Latest TDS Rates FY 2026-27: TDS Rate Chart, Rules and Key Changes

If you earn a salary, interest, dividend, rent, or professional income, you may see the term TDS, or Tax Deducted at Source. TDS is a way for the government to collect tax at the time when certain payments are made instead of waiting until the end of the financial year.

For FY 2026-27, the TDS framework has moved to the Income-tax Act, 2025, which came into effect on April 1, 2026. The good news is that the government has largely retained the existing TDS rates and monetary thresholds. What has changed is mainly the way the provisions are organised and the section numbers used. So, if you are looking for the latest TDS rates for FY 2026-27, here is a simple guide.

TDS Rate Chart for FY 2026-27

The following table includes some of the common TDS rates that individual taxpayers might encounter.

*The applicable rate depends on the nature of payment, recipient, threshold, PAN status, and other conditions. Certain payments may also be subject to surcharge and health and education cess, particularly in non-resident cases.

What Has Changed in FY 2026-27?

The biggest change is not the TDS rate itself but the new tax law and the way the sections are numbered.

Until March 31, 2026, the TDS rules were governed by the Income-tax Act, 1961. Starting April 1, 2026, all payments and credits related to the tax year will follow the Income-tax Act, 2025.

For example, many provisions that were once found in Sections 192 to 194T are now grouped under Sections 392 and 393. Section 392 now deals with TDS on salary. Section 393 covers various types of payments.

This means the section number you see in your TDS records might look different even though the actual tax rate has not changed.

TDS on Bank and FD Interest

Interest earned on bank deposits, including fixed deposits, can lead to TDS when it exceeds the set limit. For FY 2026-27, the usual limit is ₹50,000 for general individuals and ₹1 lakh for senior citizens. When TDS is applied, the usual rate is 10% if a valid PAN is provided.

TDS and the final tax you owe are not the same. Your interest income is still part of your income and is taxed based on the rules that apply to you.

Eligible taxpayers with a nil tax liability can use Form 121 to request non-deduction of TDS on specified income. Form 121 has replaced the earlier Forms 15G and 15H from FY 2026-27.

TDS on Dividends

Dividend income can also be subject to TDS. For investors, the usual rate is 10%, subject to the applicable thresholds and other rules. For example, if a company pays a dividend of ₹20,000 and TDS of ₹2,000 is deducted, then ₹18,000 is paid to the investor and ₹2,000 is deducted as TDS.

Keep in mind that the TDS amount is not always your final tax liability. You can use the TDS as a credit when you file your ITR.

FAQs

What is the TDS rate for FY 2026-27?

There is no single TDS rate for FY 2026-27. The rate depends on the type of income or payment. Common rates include 10% on specified interest and dividend income, 2% or 1% on certain contractor payments, 10% on specified professional fees, and 30% on certain winnings.

Have TDS rates changed for FY 2026-27?

The Income Tax Department has stated that the TDS rates and monetary thresholds have been retained under the Income-tax Act, 2025. The major change is the consolidation and renumbering of provisions rather than a broad change in TDS rates.

What is the TDS rate on FD interest in FY 2026-27?

The commonly applicable TDS rate on bank deposit interest is 10% when the applicable threshold is crossed and a valid PAN is available. The threshold is ₹50,000 for most individuals and ₹1 lakh for senior citizens.

What is Form 121?

Form 121 is the new declaration used by eligible taxpayers to receive specified income without TDS when their estimated tax liability is nil. It replaces Forms 15G and 15H from FY 2026-27.

Is TDS an additional tax?

No. TDS is generally a method of collecting tax in advance. The amount deducted can be adjusted against your final tax liability while filing your ITR.