What is the primary distinction between TDS and TCS?

TDS (Tax Deducted at Source) under Chapter XVII-B is deducted by the payer/buyer from payments made to the payee/seller. TCS (Tax Collected at Source) under Chapter XVII-BB is collected by the seller from the buyer over and above the sales invoice price.

What major TDS rate changes took effect on 1 October 2024?

Under the Finance (No. 2) Act, 2024, effective 1 October 2024: (1) Section 194H (Commission) reduced from 5% to 2%, (2) Section 194-IB (Individual rent) reduced from 5% to 2%, (3) Section 194M (Non-audit contract/professional) reduced from 5% to 2%, (4) Section 194G (Lottery) reduced from 5% to 2%, and (5) Section 194O (E-commerce) slashed from 1% to 0.1%.

What is Section 194T and when does it become effective?

Section 194T was enacted by Finance (No. 2) Act, 2024, effective from 1 April 2025 (FY 2025-26 onwards). It mandates partnership firms and LLPs to deduct 10% TDS on any salary, remuneration, commission, bonus, or interest paid or credited to partners exceeding ₹20,000 in aggregate in a financial year.

How do Section 194Q (TDS on Goods) and Section 206C(1H) (TCS on Goods) interact?

Section 194Q applies to buyers (turnover > ₹10 Cr) purchasing goods > ₹50 Lakh from a seller @ 0.1% TDS. Section 206C(1H) applies to sellers collecting 0.1% TCS. By explicit statutory provision, if the buyer is liable and deducts TDS under Section 194Q, Section 206C(1H) TCS is NOT applicable.

TDS & TCS Rate and Threshold Checker | Income Tax Act 1961 | SKM Laws

TDS / TCS Statutory Parameters

Section & Rate Selector

Tax Mechanism *

Financial Year (FY) *

Statutory Section & Nature of Payment *

Section 194C(1)Rate: 1% | Threshold: ₹30,000

Carrying out any work (including transport, advertising, catering, manufacturing)

Transaction / Payment Value (₹) *₹75,000

Single Invoice / Bill Amount (for Sec 194C) (Single bill limit: ₹30,000)

Transporter with <= 10 goods carriages & valid PAN (Sec 194C(6))

Statutory Tax Determination

Section 194C(1) — Contractor Payments (Individual / HUF Payee)

Within Threshold · Zero Tax

Total Statutory TDS Deduction

₹0

Gross: ₹75,000 → Net Payout: ₹75,000

Applicable Rate1%

Transaction Amount

₹75,000

FY 2026-27

Statutory Threshold

₹30,000

Single bill exceeding ₹30,000 OR aggregate in FY exceeding ₹1,00,000

Net Payable to Payee

₹75,000

Gross - TDS

Detailed Statutory Analysis

Statutory SectionSection 194C(1)

Tax MechanismChapter XVII-B (TDS)

Applicable Financial YearFY 2026-27

Threshold Limit CheckWithin Limit (Zero Tax)

Taxable Base Amount₹0

Statutory Tax Rate1%

Statutory Determination:

No TDS deduction is required under Section 194C(1) because the transaction amount (₹75,000) does not exceed the statutory threshold limit of ₹30,000.

Primary Legal Reference:

Section 194C(1), Income-tax Act, 1961

Section-Specific Exceptions & Reliefs

Transporters owning 10 or fewer goods carriages: Nil (0%) TDS upon furnishing valid PAN & declaration under 194C(6)
Individuals/HUFs paying exclusively for personal purposes are exempt

Consult Tax Advocate

Statutory Disclaimer: This tool provides an indicative rate and threshold determination under the Income-tax Act, 1961. Actual liability depends on facts, contractual terms, declarations (15G/15H/27C), CBDT circulars, and judicial scrutiny.

Statutory Section Rate & Threshold Reference Table

Master Statutory Section & Rate Matrix

Complete searchable matrix of active TDS and TCS provisions under the Income-tax Act, 1961

Section	Type	Nature of Payment / Transaction	Threshold Limit	Standard Rate	Non-PAN Rate	Status
Sec 192	TDS	Salary & Allowances Payment of salary and taxable allowances to employees	₹3,00,000 per FY	0%	20%	Active (FY 26-27)
Sec 192A	TDS	Premature EPF Withdrawal Premature withdrawal of accumulated EPF balance with < 5 years continuous service	₹50,000 per bill	10%	20%	Active (FY 26-27)
Sec 193	TDS	Interest on Securities Interest payable on taxable government bonds, debentures, and securities	₹10,000 per FY	10%	20%	Active (FY 26-27)
Sec 194	TDS	Dividends on Shares Dividend distribution by domestic companies to resident shareholders	₹5,000 per FY	10%	20%	Active (FY 26-27)
Sec 194A(3)(i)	TDS	Interest Other than Securities (Bank / Post Office) Interest on fixed deposits (FD), recurring deposits (RD), and time deposits	₹40,000 per FY	10%	20%	Active (FY 26-27)
Sec 194A	TDS	Interest by Others (Unsecured Loans / NBFCs) Interest paid on unsecured loans, company deposits, and non-bank borrowings	₹5,000 per FY	10%	20%	Active (FY 26-27)
Sec 194C(1)	TDS	Contractor Payments (Individual / HUF Payee) Carrying out any work (including transport, advertising, catering, manufacturing)	₹30,000 per FY	1%	20%	Active (FY 26-27)
Sec 194C(1)	TDS	Contractor Payments (Company / Firm Payee) Carrying out any work where payee is a company, firm, LLP, AOP, or BOI	₹30,000 per FY	2%	20%	Active (FY 26-27)
Sec 194D	TDS	Insurance Commission Remuneration or commission for soliciting or procuring insurance business	₹15,000 per FY	5%	20%	Active (FY 26-27)
Sec 194DA	TDS	Life Insurance Maturity Proceeds (Taxable) Taxable maturity proceeds of life insurance policy not exempt under Section 10(10D)	₹1,00,000 per FY	5%	20%	Active (FY 26-27)
Sec 194G	TDS	Commission on Lottery Tickets Commission, remuneration, or prize on stocking, distributing, or selling lottery tickets	₹15,000 per FY	2%	20%	Active (FY 26-27)
Sec 194H	TDS	Commission & Brokerage Commission or brokerage paid for services in course of buying/selling goods or transactions	₹15,000 per FY	2%	20%	Active (FY 26-27)
Sec 194-I(a)	TDS	Rent of Plant, Machinery or Equipment Rent paid for lease, sub-lease, or use of plant, machinery, or equipment	₹2,40,000 per FY	2%	20%	Active (FY 26-27)
Sec 194-I(b)	TDS	Rent of Land, Building, Furniture & Fittings Rent paid for use of land, building (including factory), furniture, or fittings	₹2,40,000 per FY	10%	20%	Active (FY 26-27)
Sec 194-IA	TDS	Purchase of Immovable Property Consideration for transfer of immovable property (other than agricultural land)	₹50,00,000 per bill	1%	20%	Active (FY 26-27)
Sec 194-IB	TDS	Rent Paid by Individuals / HUF (Non-Audit) Rent for land or building paid by individuals/HUF not liable to tax audit under 44AB	₹50,000 per month	2%	20%	Active (FY 26-27)
Sec 194J(1)	TDS	Fees for Professional Services Legal, medical, engineering, architectural, accountancy, or technical consultancy fees	₹30,000 per FY	10%	20%	Active (FY 26-27)
Sec 194J(1)	TDS	Fees for Technical Services (FTS) / Royalty / Call Centre Managerial, technical, consultancy services, sale of cinematographic films, or call centre operations	₹30,000 per FY	2%	20%	Active (FY 26-27)
Sec 194J(1)(ba)	TDS	Director Remuneration / Sitting Fees (Non-Salary) Remuneration, fees, or commission paid to company directors (other than salary under 192)	₹0 (Nil) per FY	10%	20%	Active (FY 26-27)
Sec 194K	TDS	Income from Mutual Fund Units / UTI Distribution of income in respect of units of Mutual Fund or Administrator of Specified Undertaking	₹5,000 per FY	10%	20%	Active (FY 26-27)
Sec 194LA	TDS	Compensation on Compulsory Acquisition of Immovable Property Compensation or enhanced compensation on compulsory acquisition of immovable property (non-agri)	₹2,50,000 per FY	10%	20%	Active (FY 26-27)
Sec 194M	TDS	Payments by Individuals / HUF (Non-Audit Contract/Commission/Professional) Sum paid by individuals/HUF (not under 44AB) for contract work, commission, or professional fees	₹50,00,000 per FY	2%	20%	Active (FY 26-27)
Sec 194N	TDS	Cash Withdrawal from Bank (Regular ITR Filer) Cash withdrawal from banking company, co-operative bank, or post office account	₹1,00,00,000 per FY	2%	20%	Active (FY 26-27)
Sec 194N	TDS	Cash Withdrawal from Bank (Non-Filer for 3 Years) Cash withdrawal by person who has not filed ITR for past 3 assessment years	₹20,00,000 per FY	2%	20%	Active (FY 26-27)
Sec 194O	TDS	E-Commerce Operator to Participant Payment or credit by e-commerce operator for sale of goods/services facilitated online	₹5,00,000 per FY	0.1%	5%	Active (FY 26-27)
Sec 194P	TDS	Specified Senior Citizen Exemption from ITR (Age 75+) Pension & bank interest in same specified bank by resident senior citizen aged 75+	₹3,00,000 per FY	0%	20%	Active (FY 26-27)
Sec 194Q	TDS	TDS on Purchase of Goods (Buyer Turnover > ₹10 Cr) Purchase of goods from resident seller where buyer turnover exceeded ₹10 Crore in preceding FY	₹50,00,000 per FY	0.1%	5%	Active (FY 26-27)
Sec 194R	TDS	Benefit or Perquisite in Business / Profession Value or aggregate value of benefit or perquisite arising from business or exercise of profession	₹20,000 per FY	10%	20%	Active (FY 26-27)
Sec 194S	TDS	Transfer of Virtual Digital Assets (Crypto / NFT) Payment on transfer of Virtual Digital Asset (Cryptocurrency, NFT, Tokens)	₹50,000 per FY	1%	5%	Active (FY 26-27)
Sec 194T	TDS	Partner Remuneration, Salary, Bonus, Commission or Interest Salary, remuneration, interest, bonus, or commission paid/credited by Firm/LLP to its partner	₹20,000 per FY	10%	20%	Active (FY 26-27)
Sec 206C(1)	TCS	Alcoholic Liquor for Human Consumption Sale of alcoholic liquor for human consumption	₹0 (Nil) per FY	1%	5%	Active (FY 26-27)
Sec 206C(1)	TCS	Tendu Leaves Sale of tendu leaves	₹0 (Nil) per FY	5%	10%	Active (FY 26-27)
Sec 206C(1)	TCS	Timber & Forest Produce Sale of timber obtained under forest lease or other mode, and other forest produce	₹0 (Nil) per FY	2.5%	5%	Active (FY 26-27)
Sec 206C(1)	TCS	Scrap & Waste Sale of scrap from mechanical working of materials	₹0 (Nil) per FY	1%	5%	Active (FY 26-27)
Sec 206C(1)	TCS	Minerals (Coal, Lignite, Iron Ore) Sale of minerals being coal or lignite or iron ore	₹0 (Nil) per FY	1%	5%	Active (FY 26-27)
Sec 206C(1C)	TCS	Parking Lot, Toll Plaza, Mining & Quarrying Lease Grant of lease, license, or transfer of right in parking lot, toll plaza, or mine/quarry	₹0 (Nil) per FY	2%	5%	Active (FY 26-27)
Sec 206C(1F)	TCS	Motor Vehicle Sale Exceeding ₹10 Lakh Sale of a motor vehicle of the value exceeding ₹10,00,000 (at retail point of sale)	₹10,00,000 per bill	1%	5%	Active (FY 26-27)
Sec 206C(1G)(a)	TCS	Overseas Tour Programme Package Sale of an overseas tour programme package	₹0 (Nil) per FY	5%	20%	Active (FY 26-27)
Sec 206C(1G)(b)	TCS	LRS Remittance: Education (Financed by Section 80E Loan) Remittance out of India under LRS for education financed by loan under Section 80E	₹7,00,000 per FY	0.5%	5%	Active (FY 26-27)
Sec 206C(1G)(b)	TCS	LRS Remittance: Education (Own Funds) or Medical Treatment Remittance out of India under LRS for education (own funds) or medical treatment abroad	₹7,00,000 per FY	5%	10%	Active (FY 26-27)
Sec 206C(1G)(b)	TCS	LRS Remittance: Investments, Gifts, Property & Other Purposes Remittance out of India under LRS for foreign investment, gifts, property purchase, etc.	₹7,00,000 per FY	20%	20%	Active (FY 26-27)
Sec 206C(1H)	TCS	TCS on Sale of Goods (Seller Turnover > ₹10 Cr) Receipt of consideration for sale of goods exceeding ₹50,00,000 from a buyer in a FY	₹50,00,000 per FY	0.1%	1%	Active (FY 26-27)

Statutory Framework & Compliance Principles

6 Core Principles of Indian TDS & TCS

Direct tax withholding mechanisms governed by Chapters XVII-B & XVII-BB of the Income-tax Act, 1961.

1. Difference Between TDS & TCS

TDS (Chapter XVII-B) is deducted by the payer at the time of making payment, whereas TCS (Chapter XVII-BB) is collected by the seller from the buyer over and above the sales consideration.

2. TDS Rate Rationalisation (Budget 2024)

Effective 1 October 2024, TDS rates on Commission (194H), Individual Rent (194-IB), Contract (194M), and Lottery (194G) were slashed from 5% to 2%, and E-commerce (194O) from 1% to 0.1%.

3. Section 194Q Overrides Section 206C(1H)

Where a transaction is subject to both TDS under Section 194Q (buyer turnover > ₹10 Cr) and TCS under Section 206C(1H), TDS under Section 194Q statutorily overrides TCS; no TCS shall be collected.

4. Section 194T: Partner Remuneration

Effective 1 April 2025 (FY 2025-26 onwards), partnership firms and LLPs must deduct 10% TDS under Section 194T on aggregate salary, remuneration, commission, bonus, or interest to partners exceeding ₹20,000 in a FY.

5. Section 206AA: Non-PAN Higher Withholding

Failure to furnish valid PAN attracts a higher withholding rate of 20% under Section 206AA. However, statutory provisos strictly cap the non-PAN rate at 5% for Sections 194O, 194Q, and 194S.

6. Sections 206AB & 206CCA Non-Filer Higher Rates

Specified non-filers of ITR with aggregate TDS/TCS >= ₹50,000 in preceding year are subject to higher TDS/TCS at the higher of twice the statutory rate or 5% (subject to statutory exclusions).

Frequently Asked Questions