Most TDS mistakes we see are not about rates. They are about thresholds — deducting when you did not need to, or worse, not deducting when you crossed a limit you did not know had changed. The Finance Act 2025 raised several thresholds from 1 April 2025, and those higher limits continue through FY 2026-27. Here is the card we keep pinned for client work, section by section.
The rate card at a glance
Rates below apply to payments to residents in FY 2026-27. Thresholds are per financial year unless stated otherwise.
| Section | Payment | Rate | Threshold |
|---|---|---|---|
| 192 | Salary | Slab rate | Where estimated tax is payable |
| 194A | Interest (non-securities) | 10% | ₹50,000 (₹1 lakh for senior citizens) |
| 194C | Contractor payments | 1% / 2% | ₹30,000 single bill / ₹1 lakh aggregate |
| 194H | Commission or brokerage | 2% | ₹20,000 |
| 194I | Rent | 10% / 2% | ₹50,000 per month (₹6 lakh a year) |
| 194J | Professional / technical fees | 10% / 2% | ₹50,000 |
| 194Q | Purchase of goods | 0.1% | Above ₹50 lakh from one seller |
| 194T | Salary, commission, interest to partners | 10% | ₹20,000 |
The split rates: 194C is 1% for payments to individuals and HUFs, 2% for others. 194I is 2% for plant and machinery, 10% for land and buildings. 194J is 2% for fees for technical services and call-centre payments, 10% for other professional fees. And 194Q applies only once your own turnover crossed ₹10 crore in the previous year — it taxes the amount above ₹50 lakh, not the whole purchase.
Two thresholds deserve a second look. Section 194H sits at ₹20,000 — raised from ₹15,000 by the Finance Act 2025 — and the rate is 2%, not the 5% many older rate cards still show. And 194T, the newest section on the card, requires partnership firms and LLPs to deduct 10% on salary, remuneration, commission, bonus and interest paid to partners once the total crosses ₹20,000 in the year. If your firm pays partners monthly remuneration, you almost certainly cross it.
One rule sits on top of every row: if the payee does not give you a valid PAN, you deduct at 20% or twice the applicable rate, whichever is higher. Collect PANs before you pay, not after.
When to deposit and when to file
Tax deducted in a month is due to the government by the 7th of the following month. The exception is March: deductions made in March can be deposited by 30 April. Government deductors follow their own book-adjustment timelines.
Quarterly TDS returns — Form 24Q for salary, Form 26Q for other resident payments — are due as follows:
| Quarter | Period | Due date |
|---|---|---|
| Q1 | Apr–Jun 2026 | 31 July 2026 |
| Q2 | Jul–Sep 2026 | 31 October 2026 |
| Q3 | Oct–Dec 2026 | 31 January 2027 |
| Q4 | Jan–Mar 2027 | 31 May 2027 |
File the return late and a fee of ₹200 per day accrues until you file, capped at the TDS amount. Deposit late and interest runs month by month — and a part of a month counts as a full month, so a deposit on the 8th instead of the 7th costs you interest for two months on that slice. Our compliance calendar tracks all four quarters plus the monthly deposit dates.
The three mistakes small deductors make
1. Reading aggregate thresholds per invoice. Under 194C, a single bill of ₹25,000 needs no deduction — but if the same contractor's bills total ₹1 lakh across the year, every rupee paid becomes deductible, including the earlier bills you skipped. Track vendor-wise totals, not invoices. The same trap exists under 194I: rent of ₹55,000 a month crosses the per-month limit even though a single quarter looks small.
2. Deducting but depositing late. Deducted tax is government money sitting in your account. Late deposit attracts interest at a higher rate than late deduction, and expenses on which TDS was deducted but not deposited in time can be disallowed in your own tax computation. A standing reminder on the 5th of every month is the cheapest fix in compliance.
3. Ignoring 194T because "it's just partner drawings". Since FY 2025-26, payments by a firm to its partners are within TDS. Firms that never had a TAN now need one, need to deduct 10% on remuneration and interest on capital above ₹20,000, and need to file 26Q every quarter. We are still meeting Jaipur firms in August 2026 that have not started — the catch-up cost grows every quarter.
Before any large payment, run the numbers through our free TDS calculator — it applies the current-year thresholds so you do not have to remember them.
How we can help
TDS is a monthly discipline, not a year-end job. On our bookkeeping and MIS retainers we compute deductions vendor-wise every month, deposit on time and file all four quarterly returns, so nothing is reconstructed in May. For growing firms, our virtual CFO service builds TDS into the payment process itself — the deduction happens before the payment leaves the bank. Retainers start at ₹2,999 a month with no lock-in, and TDS notices on retainer get a reply within 48 hours.
This article is general information, not tax advice. Rules and rates can change; confirm specifics for your business before acting.