| Technical services | 393(1) | ₹50,000 | 2% |
| Transfer of immovable property | 393(1) | ₹50,00,000 | 1% |
| Payments to non-residents | 393(2) | Nil | Lower of domestic rate or treaty rate |
| TCS — LRS, education / medical | 394(1) | Above ₹10 lakh | 2% |
| TCS — LRS, education funded by loan | 394(1) | — | Nil |
| TCS — LRS, other purposes | 394(1) | Above ₹10 lakh | 20% |
| TCS — overseas tour package | 394(1) | From first rupee | 2% |
Where the deductee has not furnished a PAN, tax is deducted at the higher of the specified rate, the rate in force, or 20% — the successor to the rule formerly in Section 206AA. A reduced floor applies to certain categories of payment, so check the applicable provision rather than defaulting to 20% in every case.
Practical points for the transition
Deduct under the correct section from the first payment of the year. A challan tagged to the wrong section creates a mismatch that surfaces later in the deductee’s credit statement, and correcting it is more work than getting it right.
Update your payroll and accounts-payable masters, not just your working papers. Most deduction errors in a transition year come from software still mapped to the old section codes.
Use the CBDT concordance table on incometax.gov.in as the reference for any provision not listed above, in preference to secondary rate charts.
Watch the return forms as well as the sections. A correct section reference on the wrong quarterly return form is still a defective filing.
Related reading
- old vs new section mapping — Income-tax Act 2025 Section Mapping: Old vs New Reference
- what changed in the 2025 Act — Income-tax Act, 2025 vs the 1961 Act: What Actually Changed
- withholding on payments to non-residents — TDS on Payments to Non-Residents Under Section 393(2)
- tax year vs assessment year — Tax Year vs Assessment Year: What Changed from April 2026
- how to verify a section reference — How to Verify a Tax Answer Against Primary Sources
Sources
- Sections 392, 393 and 394, Income-tax Act, 2025, and the CBDT old-to-new concordance table — incometax.gov.in
Frequently Asked Questions
Which section is TDS on salary under the Income-tax Act, 2025?
Section 392. Provident fund withdrawals, formerly Section 192A, sit at Section 392(7).
Is all TDS consolidated under Section 393?
No. Section 393 covers non-salary TDS only, across six tables. Salary TDS is Section 392 and TCS is Section 394. The claim that Section 393 covers all withholding is widely repeated and incorrect.
Which section replaced Section 195?
Section 393(2), Table 2, Sl. No. 17, with payment code 1057.
Where did TCS provisions move?
Section 394. TCS on LRS remittances, formerly Section 206C(1G), is Section 394(1), Sl. No. 7.
Which quarterly return form applies now?
Form 138 for salary, Form 140 for resident non-salary payments and Form 144 for non-resident payments, replacing the 24Q / 26Q / 27Q series.
What is the TDS threshold on professional fees?
₹50,000 for the year, at 10%. Technical services are also ₹50,000 but at 2%.
What is the TDS rate on rent?
10% on land and building and 2% on plant and machinery, in each case where rent exceeds ₹50,000 per month.
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