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NRI Income Tax & Compliance
30+ Important Income Tax Terms in India You Need to Know30+ Important Income Tax Terms in India You Need to Know
Written by Shubham Jain
TDS (Tax Deducted at Source) is a mechanism where tax is deducted before you even receive the payment. Under the updated Income Tax Act, 2025, all TDS rules are now combined under Section 393. Whether you are an employee, a business owner, or a CA, knowing the right rates, limits, and section codes is crucial to avoid penalties.
Key Takeaways
- If the TDS deducted from your income is higher than your actual tax liability, you can claim the extra money as a refund when you file your Income Tax Return (ITR).
- If your total income is below the taxable threshold, you can prevent TDS from being deducted by submitting Form 121. As per the IT Act 2025, Form 121 has replaced the old Form 15G (for individuals under 60 years) or Form 15H (for senior citizens).
- You can view a consolidated statement of all TDS deducted against your PAN using Form 149 (which replaces the old Form 26A).
TDS Rates for Non- Residents FY 2026-27
| Section* | Payment Type | TDS Rate |
|---|---|---|
| Section 192 | Payment of Salary | Normal Slab Rate |
| Section 192A | Payment of accumulated balance of provident fund which is taxable in the hands of an employee. | 10% |
| Section 194B | Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort or from gambling or betting of any form or nature whatsoever. | 30% |
| Section 194BA | Income by way of winnings from any online game | 30% |
| Section 194BB | Income by way of winnings from horse races | 30% |
| Section 194E | Payment to non-resident sportsmen/sports association | 20% |
| Section 194EE | Payment in respect of deposits under National Savings Scheme | 10% |
| Section 194F | Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India* | 20% |
| Section 194G | Commission, etc., on sale of lottery tickets | 2% |
| Section 194LB | Payment of interest on infrastructure debt fund | 5% |
| Sec. 194LBA(2) | Payment of the nature referred to in Section 10(23FC)(a) | 5% |
| Section 194LBA(2) | Payment of the nature referred to in Section 10(23FC)(b) | 10% |
| Section 194LBA(3) | Payment of the nature referred to in section 10(23FCA) by business trust to unit holders | 30% |
| Section 194LBB | Investment fund paying an income to a unit holder [other than income which is exempt under Section 10(23FBB)]. | 30% |
| Section 194LBC | Income in respect of investment made in a securitisation trust (specified in Explanation of section115TCA) | 30% |
| Section 194LC | When an Indian company pays interest in foreign currency : | |
| 1. When interest is paid for a long term bond or RDB - listed on IFSC | 4% | |
| 2. When bonds specified in (1) is issued after 01-04-2023 | 9% | |
| Section 194LD | Payment of interest on rupee denominated bond of an Indian Company or Government securities to a Foreign Institutional Investor or a Qualified Foreign Investor | |
| Section 194N | Cash withdrawals in excess of Rs. 1 crore | 2% |
| ii) If ITR not filed for preceding 3 years: | ||
| a) in excess of Rs. 20 lakhs* | 2% | |
| b) in excess of Rs. 1 crore | 5% | |
| Section 194T | Payments of any sum in the nature of salary, remuneration, commission, bonus or interest to a partner of the firm. From 01-04-2025, when the payment exceeds Rs 20,000. | 10% |
| Section 195 | Payment of any other sum to a Non-resident | |
| a) Income in respect of investment made by a Non-resident Indian Citizen | ||
| b) Income by way of long-term capital gains referred to in Section 115E in case of a Non-resident Indian Citizen, | 20% | |
| c) Income by way of long-term capital gains referred to in sub-clause (iii) of clause (c) of sub-Section (1) of Section 112 | 12.50% | |
| d) Income by way of long-term capital gains as referred to in Section 112A exceeding Rs. 1,25,000 | 12.50% | |
| e) Income by way of short-term capital gains referred to in Section 111A | 12.50% | |
| f) Any other income by way of long-term capital gains [not being long-term capital gains referred to in sections 10(33), 10(36)] | 20% | |
| g) Income by way of dividend from a unit in International Financial Services Centre | 12.50% | |
| h) Income by way of dividend [Other than (g)] | 10% | |
| i)Interest on foreign-currency borrowings payable by the Government or an Indian concern (excluding Sections 194LB and 194LC). | 20% | |
| j) Royalty paid by the Government or an Indian concern for transfer or licensing of specified book copyrights or computer software under Section 115A. | 20% | |
| k) Royalty income (other than (j)) payable by the government or Indian Concern under central government approved agreement or in accordance with industrial policy | 20% | |
| l) Fees for technical services in accordance with government agreement, government approved agreement or included in industrial policy in force | 20% | |
| m) Any other income | 20% | |
| Section 196A | Income in respect of units of non-resident | 30% |
| Section 196B | Income from units referred to in section 115AB(1)(i) | 20% |
| Section 196B | Long-term capital gain on transfer of units referred to in section 115AB, | 12.50% |
| Section 196C | Income by way of interest or dividends in respect of bonds or GDR referred to in section 115AC | 12.50% |
| Section 196C | Long-term capital gain arising from transfer of bonds or GDR referred to in section 115AC | 12.50% |
| Section 196D | Income of foreign Institutional Investors from securities (not being dividend or capital gain arising from such securities) | 20% |
| Note: Tax shall be deducted at the rate provided under DTAA if same is lower than the existing TDS rate of 20%. | ||
| Section 196D(1A) | Income in respect of securities referred to in section 115AD(1)(a) payable to specified fund [referred to in clause (c) of Explanation to section 10(4D)] | 10% |
| Note: Since recipient of income is a specified fund, surcharge & health and education cess shall be nil. |
TDS Rates for Residents
| Section* | Nature of Transaction | Threshold Limit (Rs) | TDS Rate (%) |
|---|---|---|---|
| 192 | Salary | Basic exemption limit of employee | Slab rates |
| 192A | Premature withdrawal from EPF | Rs. 50,000 | 10% |
| 193 | Interest on Securities | Rs. 10,000 | 10% |
| 194 | Dividends | Rs. 10,000 | 10% |
| 194A | on bank/post office deposits | Rs. 50,000 | 10% |
| Interest on bank/post office deposits (Senior Citizen) | Rs. 1,00,000 | 10% | |
| Interest (Others) | Rs. 10,000 | 10% | |
| 194K | Payment of dividend by mutual Funds | Rs. 10,000 | 10% |
| 194B | Lottery, game shows, gambling winnings | Rs. 10,000 | 30% |
| 194BA | Online gaming winnings | - | 30% |
| 194BB | Winnings from horse races | Rs. 10,000 (Aggregate winnings during a financial year not single transaction) | 30% |
| 194C | Payment to contractors or sub-contractors | Rs. 30,000 (Single Transaction) or Rs. 1 lakh (In a FY) | 1% for individuals and HUF, 2% for others |
| 194D | Insurance Commission | Rs. 20,000 | 2% for individuals and HUF, 10% for others |
| 194DA | Payment received; Life insurance Policy | Rs. 1 lakh | 2% |
| 194EE | Payment received; National Savings Scheme (NSS) | Rs. 2,500 | 10% |
| 194G | Lottery Commission | Rs. 20,000 | 2% |
| 194H | Commission/Brokerage | Rs. 20,000 | 2% |
| 194J(a) | Fees; Technical Services, Call Centre, Royalty, Distribution / Exhibition of Cinematography Films, etc. | Rs. 50,000 | 2% |
| 194J(b) | Fees All other Professional Services | Rs. 50,000 | 10% |
| 194I(a) | Rent for Plant & Machinery | Rs. 50,000 | 2% |
| 194I(b) | Rent of Land Building & Furniture | Rs. 50,000 | 10% |
| 194IA | Transfer of certain immovable property other than agricultural land | Rs. 50 lakh | 1% |
| 194IB | Rent payment by individual / HUF not covered u/s 194I | Rs. 50,000 pm | 2% |
| 194IC | Payment under specified Joint Development Agreement | - | 10% |
| 194LA | Compensation on transfer of certain immovable property other than agricultural land | Rs. 5 lakh | 10% |
| 194LBA | Certain income from units of a business trust | - | 10% |
| 194LBB | Income in respect of investment of investment fund | - | 10% |
| 194LBC | Income in respect of investment in securitization trust | - | 10% |
| 194M | Payment made for Contracts, Brokerage or Professional Fees etc. by Individual and HUF | Rs. 50 lakh | 2% |
| 194N | Cash withdrawal in excess of 1 crore during the previous year from 1 or more account with a bank or co-operative society | 1 Crore (Rs. 3 Crores, if withdrawal is by co-operative society) | 2% |
| 20 Lakh (if ITR not filed for previous 3 years) | 2% (Rs. 20 Lakh 1 Crore) | ||
| 5% (Rs. 1 Crore and above) | |||
| 194O | TDS on e-commerce participants | Rs. 5 lakh | 0.10% |
| 194P | TDS in case of Specified Senior Citizen (above 75 years) having Salary & Interest (ITR not required) | - | Slab Rates |
| 194Q | TDS on Purchase of Goods exceeding Rs. 50 Lakh | Rs. 50 lakh | 0.10% |
| 194R | Benefits or perquisites of business or profession | Rs. 20,000 | 10% |
| 194S | Payment of consideration for transfer of virtual digital asset by persons other than specified person | Rs. 10,000 | 1% |
| Payment of consideration for transfer of virtual digital asset by specified person | Rs. 50,000 | 1% | |
| 194T | Payments by Partnership Firms to Partners | Rs. 20,000 | 10% |
TCS Rate Chart
With effect from 1st April, 2026, section 394 of the Income Tax Act, 2025 deals with the provisions of Tax Collected at Source. However, the sections as per Income Tax Act 1961 are retained for reference purposes.
| Section | Particulars | Threshold Limit | TCS Rate |
|---|---|---|---|
| 206C(1) | Alcoholic liquor for human consumption | Not applicable | 2% |
| 206C(1) | Tendu leaves | Not applicable | 2% |
| 206C(1) | Timber (forest lease or other mode) | Not applicable | 2% |
| 206C(1) | Scrap | Not applicable | 2% |
| 206C(1) | Minerals (coal, lignite, iron ore) | Not applicable | 2% |
| 206C(1C) | Parking lot, Toll plaza, Mining & Quarrying | Not applicable | 2% |
| 206C(1F) | Sale of motor vehicle | ₹10 lakh | 1% |
| 206C(1G) | Foreign remittance under LRS - education/medical | ₹10 lakh | 2% |
| 206C(1G) | LRS - other purposes | ₹10 lakh | 20% |
| 206C(1G) | Overseas tour programme package | Not applicable* | 2% |
NRI Tax Experts You Can Trust
We provide a full range of NRI taxation and financial consultancy services in India, so you can stay compliant and stress-free abroad.
The Bottom Line
The TDS rules may vary by transaction type, including the deduction timing, rates, and threshold limits. Staying up to date with these laws and recent amendments helps you meet the compliance requirements and avoid penalties or other consequences.
Knowing the latest TDS rate chart for FY 2026-27 is important for both NRIs and Indian residents. It ensures that the TDS deducted in your case is calculated correctly. Moreover, for further NRI tax assistance, connect with an expert at Savetaxs. We have been helping NRIs from over 90 countries with various NRI issues, including ITR filing, TDS deduction, claiming eligible deductions, etc. Connect with us today as we actively work 24/7 across all time zones.
Glossary
- Income Tax: Income Tax, a Type of Direct Tax, is Imposed by the Government on the Income of Individuals or Organisations.
- Income Tax Act: Income Tax Act, an Act to Manage and Govern the Direct Taxes, by Levying, Collecting, and Administering.
- Income Tax Department: Income Tax Department, a Part of the Indian Government, Handles the Levying and Collection of the Tax.
- Income Tax Return: Income Tax Return, Filed by Taxpayers, Contains a Formal Record of the Collected Tax by the Government.
- Tax Deducted at Source (TDS): The Full form of TDS is Tax Deducted at Source, which is a way to collect the income tax.
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- DTAA between India and the USA
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- Section 195 of Income Tax Act - TDS Applicability for NRI
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Disclaimer
Note: This guide is for information purposes only. The views expressed in this guide are personal and do not constitute the views of Savetaxs. Savetaxs or the author will not be responsible for any direct or indirect loss incurred by the reader for taking any decision based on the information or the contents. It is advisable to consult either a CA, CS, CPA or a professional tax expert from the Savetaxs team, as they are familiar with the current regulations and help you make accurate decisions and maintain accuracy throughout the whole process.
About Author
Hatim Dudhiyawala is a Certified Public Accountant (CPA) with SaveTaxs and specializes in Indian and NRI taxation. He advises individuals, NRIs, and businesses on income tax filing, capital gains taxation, DTAA benefits, fund repatriation, and tax compliance. With experience in cross-border tax matters, Hatim helps taxpayers understand complex regulations and make informed decisions. Through his articles, he shares practical insights to help readers stay compliant and manage their tax obligations with confidence. See Full Bio
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Frequently Asked Questions
For the specific types of payment, TDS deduction is mandatory.
For a 30,000 salary, no TDS is deducted under the new tax regime.
The value of TDS credit can be checked under Form 26AS.
The interest at the rate of 1% per month must be paid if TDS is not duly deducted.
When the PAN is not provided accurately by the payee, a higher TDS rate shall be deducted. In cases where the higher TDS rate for non-providing of PAN is specifically mentioned in the Income Tax Section, the amount specified in the Section must be considered.