From 1 April 2026, India officially moved to the Income Tax Act, 2025 — replacing the Income Tax Act, 1961. It is a major official step that amends the 60 year old Income Tax Act, replacing it with Income Tax Act 2025. The new Income Tax Act 2025 is shorter (536 sections vs 800+), better organised, and also brings with it new TDS rates.
The Income Tax Act 2025 brings significant changes to TDS rate chart 2026-27, TDS thresholds, TDS section numbers, and payment codes. Most TDS rates under the new Income Tax Act 2025 remain unchanged. But businesses and taxpayers must understand the new compliance framework, revised section references, and updated TDS provisions applicable from FY 2026-27.
This blog gives you the full picture — old rates, new rates, and what exactly is different.
The Foundation: TDS Section Changes Under Income Tax Act 2025
Before getting to TDS new slab rates and the old tds rates vs new tds rates, let’s first understand the TDS structural shift that comes under Income Tax Act 2025. Under the old Income Tax Act, 1961, TDS provisions were spread across more than 40 individual sections. That included Section 192 for salary, Section 194C for contractors, Section 194J for professionals, and so on, all the way to Section 194T.
Under the new Income Tax Act, 2025, the TDS compliance now is in three parent sections:
| What TDS Compliance Covers | Old Sections (Income Tax Act 1961) | New Section (Income Tax Act 2025) |
|---|---|---|
| Salary and PF withdrawals | Sec 192, 192A | Section 392 |
| All other payments (residents + non-residents) | Sec 193 to 194T, 195 | Section 393 |
| Tax Collection at Source (TCS) | Sec 206C | Section 394 |
Within Section 393 of TDS, payments are organised in numbered tables. Residents in Table 1, non-residents in Table 2, special cases (winnings, partners) in Table 3. Each entry has a 4-digit payment code (1001 to 1067). It replaces old TDS section references on TDS returns and challans.
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Complete Old TDS Rates vs New TDS Rate Comparison Table (FY 2026-27)
If you are searching for the latest TDS rates for FY 2026-27, this comparison table covers every major category. It includes TDS on salary, interest income, rent, professional fees, contractor payments, insurance payouts, dividends, and property transactions under the new Income Tax Act 2025.
Note: All rates exclude applicable Surcharge and 4% Health & Education Cess.
TDS Rate on Salary and PF
| Nature of Payment | Old Section | New Section | TDS Rate | Threshold | Change? |
|---|---|---|---|---|---|
| Salary income | 192 | Sec 392 | TDS slab rates | Basic exemption limit | No change in TDS rate |
| PF premature withdrawal | 192A | Sec 392 | 10% | ₹50,000 | No change in TDS rate |
TDS Rate on Interest Income
| Nature of Payment | Old Section | New Section | TDS Rate | Threshold | Change? |
|---|---|---|---|---|---|
| Interest on securities | 193 | Sec 393 | 10% | ₹10,000 | No change in TDS rate |
| Interest — Bank / Post Office (Senior Citizens) | 194A | Sec 393 | 10% | ₹1,00,000 (was ₹50,000) | ✅ Threshold doubled |
| Interest — Bank / Post Office (Others) | 194A | Sec 393 | 10% | ₹50,000 | No change |
| Interest — Others (e.g., NBFCs) | 194A | Sec 393 | 10% | ₹10,000 | No change |
TDS Rate on Dividends and Winnings
| Nature of Payment | Old Section | New Section | TDS Rate | Threshold | Change? |
|---|---|---|---|---|---|
| Dividend from company | 194 | Sec 393 | 10% | ₹10,000 | No change |
| Lottery / prize winnings | 194B | Sec 393 | 30% | ₹10,000 | No change |
| Online game winnings | 194BA | Sec 393 | 30% | No limit | No change |
| Horse race winnings | 194BB | Sec 393 | 30% | ₹10,000 | No change |
TDS Rate on Rent
| Nature of Payment | Old Section | New Section | TDS Rate | Threshold | Change? |
|---|---|---|---|---|---|
| Rent — Individual/HUF (not under tax audit) | 194IB | Sec 393 | 2% (was 5%) | ₹50,000/month | ✅ Rate reduced |
| Rent — Plant & Machinery | 194I(a) | Sec 393 | 2% | ₹50,000/month | Threshold basis changed to monthly |
| Rent — Land / Building / Furniture | 194I(b) | Sec 393 | 10% | ₹50,000/month | Threshold basis changed to monthly |
TDS on Rent Reduced from 5% to 2% Under the New Income Tax Act 2025
TDS Rate on Commission, Brokerage, and Fees
| Nature of Payment | Old Section | New Section | TDS Rate | Threshold | Change? |
|---|---|---|---|---|---|
| Commission / Brokerage | 194H | Sec 393 | 2% | ₹20,000 (was ₹15,000) | ✅ Threshold raised |
| Insurance commission | 194D | Sec 393 | 2% | ₹20,000 (was ₹15,000) | ✅ Threshold raised |
| Commission on lottery tickets | 194G | Sec 393 | 2% | ₹20,000 (was ₹15,000) | ✅ Threshold raised |
TDS Rate on Contractors and Professionals
| Nature of Payment | Old Section | New Section | TDS Rate | Threshold | Change? |
|---|---|---|---|---|---|
| Contractor / sub-contractor (Individual/HUF) | 194C | Sec 393 | 1% | ₹30,000 / ₹1,00,000 aggregate | No change |
| Contractor / sub-contractor (Others) | 194C | Sec 393 | 2% | ₹30,000 / ₹1,00,000 aggregate | No change |
| Professional services fees | 194J | Sec 393 | 10% | ₹50,000/year | No change |
| Technical services fees | 194J | Sec 393 | 2% | ₹50,000/year | No change |
| Director remuneration (non-salary) | 194J | Sec 393 | 10% | No limit | No change |
TDS Rate on Insurance and Life Policy
| Nature of Payment | Old Section | New Section | TDS Rate | Threshold | Change? |
|---|---|---|---|---|---|
| Life insurance maturity / surrender payout | 194DA | Sec 393 | 2% (was 5%) | ₹1,00,000 | ✅ Rate reduced |
| National Savings Scheme withdrawal | 194EE | Sec 393 | 10% | ₹2,500 | No change |
TDS Rate on Property and Immovable Assets
| Nature of Payment | Old Section | New Section | TDS Rate | Threshold | Change? |
|---|---|---|---|---|---|
| Purchase of immovable property (buyer TDS) | 194IA | Sec 393 | 1% | ₹50 lakh | No change |
| Rent + JDA + Professional + VDA (Individual/HUF) | 194IB / 194IC / 194M | Sec 393 via Form 141 | Varies | Applicable limits | Forms consolidated |
New Provisions Under the New Income Tax Act 2025
| Nature of Payment | Old Section | New Section | TDS Rate | Threshold | Change? |
|---|---|---|---|---|---|
| Payments by firm to partners (salary, remuneration, interest, bonus) | 194T (introduced Jul 2024) | Sec 393(3) Table Sl. No. 7 | 10% | ₹20,000/year | Carried forward into new Act |
| Manpower / labour supply services | No explicit provision (was disputed) | Sec 393 (now explicit under contractor clause) | 1% / 2% | Same as contractor | ✅ Ambiguity resolved |
| Motor Accident Claims Tribunal (MACT) interest | 194A (taxable) | Sec 393 | NIL (fully exempt) | No threshold | ✅ Fully exempted |
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The 5 New TDS Rate/Threshold Changes That Actually Matter
Change 1 — TDS on Rent Reduced from 5% to 2% Under the New Income Tax Act 2025
If you are a salaried person or an individual paying rent of more than ₹50,000 per month to a landlord — and you are not under tax audit — your TDS obligation has halved.
Old rate (Sec 194IB): 5% New rate (Sec 393): 2%
This is a meaningful saving, especially in cities like Mumbai, Delhi, and Bangalore where monthly rents above ₹50,000 are common.
Example: On ₹70,000/month rent, TDS was ₹3,500/month (₹42,000/year). It is now ₹1,400/month (₹16,800/year).
Change 2 — TDS on Life Insurance Policy Payout Reduced from 5% to 2% Under the New Income Tax Act 2025
When a life insurance policy matures and the payout is taxable (which happens when premiums exceed 10% of sum assured), the insurance company deducts TDS on the income portion.
Old rate (Sec 194DA): 5% New rate (Sec 393): 2%
This rate cut reduces the TDS bite on policy maturities, giving policyholders better cash-in-hand at payout.
Change 3 — Senior Citizens Get Double the Interest Threshold
Senior citizens earning bank or post office interest no longer face TDS until they cross ₹1,00,000 per year (up from ₹50,000). This means that TDS threshold on interest income for senior citizens increased to ₹1 Lakh.
This is one of the most impactful changes for retirees who live on fixed deposit interest. Earlier, many senior citizens had to file Form 15H or chase refunds to recover TDS on interest income. With the higher threshold, a significant number will now stay below the TDS trigger entirely.
Change 4 — Commission and Brokerage TDS-Free Threshold Limit Increased from ₹15,000 to ₹20,000 Under New Income Tax Act 2025
Insurance agents, real estate brokers, and sub-agents earning commissions from a single payer now have a higher TDS-free limit of ₹20,000 per year (up from ₹15,000).
This affects small-scale agents and part-time intermediaries who will now receive more of their earnings without TDS being deducted.
Change 5 — TDS Rent Threshold Changed to Monthly Basis
Under the old Act, TDS on rent (194I) kicked in when annual rent exceeded ₹2,40,000 — the calculation was done on a yearly basis.
Under the new Act, the threshold is ₹50,000 per month, applied on a monthly basis. Mathematically, it is the same (₹50,000 × 12 = ₹6,00,000 annually — wait, this is higher than old). This is intentional: it also means that short leases or variable rent arrangements are now assessed month-by-month rather than on an annual estimate.
Read: How manual e-TDS filling and TDS Reconciliation is impacting your business.
What Has Not Changed in New TDS Rules Under Income Tax Act 2025
Despite the structural overhaul of the Income Tax Act, most TDS rates for FY 2026-27 remain unchanged. Taxpayers looking for new TDS rates in India should note that the majority of TDS compliance changes relate to section numbers. This majorlry includes eporting requirements rather than actual tax deduction percentages.
For most people, most transactions are untouched:
- Salary TDS: same TDS slab rates
- TDS on contractor payments: same 1%/2%
- TDS on professional and technical fees: same 10%/2%
- TDS on dividends: same 10%
- TDS on property purchase: same 1%
- TDS on lottery and gaming winnings: same 30%
- TDS on PF withdrawal: same 10%
- TDS on interest (non-senior citizens): same 10%
- Due dates for TDS deposit: unchanged
- PAN and TAN: continue to be valid
FAQs on Old vs New TDS Rates India
No. The government has not increased any TDS rate. It has reduced a few rates.
No. The new Act takes effect on 1 April 2026. The old Act governs income earned up to 31 March 2026.
It is now under Section 393(1), Table Sl. No. 6(i), with payment code 1017 in TDS returns.
It is now under Section 393(1), Table Sl. No. 6(iii).
The TRACES portal may reject your TDS return or flag it for correction. You may then need to file a correction statement, which can delay compliance and may lead to penalties.
TRACES flags and rejects your TDS return for correction. You will need to file a correction statement, which delays TDS compliance and may attract penalties.
The new TDS rates under the Income Tax Act 2025 remain the same. However, the government has reduced TDS on rent for individuals and life insurance payouts, and it has increased certain threshold limits.
The Income Tax Act 2025 reorganizes old TDS sections like 192, 194C, 194J, and 195 under Sections 392 and 393. Section 394 now covers TCS provisions.
Yes. Businesses must update their accounting, payroll, ERP, and TDS compliance software to accommodate the new TDS section numbers. This also includes payment codes, and reporting formats prescribed under the Income Tax Act 2025.
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Quick Reference: Key TDS Rate Changes at a Glance
| Who you are | What changes for you |
|---|---|
| Individual paying rent > ₹50,000/month | TDS rate drops from 5% to 2% |
| Life insurance policyholder at maturity | TDS rate drops from 5% to 2% |
| Senior citizen with bank FDs | TDS-free limit doubles from ₹50,000 to ₹1 lakh |
| Insurance agent / broker | TDS-free commission limit rises from ₹15,000 to ₹20,000 |
| Partner in a firm | 10% TDS now deducted on salary/interest from firm (effective from FY 2025–26 under Sec 194T) |
| Employer / payroll manager | Section number changes from 192 to Section 392; Form 16 is now Form 130 |
Bottom Line
For businesses, finance teams, payroll departments, and tax professionals, the biggest challenge is not the revised new TDS rates under Income Tax Act 2025 but updating ERP systems, accounting software, TDS return utilities, and TDS compliance workflows to align with the new TDS sections 392, 393, and 394.
The new Income Tax Act 2025 is not a rate overhaul. It is a structural clean-up with a few targeted reliefs.
If you are an individual taxpayer or salaried employee: the direct changes for you are the rent TDS reduction, the senior citizen interest threshold, and the insurance payout TDS reduction.
If you run accounts, payroll, or TDS compliance for a business: the job is not about rates — it is about updating your software, form references, and payment codes before 1 April 2026 deadlines.
The rates changed a little. The system changed a lot.
