Practical Approach to TDS & TCS

Two Golden Rules of TDS

A Comparative Study: Income Tax Act 1961 v/s Income Tax Act 2025

TDS Rates for Financial Year 2025-26 (Assessment Year 2026-27) (Where Recipient is Resident)

TDS Rates for Financial Year 2025-26 (Assessment Year 2026-27) (Where Recipient is Non-Resident)

TCS Rates for Financial Year 2025-26 (Assessment Year 2026-27) (Rates of Tax Collected at Source)

Payment of Salary — Section 392

Payment to Residents (Other than Salary) — Section 393(1)

Payment to Non-Residents —Section 393(2)

Payment to any person — Section 393(3)

TCS Rates — Section 394 (As Amended by Finance Act, 2026)

Practical Checklist for Deducting TDS on Business Payments

Introduction

Part A

Tax to be Deducted on Salary and Accumulated

Balance due to an Employee

Part B

Tax to be Deducted at Source for

Payments to Residents

Chapter B-1TDS on Insurance Commission [(Sec 393(1) Table SI. 1(i) ITA 2025) (Sec 194D ITA 1961)]

Chapter B-2Commission or Brokerage [(Sec 393(1) Table SI.1(ii) ITA 2025) (Sec 194H ITA 1961)]

Chapter B-3TDS on Payment of Rent by Certain Individual/HUF [(Sec 393(1) Table S1.2(i) ITA 2025) (Sec 194IB ITA 1961)]

Chapter B-4Rent [(Sec 393(1) Table Sl.2(ii) ITA 2025) (Sec 194I ITA 1961)]

Chapter B-5TDS on Payment on Transfer of certain Immovable Property other than Agricultural Land [(Sec 393(1) Table SI.3(i) ITA 2025) (Sec 194-IA ITA 1961)]

Chapter B-6TDS on Payment made under Specified Agreement [(Sec 393(1) Table SI.3(ii) ITA 2025) (Sec 194IC ITA 1961)]

Chapter B-7TDS on Payment of Compensation on Acquisition of Certain Immovable Property [(Sec 393(1) Table SI.3(iii) ITA 2025) (Sec 194LA ITA 1961)]

Chapter B-8Tax Deduction on Income from Mutual Fund Units [(Sec 393(1) Table SI.4(i) ITA 2025) (Sec 194K ITA 1961)]

Chapter B-9TDS on Certain Income from Units of a Business Trust [(Sec 393(1) Table SI.4(ii) ITA 2025) (Sec 194LBA ITA 1961)]

Chapter B-10TDS on Income of Units of Investment Fund [(Sec 393(1) Table SI.4(iii) ITA 2025) (Sec 194LBB ITA 1961)]

Chapter B-11TDS on Income from Investment in Securitization Fund [(Sec 393(1) Table SI.4 (iv) ITA 2025) (Sec 194LBC ITA 1961)]

Chapter B-12Interest on Securities [(Sec 393(1) Table SI.5(i) ITA 2025) (Sec 193 ITA 1961)]

Chapter B-13Interest other than Interest on Securities [(Sec 393(1) Table SI.5(ii)(iii) ITA 2025) (Sec 194A ITA 1961)]

Chapter B-14Payments to Contractors and Sub-Contractors [(Sec 393(1) Table SI.6(i) ITA 2025) (Sec 194C ITA 1961)]

Chapter B-15TDS on Payments of Certain Sums by Individual and HUF [(Sec 393(1) Table SI.6(ii) ITA 2025) (Sec 194M 1961)]

Chapter B-16Fees for Professional or Technical Services [(Sec 393(1) Table SI.6 ITA 2025) (Sec 194J ITA 1961)]

Chapter B-17Dividends [(Sec 393(1) Table Sl.7 ITA 2025) (Sec 194 ITA 1961)]

Chapter B-18TDS on Payment in respect of Life Insurance Policy [(Sec 393(1) Table SI.8(i) ITA 2025) (Sec 194DA ITA 1961)]

Chapter B-19Deduction of Tax at Source on Purchase of Goods [(Sec. 393(1), Table Sl. No. 8(ii) ITA 2025) (Sec 194Q ITA 1961)]

Chapter B-20Deduction of Tax by a Specified Bank in Case of Specified Senior Citizen [(Sec 393(1) Table Sl.8(iii) ITA 2025) (Sec 194P ITA 1961)]

Chapter B-21TDS on Perquisites in respect of Business [(Sec 393(1) Table Sl.8(iv) ITA 2025) (Sec 194R ITA 1961)]

Chapter B-22TDS on Payments made to e-Commerce Participants [(Sec 393(1) Table Sl.8(v) ITA 2025) (Sec 194O ITA 1961)]

Chapter B-23Payment on Transfer of Virtual Digital Asset [(Sec 393(1) Table 8(vi) ITA 2025) (Sec 194S ITA 1961)]

Part C

Tax to be deducted at Source for

Payments to Non-Residents

Chapter C-1Payment to Non-Resident Sports Men or Sports Association [(Sec 393(2) ITA 2025 Table S. No 1) (Sec 194E ITA 1961)]

Chapter C-2Income by way of Interest from an Indian Company or Business Trust [(Sec 393(2) ITA 2025 Table S. No 2-4) (Sec 194LC ITA 1961)]

Chapter C-3TDS on Interest from Infrastructure Debt Fund [(Sec 393(2) ITA 2025 Table S. No 5) (Sec 194LB ITA 1961)]

Chapter C-4TDS on certain Income from Units of a Business Trust [(Sec 393(2) ITA 2025 Table S. No 6-7) (Sec 194LBA ITA 1961)]

Chapter C-5TDS on Income of Units of Investment Fund [(Sec 393(2) ITA 2025 Table S. No. 8) (Sec 194LBB ITA 1961)]

Chapter C-6TDS on Income from Investment in Securitization Fund [(Sec 393(2) ITA 2025 Table S. No. 9) (Sec 194LBC ITA 1961)]

Chapter C-7Income in respect of Units of Non-Residents [(Sec 393(2) Table S. No 10 ITA 2025) (Sec 196A ITA 1961)]

Chapter C-8TDS on Income from Units [(Sec 393(2) Table S. No. 11-12 ITA 2025) (Sec 196B ITA 1961)]

Chapter C-9TDS on Income from Foreign Currency Bonds or GDR [(Sec 393(2) ITA 2025 Table S. No. 13-14) (Sec 196C ITA 1961)]

Chapter C-10TDS on Income of FII from Securities [(Sec 393(2) ITA 2025 Table S. No. 15-16) (Sec 196D ITA 1961)]

Chapter C-11TDS on other sums payable to Non-Resident [(Sec 393(2) ITA 2025 Table S. No. 17) (Sec 195 ITA 1961)]

Part D

Tax to be deducted at source for

Payments to any Person

Chapter D-1Winnings from Lotteries or Crossword Puzzles [(Sec 393(1) Table SI.1 ITA 2025) (Sec 194B ITA 1961)]

Chapter D-2Winnings from Online Games [(Sec 393(1) Table SI.2 ITA 2025) (Sec 194BA ITA 1961)]

Chapter D-3Winnings from Horse Races [(Sec 393(1) Table Sl.3 ITA 2025) (Sec 194BB ITA 1961)]

Chapter D-4Commission on Sale of Lottery Tickets [(Sec 393(1) Table Sl.4 ITA 2025) (Sec 194G ITA 1961)]

Chapter D-5Cash Withdrawal [(Sec 393(1) Table Sl.5 ITA 2025) (Sec 194N ITA 1961)]

Chapter D-6Payments in respect of NSS [(Sec. 393(3) (Table Sl. 6) ITA 2025) (Sec 194EE ITA 1961)]

Chapter D-7Payments to Partners of Firms [(Sec 393(1) Table Sl.7 ITA 2025) (Sec 194T ITA 1961)]

Part E

Collection of Tax at Source

Part F

Procedural Mechanism for Deposit and

Reporting of TDS and TCS

Chapter F-1Compliance and Reporting of TDS and TCS [Section 397 (erstwhile sections 203A, 206CA of ITA 1961)]

Chapter F-2Processing of TDS and TCS Returns

Chapter F-3Consequences for Failure to Deduct/Collect or Deposit TDS or TCS

Chapter F-4Certificates (Sec 395)

Chapter F-5Tax Deducted is Income Received (Sec 396)

Chapter F-6Non-Deduction of TDS in Certain Cases

Part G

Mechanism for Examination of

TDS/TCS Compliance in Tax Audit

Report by Auditors

Chapter G-1 Checklist for Clause 34 of Tax Audit Report to be considered by Auditors