New TDS and TCS changes for Tax Year 2026-27: Check 6 important tax updates now
1/7
New TDS and TCS rules come into effect
The Finance Bill, 2026 has introduced several changes to Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) provisions. These changes will be applicable from April 1, 2026 (Tax Year 2026–27).
2/7
No TDS on motor accident compensation interest
Interest received on compensation under the Motor Vehicles Act, 1988, will now be fully tax- exempt. As a result, no TDS will be deducted on such interest payments.
3/7
Easier process for lower or nil TDS certificate
Small taxpayers can now apply for lower or nil TDS certificates through an electronic Process, eliminating the need for manual verification by the Assessing Officer.
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4/7
Relief in TDS compliance for NRI property deals
From October 1, 2026, resident buyers and HUFs purchasing immovable property from NRIs will not need a TAN. TDS compliance can be completed using just the PAN, simplifying the process.
5/7
Simplified declaration for no TDS deduction
Taxpayers earning dividend or interest income can now submit a single declaration to the depository for non-deduction of TDS, instead of filing separate forms with each payer.
6/7
TDS clarity on manpower supply and co-op banks
The definition of “work” now explicitly includes manpower supply, making such payments liable for TDS. Accordingly, payments for manpower supply will attract TDS for payment to contractors.
At the same time, interest paid by co-operative banks and similar institutions will not attract TDS, providing relief to depositors.
At the same time, interest paid by co-operative banks and similar institutions will not attract TDS, providing relief to depositors.
7/7
Uniform TCS rate proposed
The government has proposed to rationalise TCS rates by introducing a uniform 2% rate across most transactions. The table above shows detailed changes in TCS rates.