TDS Rule Amendments & Circulars: Rate Rationalization & TRACES SOPs

टीडीएस नियम संशोधन एवं नई दरें

Comprehensive guide to recent statutory amendments in Tax Deducted at Source provisions under Chapter XVII-B: reduction of TDS rate on commission/brokerage under Section 194H to 2%, streamlining Section 194-IA immovable property TDS, and TRACES online auto-correction features.

Written by: Author Profile

Direct Tax & CA Review Panel

Chartered Accountancy Review Panel • Senior Direct Tax Review Desk

Reviewed & Fact-Checked by: Technical Review Panel

Tax Law & Dispute Review Desk

Tax Litigation & Legal Review Panel • Tax Appeal & Procedure Review Desk

Published: 1st April 2026•Last Updated: 15th August 2026•Last Reviewed: 15th August 2026

Key Statutory Highlights (FY 2026-27 (AY 2027-28))

Section 194H (Commission / Brokerage): Rate reduced from 5% to 2% to improve liquidity for business agents and intermediaries.

Section 194-IB (Rent by Individuals): TDS rate reduced from 5% to 2% on monthly rent payments exceeding ₹50,000.

Section 194M (Payments by Individuals to Contractors/Professionals): Rate reduced from 5% to 2% for aggregate payments exceeding ₹50 Lakh/year.

Section 194-IA (Property Purchase): Clarified that the ₹50 Lakh threshold applies considering the aggregate consideration of all co-owners/transferees combined.

Who is Eligible & When Does it Apply?

Applicability #1

All corporate and individual deductors making specified payments.

Step-by-Step Procedure & Compliance Roadmap

Update ERP TDS Rate Masters

Adjust accounting software rates for Section 194H, 194-IB, and 194M to 2%.

Apply Updated Rates on Vendor Bills

Ensure new invoices are deducted at the revised statutory rates.

Mandatory Documents Checklist

CBDT Circulars, Revised TDS Rate Masters, Vendor Invoices

Common Mistakes & Compliance Risks to Avoid

•Continuing to deduct 5% on Section 194H brokerage invoices instead of the revised 2% rate.

Frequently Asked Questions

What is the new TDS rate on commission under Section 194H?

The statutory TDS rate under Section 194H for commission or brokerage (other than insurance commission) has been reduced to 2%.

Interactive Tax Calculators

TDS Calculator

Related Tax Knowledge

TDS Rates Matrix

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🛡️ Educational Disclaimer: FinSetu India is an independent educational guidance and calculation platform. Content is published for general citizen awareness based on applicable laws as of FY 2026-27 (AY 2027-28). We do not provide personalized legal/tax advice or file returns directly. Verify current applicable rules on official portals or consult a qualified Chartered Accountant / Tax Lawyer.