TDS Applicability in India
Complete Rate Chart — Income Tax Act 2025
The most comprehensive TDS guide for Tax Year 2026-27 — covering all 92 TRACES payment codes (1001–1092) under Income Tax Act 2025. Every domestic payment, every NRI/foreign payment, and complete TCS codes including new luxury goods provisions.
🔷 What is TDS and Why It Matters
Tax Deducted at Source (TDS) is the mechanism under which the payer (deductor) deducts a prescribed percentage of income tax before releasing payment to the recipient (deductee), and deposits it with the Central Government. It ensures real-time tax collection and creates a complete digital audit trail of transactions.
TDS applies to salary, interest, rent, professional fees, contractor payments, commission, lottery winnings, purchase of goods, digital assets, and many other payment types. Non-compliance attracts heavy interest, penalties, expense disallowance, and in serious cases, prosecution.
🔷 What Are TRACES Payment Codes?
Under the old Income Tax Act 1961, TDS returns were filed by citing the section number (e.g., 194C for contractors, 194J for professional fees). From 1 April 2026, the Income Tax Act 2025 consolidates all TDS/TCS into Sections 392, 393, and 394 — and introduces a 4-digit numeric payment code for each payment type.
These codes are drawn from the Notes to new TDS/TCS return forms (138, 140, 143, 144) notified under the Income Tax Rules 2026. Using old section numbers in new quarterly returns will make the return defective.
Salary Codes
Section 392 — salary & EPF. Filed in Form 138.
Resident TDS Codes
Section 393(1) — all non-salary resident payments. Form 140.
Non-Resident Codes
Section 393(2) — NRI & foreign company payments. Form 144.
Any Person Codes
Section 393(3) — winnings, cash, partners. Forms 140 & 144.
TCS Codes
Section 394 — Tax Collected at Source. Form 143.
Inferred Codes*
Sequential gaps — not yet formally confirmed by CBDT.
🔷 Section 392 — Salary & EPF (Codes 1001–1004)
Section 392 replaces old Sections 192 and 192A. Reported in Form 138 (replaced old Form 24Q). Code 1004 also appears in Form 144 for non-resident employees.
| TRACES Code | Old Section | Nature of Payment | New Section | Rate | Threshold |
|---|---|---|---|---|---|
| 1001 | 192 | Salary — State Government / Local Authority employees | 392 | Slab | Basic exemption limit |
| 1002 | 192 | Salary — Private sector / non-Government employees | 392 | Slab | Basic exemption limit |
| 1003 | 192 | Salary — Union (Central) Government employees | 392 | Slab | Basic exemption limit |
| 1004 | 192A | Premature EPF withdrawal — accumulated balance. | 392(7) | 10% | ₹50,000 |
🔷 Section 393(1) — Payments to Residents (Codes 1005–1038)
The largest block — all non-salary TDS on payments to resident payees. Reported in Form 140 (replaced old Form 26Q).
Commission & Brokerage [Table Sl. No. 1]
| TRACES Code | Old Section | Nature of Payment | New Section Reference | Rate | Threshold |
|---|---|---|---|---|---|
| 1005 | 194D | Commission or brokerage — insurance (paid by insurance company) | 393(1)[Sl.1(i)] | 5% | ₹20,000 p.a. |
| 1006 | 194H | Commission or brokerage — all others | 393(1)[Sl.1(ii)] | 2% | ₹20,000 p.a. |
Rent [Table Sl. No. 2]
| TRACES Code | Old Section | Nature of Payment | New Section Reference | Rate | Threshold |
|---|---|---|---|---|---|
| 1007* | 194IB | Rent paid by Individual/HUF not liable to tax audit | 393(1)[Sl.2(i)] | 2% | ₹50,000 per month |
| 1008 | 194I(a) | Rent — Plant, Machinery or Equipment | 393(1)[Sl.2(ii).D(a)] | 2% | ₹50,000 per month |
| 1009 | 194I(b) | Rent — Land, Building or Furniture | 393(1)[Sl.2(ii).D(b)] | 10% | ₹50,000 per month |
Immovable Property [Table Sl. No. 3]
| TRACES Code | Old Section | Nature of Payment | New Section Reference | Rate | Threshold |
|---|---|---|---|---|---|
| 1010* | 194IA | Purchase of immovable property from resident — buyer deducts TDS | 393(1)[Sl.3(i)] | 1% | ₹50 lakh |
| 1011 | 194IC | Cash payment under Joint Development Agreement | 393(1)[Sl.3(ii)] | 10% | No threshold |
| 1012 | 194LA | Compensation on compulsory acquisition of immovable property | 393(1)[Sl.3(iii)] | 10% | ₹5,00,000 |
Contracts & Professional Fees [Table Sl. No. 6]
| TRACES Code | Old Section | Nature of Payment | New Section Reference | Rate | Threshold | Notes |
|---|---|---|---|---|---|---|
| CONTRACTOR / SUBCONTRACTOR / MANPOWER SUPPLY | ||||||
| 1023 | 194C | Contract work / supply of labour — contractor is Individual or HUF | 393(1)[Sl.6(i).D(a)] | 1% | ₹30,000 per invoice | Annual aggregate ₹1 lakh also triggers. |
| 1024 | 194C | Contract work / supply of labour — contractor is Company, Firm, LLP, AOP or BOI | 393(1)[Sl.6(i).D(b)] | 2% | ₹1,00,000 p.a. aggregate | Aggregate across all invoices in the tax year. |
| INDIVIDUAL/HUF PAYMENTS — NOT COVERED BY TAX AUDIT (old 194M) | ||||||
| 1025* | 194M | Contract / commission / professional fees paid by Individual/HUF not liable to tax audit | 393(1)[Sl.6(ii)] | 2% | ₹50 lakh per year | Verify before using. |
| PROFESSIONAL & TECHNICAL SERVICES | ||||||
| 1026 | 194J(a) | Fees for technical services (not professional); call centre operations | 393(1)[Sl.6(iii).D(a)] | 2% | ₹50,000 p.a. | Lower rate for tech services. |
| 1027 | 194J(b) | Fees for professional services — doctors, lawyers, CAs, architects, engineers etc. | 393(1)[Sl.6(iii).D(b)] | 10% | ₹50,000 p.a. | Royalty (other than films) also at 10%. |
| 1028 | 194J(b) | Director remuneration / fees / commission (non-salary) | 393(1)[Sl.6(iii).D(b)] | 10% | No threshold | Applies even on a single-rupee payment. |
Miscellaneous Payments [Table Sl. No. 8]
| TRACES Code | Old Section | Nature of Payment | New Section Reference | Rate | Threshold |
|---|---|---|---|---|---|
| PURCHASE OF GOODS | |||||
| 1031 | 194Q | Purchase of goods from a resident seller (buyer’s turnover > ₹10 crore) | 393(1)[Sl.8(ii)] | 0.1% | Excess of ₹50 lakh per seller per year |
| BENEFIT / PERQUISITE | |||||
| 1033 | 194R | Benefit or perquisite (cash or kind) arising from business or profession | 393(1)[Sl.8(iv)] | 10% | ₹20,000 per year |
| E-COMMERCE | |||||
| 1035 | 194O | Sale of goods / services by e-commerce participant through digital platform | 393(1)[Sl.8(v)] | 1% | ₹5 lakh p.a. for Indv/HUF sellers |
| VIRTUAL DIGITAL ASSETS (CRYPTO) | |||||
| 1037 | 194S | Consideration for VDA transfer — payer is person other than Indv/HUF | 393(1)[Sl.8(vi)] | 1% | ₹10,000 (others) |
🔷 Section 393(2) — Payments to Non-Residents (Codes 1039–1057)
Reported in Form 144. Health & Education Cess at 4% applies in addition to the base TDS rate for all non-resident payments.
| TRACES Code | Old Section | Nature of Payment | New Section Reference | Rate | Notes |
|---|---|---|---|---|---|
| GENERAL — ANY OTHER SUM PAYABLE TO NON-RESIDENT | |||||
| 1050 | 195 | Royalty / FTS to non-resident or foreign company | 393(2) | 10% | +4% HEC. DTAA reduces if Form 10F + TRC submitted. |
| 1057 | 195 | Any interest or any other sum chargeable under the Act — not salary — to non-resident | 393(2)[Sl.17] | Act/DTAA | +4% HEC. Catch-all code for all NRI/foreign payments not covered. |
🔷 Section 393(3) — Any Person Codes (1058–1067)
These codes apply regardless of whether the payee is resident or non-resident.
| TRACES Code | Old Section | Nature of Payment | New Section Reference | Rate | Threshold |
|---|---|---|---|---|---|
| WINNINGS | |||||
| 1058 | 194B | Winnings from lottery / crossword / card game — cash payment | 393(3)[Sl.1] | 30% | ₹10,000 |
| 1060 | 194BA | Winnings from online games — net winnings | 393(3)[Sl.2] | 30% | No threshold |
| CASH WITHDRAWALS | |||||
| 1065 | 194N | Cash withdrawal from bank/PO/co-op — any person | 393(3)[Sl.5.D(b)] | 2% | ₹1 crore |
| PARTNER / LLP PAYMENTS | |||||
| 1067 | 194T | Salary / remuneration / interest credited or paid to partner of a firm or LLP | 393(3)[Sl.7] | 10% | ₹20,000 p.a. aggregate |
🔷 Section 394 — TCS Codes (1068–1092)
Reported in Form 143. The Income Tax Act 2025 has introduced entirely new TCS obligations on luxury goods (Codes 1076–1085).
| TRACES Code | Old Section | Nature of Transaction (Seller collects from Buyer) | New Section Reference | Rate |
|---|---|---|---|---|
| 1075 | 206C(1F) | Sale of Motor Vehicle > ₹10 lakh | 394(1)[Sl.6.D(a)] | 1% |
| NEW — LUXURY GOODS TCS [Sl. No. 6.D(b)] | ||||
| 1076 | — | Sale of Wrist Watch NEW | 394(1)[Sl.6.D(b)] | 1% |
| 1077 | — | Sale of Art Piece (antiques, paintings) NEW | 394(1)[Sl.6.D(b)] | 1% |
| 1079 | — | Sale of Yacht, Boat or Helicopter NEW | 394(1)[Sl.6.D(b)] | 1% |
| LRS REMITTANCES & OVERSEAS TOURS | ||||
| 1086 | 206C(1G) | LRS Remittance — education or medical (> ₹7L) | 394(1)[Sl.7.D(a)] | 0.5% |
| 1087 | 206C(1G) | LRS Remittance — other purposes (> ₹7L) | 394(1)[Sl.7.D(b)] | 20% |
| 1089 | 206C(1G) | Sale of Overseas Tour Package — above threshold | 394(1)[Sl.8.D(b)] | 20% |
🔷 New TDS/TCS Return Forms (Rules 2026)
🔷 Penalties & Consequences of Non-Compliance
Interest — Not Deducted
1% per month (or part thereof) from date TDS was deductible.
Interest — Not Deposited
1.5% per month (or part thereof) from date of deduction.
Late Filing Fee
₹200 per day for delayed quarterly TDS return.
Penalty — Non-Deduction
AO can levy 100% of tax not deducted as penalty.
🔷 Visit Our Office
If you need in-person consultation on the new Income Tax Act 2025 regulations, visit Indian Tax Planning at our New Delhi office.
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