Comprehensive Guide to TDS Rates & Thresholds from 01-04-2026 (FY 2026-27)

With the enactment of the Income Tax Act, 2025, the framework for Tax Deducted at Source (TDS) has been restructured through new section codes while substantially continuing many of the existing rates and monetary limits. These revised provisions will take effect from 1st April 2026 and will govern TDS for Financial Year 2026-27.

This guide presents a practical, consolidated ready reference for professionals, businesses, and assessee to correctly identify:

  • The nature of payment
  • The relevant old TDS section
  • The new section code under the Income Tax Act, 2025
  • The payment code
  • The threshold limit for deduction
  • The applicable TDS rate

Note: This is a simplified reference tool and must always be read along with the detailed provisions of the Income Tax Act, 2025, associated rules, notifications, and CBDT circulars, wherever applicable.

1. TDS on Interest on Securities

Interest on Securities – Section 193 → Section 393(1) [SI.5(i)]

  • Old Section: 193
  • New Section Code: 393(1) [SI.5(i)]
  • Payment Code: 1019
  • Nature of Payment: Interest on securities paid or credited
  • Threshold Limit: ₹10,000 in a Financial Year
  • TDS Rate: 10%

This covers interest payments on specified securities where TDS is required once the total interest credited or paid during the year exceeds ₹10,000.

2. TDS on Dividend Paid to Individual Shareholders

Dividend – Section 194 → Section 393(1) [SI.7]

  • Old Section: 194
  • New Section Code: 393(1) [SI.7]
  • Payment Code: 1029
  • Nature of Payment: Dividend paid to an individual shareholder
  • Threshold Limit: Nil (no monetary exemption limit)
  • TDS Rate: 10%

Where a company distributes dividends to an individual shareholder, TDS at 10% must be deducted from the first rupee, as no separate threshold exemption is prescribed here.

3. TDS on Interest Other than Interest on Securities (Section 194A)

Interest Other than Securities – Section 194A → Multiple New Codes

The treatment for interest other than securities differs based on the category of the recipient:

A) Senior Citizens

  • Old Section: 194A
  • New Section Code: 393(1)[SI.5(ii).D(a)]
  • Payment Code: 1020
  • Recipient Category: Senior citizens
  • Threshold Limit: ₹1,00,000 in a Financial Year
  • TDS Rate: 10%

TDS is triggered once total interest (excluding interest on securities) paid or credited to a senior citizen exceeds ₹1,00,000 in the year.

B) Other Individuals

  • Old Section: 194A
  • New Section Code: 393(1)[SI.5(ii).D(b)]
  • Payment Code: 1021
  • Recipient Category: Individuals (other than senior citizens)
  • Threshold Limit: ₹50,000 in a Financial Year
  • TDS Rate: 10%

If the aggregate of such interest to an individual (non-senior) goes beyond ₹50,000 during the year, TDS at 10% becomes applicable.

C) Other Cases

  • Old Section: 194A
  • New Section Code: 393(1)[SI.5(iii)]
  • Payment Code: 1022
  • Recipient Category: All other cases (e.g., firms, companies, etc., subject to statutory conditions)
  • Threshold Limit: ₹10,000 in a Financial Year
  • TDS Rate: 10%