TDS & TCS Payment Codes Guide FY 2026-27

Ultimate Guide to TDS & TCS Payment Codes

FY 2026-27 | AY 2027-28

The Income Tax Department has updated the Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) payment codes. These changes apply to Financial Year (FY) 2026-27 and Assessment Year (AY) 2027-28. Selecting the correct code prevents challan mismatches, interest penalties, and defective return notices.

📋 Comprehensive TDS Payment Codes

Salaries & Institutional Payments

  • 1004(Sec 192A): Accumulated balance paid to an employee from a provident fund.
  • 1019(Sec 193): Income earned from interest on government or corporate securities.
  • 1029(Sec 194): Dividends declared on equity or preference shares.

Interest Income

  • 1020(Sec 194A): Interest income (non-securities) paid specifically to senior citizens.
  • 1021(Sec 194A): Interest income (non-securities) paid to non-senior citizens.
  • 1022(Sec 194A): General interest income other than interest on securities.

Contractors & Professionals

  • 1023(Sec 194C): Payments to contractors who are Individuals or HUFs.
  • 1024(Sec 194C): Payments to contractors who are companies, firms, or other entities.
  • 1026(Sec 194J(a)): Technical service fees, film royalty, or call centre business payments.
  • 1027(Sec 194J(b)): Professional service fees or specified contractual sums.
  • 1028(Sec 194J(b)): Remuneration, fees, or commissions paid to company directors.

Commissions, Rental, & Real Estate

  • 1005(Sec 194D): Insurance commission or brokerage payments.
  • 1006(Sec 194H): General commission or brokerage payments.
  • 1008(Sec 194I(a)): Rental payments for machinery, plant, or equipment.
  • 1009(Sec 194I(b)): Rental payments for land, buildings, or furniture.
  • 1011(Sec 194IC): Non-kind considerations under joint development agreements.
  • 1012(Sec 194IA): Compensation paid for acquiring specific immovable property.

Investment Trusts & Mutual Funds

  • 1013(Sec 194K): Income distributed by a specified Mutual Fund to resident assessees.
  • 1014(Sec 194LBA): Interest income from business trust units to resident holders.
  • 1015(Sec 194LBA): Dividend income from business trust units to resident holders.
  • 1017(Sec 194LBB): Income from investment fund units paid to unit holders.
  • 1018(Sec 194LBC): Income from securitisation trust investments paid to investors.

Insurance & Goods Purchase

  • 1030(Sec 194DA): Payouts under life insurance policies, including bonuses.
  • 1031(Sec 194Q): Payments made for the purchase of goods exceeding threshold limits.

Business Perquisites & E-Commerce

  • 1033(Sec 194R): Cash or convertible benefits/perquisites arising from business or profession.
  • 1034(Sec 194R): Business benefits or perquisites provided entirely in kind.
  • 1035(Sec 194O): E-commerce transactions facilitated by an e-commerce operator.
  • 1067(Sec 194T): Remuneration, salary, bonus, or interest paid to a firm's partner.

Virtual Digital Assets (VDA)

  • 1037(Sec 194S): Monetary consideration for transferring a Virtual Digital Asset.
  • 1038(Sec 194SP): In-kind consideration for transferring a Virtual Digital Asset.

Winnings & Cash Withdrawals

  • 1058(Sec 194B): Winnings from lotteries, crossword puzzles, and card games.
  • 1060(Sec 194BA): Net winnings from online gaming platforms.
  • 1062(Sec 194BB): Winnings from horse races.
  • 1063(Sec 194G): Commission earned on the sale of lottery tickets.
  • 1064(Sec 194N): High-value cash withdrawals by Co-operative Societies.
  • 1065(Sec 194N): High-value cash withdrawals by non-cooperative entities.
  • 1066(Sec 194EE): Withdrawals made from the National Savings Scheme (NSS).

📋 Comprehensive TCS Payment Codes

Alcohol, Forest Produce, & Scrap

  • 1068(Sec 206C-A): Sale of alcoholic liquor fit for human consumption.
  • 1069(Sec 206C-I): Sale of Tendu leaves.
  • 1070(Sec 206C-B): Timber obtained under an official forest lease.
  • 1071(Sec 206C-C): Timber obtained through any non-forest lease mode.
  • 1072(Sec 206C-D): Any other forest produce excluding timber or tendu leaves.
  • 1073(Sec 206C-E): Sale of industrial scrap.

Minerals, Vehicles, & Animals

  • 1074(Sec 206C-J): Sale of coal, lignite, or iron ore.
  • 1075(Sec 206C-L): Sale of motor vehicles exceeding the value threshold.
  • 1085(Sec 206C-MJ): Sale of race horses or polo horses.

Luxury Goods & Lifestyle Items

  • 1076(Sec 206C-MA): Luxury wristwatches.
  • 1077(Sec 206C-MB): Original art pieces, paintings, and sculptures.
  • 1078(Sec 206C-MC): Collectors' items, including antiques and coins.
  • 1079(Sec 206C-MD): Yachts, rowing boats, canoes, and helicopters.
  • 1080(Sec 206C-ME): Premium sunglasses.
  • 1081(Sec 206C-MF): Luxury handbags and purses.
  • 1082(Sec 206C-MG): Premium shoes.
  • 1083(Sec 206C-MH): High-end sportswear and sports equipment.
  • 1084(Sec 206C-MI): Home theatre systems.

Foreign Remittance & Travel (LRS)

  • 1086(Sec 206C-T): Foreign remittance via LRS for education or medical treatment.
  • 1087(Sec 206C-Q): Foreign remittance via LRS for any other purpose.
  • 1088(Sec 206C-O): Overseas tour packages valued up to ₹10 Lakh.
  • 1089(Sec 206C-O): Overseas tour packages valued above ₹10 Lakh.

Public Rights & Leases

  • 1090(Sec 206C-F): Sale of parking lot operational rights.
  • 1091(Sec 206C-G): Sale of toll plaza collections rights.
  • 1092(Sec 206C-H): Sale of mining, quarrying, or mineral rights.

⚡ Crucial Compliance Guidelines

1. Accurate Challan Entry

Verify the 4-digit code before initiating online banking payments. Separate challans must be generated for different sections.

2. Form Matching

Cross-check your codes with Form 24Q, 26Q, and 27EQ structures. Mismatched codes delay tax credits in Form 26AS/AIS.

3. Penalties for Mismatch

Wrong codes lead to "Short Deduction" notices. Correcting a faulty challan requires online correction via the Traces portal.