TDS Rate Chart for FY 2025-26 (AY 2026-27)

TDS Rate Chart for FY 2025-26 (AY 2026-27). Tax Deducted at Source (TDS) is an important part of India’s taxation system. It helps in the collection of tax at the source of income, which minimizes tax evasion and ensures a steady inflow of revenue for the government. This article explains the applicable TDS rates for the Financial Year (FY) 2025-26 (Assessment Year 2026-27), the recent changes effective from April 1, 2025, and how different sections of the Income Tax Act govern TDS deduction for various types of payments.
What is TDS?
TDS stands for Tax Deducted at Source. It refers to the practice where the payer (known as the deductor) deducts a certain percentage of tax before making the actual payment to the receiver (known as the deductee). This system is applicable for various types of payments like salaries, commissions, rent, interest, professional fees, etc. The deductor is responsible for depositing the deducted amount with the government and filing TDS returns on time.
TDS is governed by the provisions of the Income Tax Act, and the rate of deduction depends on the nature of the payment, the recipient's status (resident or non-resident), and the applicable section of the Act.
TDS Changes from 1st April 2025
With effect from April 1, 2025, the government has introduced certain changes in the TDS provisions. The most significant change is the enhancement of threshold limits for TDS deductions across several sections. This step is aimed at reducing the compliance burden for small taxpayers and easing the process of tax collection. Here are some key changes:
• Section 193 (Interest on Securities): Previously, there was no threshold. Now, TDS will be applicable only if the interest exceeds Rs.10,000.
• Section 194A (Interest other than Securities): The threshold has been increased. For senior citizens, it is now Rs.1 lakh, and for others, it is Rs.50,000. If the payer is not a bank, post office, or cooperative society, the threshold is Rs.10,000.
• Section 194 (Dividend) and 194K (Mutual Fund Units): The threshold limit has been increased from Rs.5,000 to Rs.10,000.
• Section 194B and 194BB (Winnings from lottery or horse race): TDS is now applicable for a single transaction exceeding Rs.10,000.
• Section 194D, 194G, and 194H: Threshold limits have increased from Rs.15,000 to Rs.20,000.
• Section 194I (Rent): TDS is now applicable if monthly rent exceeds Rs.50,000.
• Section 194J (Professional/Technical Services): The threshold has increased from Rs.30,000 to Rs.50,000.
• Section 194LA (Enhanced Compensation): The threshold is doubled from Rs.2.5 lakh to Rs.5 lakh.
• Section 206AB: This section, which previously imposed a higher TDS rate on non-filers, has been removed to reduce compliance complexity.
• Section 194LBC: The TDS rate on income from securitization trusts for residents has been reduced to 10%.
TDS Rate Chart – For Residents
This section outlines the TDS rates applicable when the payment is made to a resident individual or entity.
• Section 192 (Salary): TDS is deducted based on the income slab rates applicable to the employee.
• Section 192A (EPF Withdrawal): If the withdrawal is above Rs.50,000, TDS is deducted at 10% (with PAN) or 20% (without PAN).
• Section 193 (Interest on Securities): TDS is deducted at 10% if interest exceeds Rs.10,000.
• Section 194 (Dividend): TDS is deducted at 10% if dividend payment exceeds Rs.10,000.
• Section 194A (Interest on Deposits): TDS is applicable at 10% for interest exceeding Rs.1 lakh for senior citizens and Rs.50,000 for others.
• Section 194B/194BB (Lottery & Horse Race Winnings): TDS is deducted at 30% for winnings exceeding Rs.10,000 in a single transaction.
• Section 194BA (Online Gaming): TDS is deducted at 30%, with no threshold limit.
• Section 194C (Contractors/Subcontractors): For individuals or HUFs, TDS is 1%; for others, it is 2%. Threshold limits are Rs.30,000 for a single transaction or Rs.1 lakh in a financial year.
• Section 194D (Insurance Commission): TDS at 2% if commission exceeds Rs.20,000.
• Section 194DA (Life Insurance Payout): 2% TDS is deducted on payments exceeding Rs.1 lakh.
• Section 194EE (NSS Payments): TDS is applicable at 10% for amounts above Rs.2,500.
• Section 194F (Repurchase of Units by UTI/Mutual Fund): TDS is deducted at 20% with no threshold.
• Section 194G/194H (Commission): TDS at 2% if commission exceeds Rs.20,000.
• Section 194-I (Rent): TDS is deducted at 2% for plant & machinery and 10% for land/building/furniture, if monthly rent exceeds Rs.50,000.
• Section 194-IA (Property Transfer): 1% TDS on transactions exceeding Rs.50 lakh.
• Section 194-IB (Rent by individuals/HUFs not covered under 194-I): 2% TDS if monthly rent exceeds Rs.50,000.
• Section 194-IC (Joint Development Agreements): 10% TDS on payments.
• Section 194J (Professional or Technical Services): TDS at 10% for most services; 2% for technical services, call centers, and royalty on cinematographic films.
• Section 194K (Mutual Fund Units): 10% TDS on income exceeding Rs.10,000.
• Section 194LA (Compensation on Land Acquisition): 10% TDS if compensation exceeds Rs.5 lakh.
• Section 194LBA, 194LBB, and 194LBC: Business trusts and investment funds must deduct TDS at 10% on distributions.
• Section 194M (High-Value Individual/HUF Payments): 2% TDS for payments over Rs.50 lakh not covered under 194C/194H/194J.
• Section 194N (Cash Withdrawals): 2% TDS on withdrawals above Rs.1 crore (Rs.3 crore for cooperative societies). For non-ITR filers, 2% TDS above Rs.20 lakh and 5% above Rs.1 crore.
• Section 194O (E-commerce Transactions): 1% TDS on payments above Rs.5 lakh.
• Section 194P (Senior Citizens above 75 Years): TDS based on slab rates.
• Section 194Q (Goods Purchase): 0.1% TDS if the purchase value exceeds Rs.50 lakh.
• Section 194R (Perquisites): 10% TDS on benefits exceeding Rs.20,000.
• Section 194S (Virtual Digital Assets): 1% TDS on transactions above Rs.10,000 (Rs.50,000 for specified individuals).
• Section 194T (Partner’s Remuneration): TDS at 10% on remuneration above Rs.20,000.
TDS Rate Chart – For Non-Residents (Other Than a Company)
When payments are made to non-resident individuals or entities (not companies), different TDS rates are applicable, and generally, no threshold limits apply (except in section 192A).
• Section 192 (Salary): TDS is deducted as per income tax slab rates.
• Section 192A (EPF Withdrawal): TDS at 10% for withdrawals above Rs.30,000.
• Section 194B/194BB: 30% TDS on lottery/horse race winnings.
• Section 194E: 20% on payments to non-resident sportsmen or entertainers.
• Section 194LB/LC/LD: TDS at 5% or 4% on specific interest payments to non-residents.
• Section 195: Covers a wide range of payments including interest, royalty, technical fees, and capital gains to NRIs and other non-residents. TDS ranges from 12.5% to 30% depending on the nature of income.
• Sections 196B, 196C, and 196D: TDS varies from 10% to 20% on income from offshore funds, foreign currency bonds, GDRs, and Foreign Institutional Investors (FIIs).
TDS Rate Chart – For Domestic Companies
Domestic companies are also subject to TDS on various transactions:
• Section 193, 194, and 194A: TDS on interest and dividends at 10%.
• Section 194B/194BB: 30% on winnings.
• Section 194C: 1% for individuals/HUFs and 2% for others.
• Section 194D/DA: 10% and 2% respectively.
• Sections 194EE to 194J: TDS varies from 2% to 20% depending on nature of transaction.
• Section 194K: 10% TDS on mutual fund unit income.
• Section 194LA, 194LBA, 194LBB, 194LBC: 10% TDS on distributions or compensation.
• Section 194M to 194S: Applicable TDS rates range from 0.1% to 10% based on nature and volume of the transaction.
TDS Rate Chart – For Foreign Companies
For foreign companies, TDS must be deducted irrespective of the amount paid. No threshold limit applies. The applicable TDS rates are as follows:
• Section 194B/194BB: 30% for winnings from lotteries or horse races.
• Section 194E: 20% for non-resident sportsmen or entertainers.
• Section 194G: 5% TDS on commission for sale of lottery tickets.
• Section 194LB to 194LD: TDS rates range between 4% and 5% on interest payments.
• Section 195: TDS ranges between 12.5% to 35% based on income type like capital gains, royalty, interest, or technical fees.
• Sections 196B and 196C: TDS ranges from 10% to 12.5% on income from offshore funds and bonds.
• Section 196D: 20% on income from FIIs, excluding dividends and capital gains.
Conclusion
The TDS system ensures timely collection of revenue and reduces chances of tax evasion. Knowing the applicable TDS rates, thresholds, and compliance requirements is essential for businesses, individuals, and deductors. With the revised limits and simplified provisions coming into effect from April 1, 2025, taxpayers must update their accounting systems and ensure timely compliance to avoid penalties.
If you need any support you can connect with Compliance Calendar experts through mail info@ccoffice.in or Call/Whatsapp at +91 9988424211.
FAQs
Q1. What is the basic concept of TDS and why is it deducted?
Ans. TDS stands for Tax Deducted at Source. It is a mechanism introduced by the Income Tax Department to collect tax at the time the income is earned, rather than at a later date. The person making a specified payment is required to deduct tax at a prescribed rate and deposit it with the government. It applies to payments like salary, interest, commission, rent, professional fees, etc. TDS helps in preventing tax evasion and ensures a steady inflow of revenue to the government.
Q2. What are the major TDS changes applicable from April 1, 2025?
Ans. From April 1, 2025, the government has increased the threshold limits for TDS deductions under several sections to reduce the burden on small taxpayers. For example:
• Section 193 (Interest on securities): Threshold increased to Rs.10,000.
• Section 194A (Interest on bank deposits): Now Rs.1 lakh for senior citizens and Rs.50,000 for others.
• Section 194 (Dividend) and 194K (Mutual fund units): Now Rs.10,000. Also, Section 206AB, which earlier imposed higher TDS for non-filers of ITR, has been removed.
Q3. How is TDS deducted on salary income?
Ans. TDS on salary is deducted under Section 192. The employer is responsible for calculating the total salary income of the employee, applying applicable income tax slab rates after considering exemptions, deductions, and rebates, and then deducting TDS accordingly every month. There is no fixed rate – it depends on the taxable salary of the employee.
Q4. What is the TDS rate for rent paid by an individual or HUF?
Ans. There are two provisions depending on the payer:
• Section 194-I: For entities (not individuals/HUF), TDS on rent is:

2% for rent of plant and machinery.

10% for land, building, or furniture.

Threshold: Rent exceeding Rs.50,000 per month.

• Section 194-IB: If an individual or HUF not liable for tax audit pays rent exceeding Rs.50,000/month, TDS of 2% is applicable.
Q5. What is the TDS rate for winnings from lottery or game shows?
Ans. Under Section 194B, if a person receives income from lottery, crossword puzzles, or game shows exceeding Rs.10,000 in a single transaction, TDS at 30% is applicable. For winnings from online games, as per Section 194BA, TDS is also at 30%, with no threshold.
Q6. Is TDS applicable on cash withdrawals?
Ans. Yes, TDS is applicable on cash withdrawals under Section 194N. The rules are:
• For general cases: If withdrawals exceed Rs.1 crore in a year – TDS at 2%.
• For cooperative societies: Threshold is Rs.3 crore.
• If the person has not filed ITRs for the last three years:

Withdrawals above Rs.20 lakh and up to Rs.1 crore – TDS at 2%.

Withdrawals above Rs.1 crore – TDS at 5%.

Q7. How is TDS deducted on purchase of property?
Ans. Under Section 194-IA, if any person (including individuals) purchases an immovable property (excluding agricultural land) for Rs.50 lakh or more, TDS at the rate of 1% of the total sale consideration is to be deducted. The buyer must deposit this TDS with the government using Form 26QB within 30 days from the end of the month in which the payment is made.

Tax Deducted at Source (TDS) is an important part of India’s taxation system. It helps in the collection of tax at the source of income, which minimizes tax evasion and ensures a steady inflow of revenue for the government. This article explains the applicable TDS rates for the Financial Year (FY) 2025-26 (Assessment Year 2026-27), the recent changes effective from April 1, 2025, and how different sections of the Income Tax Act govern TDS deduction for various types of payments.

What is TDS?

TDS stands for Tax Deducted at Source. It refers to the practice where the payer (known as the deductor) deducts a certain percentage of tax before making the actual payment to the receiver (known as the deductee). This system is applicable for various types of payments like salaries, commissions, rent, interest, professional fees, etc. The deductor is responsible for depositing the deducted amount with the government and filing TDS returns on time.

TDS is governed by the provisions of the Income Tax Act, and the rate of deduction depends on the nature of the payment, the recipient's status (resident or non-resident), and the applicable section of the Act.

TDS Changes from 1st April 2025

With effect from April 1, 2025, the government has introduced certain changes in the TDS provisions. The most significant change is the enhancement of threshold limits for TDS deductions across several sections. This step is aimed at reducing the compliance burden for small taxpayers and easing the process of tax collection. Here are some key changes:

• Section 193 (Interest on Securities): Previously, there was no threshold. Now, TDS will be applicable only if the interest exceeds Rs.10,000.

• Section 194A (Interest other than Securities): The threshold has been increased. For senior citizens, it is now Rs.1 lakh, and for others, it is Rs.50,000. If the payer is not a bank, post office, or cooperative society, the threshold is Rs.10,000.

• Section 194 (Dividend) and 194K (Mutual Fund Units): The threshold limit has been increased from Rs.5,000 to Rs.10,000.

• Section 194B and 194BB (Winnings from lottery or horse race): TDS is now applicable for a single transaction exceeding Rs.10,000.

• Section 194D, 194G, and 194H: Threshold limits have increased from Rs.15,000 to Rs.20,000.

• Section 194I (Rent): TDS is now applicable if monthly rent exceeds Rs.50,000.

• Section 194J (Professional/Technical Services): The threshold has increased from Rs.30,000 to Rs.50,000.

• Section 194LA (Enhanced Compensation): The threshold is doubled from Rs.2.5 lakh to Rs.5 lakh.

• Section 206AB: This section, which previously imposed a higher TDS rate on non-filers, has been removed to reduce compliance complexity.

• Section 194LBC: The TDS rate on income from securitization trusts for residents has been reduced to 10%.

TDS Rate Chart – For Residents

This section outlines the TDS rates applicable when the payment is made to a resident individual or entity.

• Section 192 (Salary): TDS is deducted based on the income slab rates applicable to the employee.

• Section 192A (EPF Withdrawal): If the withdrawal is above Rs.50,000, TDS is deducted at 10% (with PAN) or 20% (without PAN).

• Section 193 (Interest on Securities): TDS is deducted at 10% if interest exceeds Rs.10,000.

• Section 194 (Dividend): TDS is deducted at 10% if dividend payment exceeds Rs.10,000.

• Section 194A (Interest on Deposits): TDS is applicable at 10% for interest exceeding Rs.1 lakh for senior citizens and Rs.50,000 for others.

• Section 194B/194BB (Lottery & Horse Race Winnings): TDS is deducted at 30% for winnings exceeding Rs.10,000 in a single transaction.

• Section 194BA (Online Gaming): TDS is deducted at 30%, with no threshold limit.

• Section 194C (Contractors/Subcontractors): For individuals or HUFs, TDS is 1%; for others, it is 2%. Threshold limits are Rs.30,000 for a single transaction or Rs.1 lakh in a financial year.

• Section 194D (Insurance Commission): TDS at 2% if commission exceeds Rs.20,000.

• Section 194DA (Life Insurance Payout): 2% TDS is deducted on payments exceeding Rs.1 lakh.

• Section 194EE (NSS Payments): TDS is applicable at 10% for amounts above Rs.2,500.

• Section 194F (Repurchase of Units by UTI/Mutual Fund): TDS is deducted at 20% with no threshold.

• Section 194G/194H (Commission): TDS at 2% if commission exceeds Rs.20,000.

• Section 194-I (Rent): TDS is deducted at 2% for plant & machinery and 10% for land/building/furniture, if monthly rent exceeds Rs.50,000.

• Section 194-IA (Property Transfer): 1% TDS on transactions exceeding Rs.50 lakh.

• Section 194-IB (Rent by individuals/HUFs not covered under 194-I): 2% TDS if monthly rent exceeds Rs.50,000.

• Section 194-IC (Joint Development Agreements): 10% TDS on payments.

• Section 194J (Professional or Technical Services): TDS at 10% for most services; 2% for technical services, call centers, and royalty on cinematographic films.

• Section 194K (Mutual Fund Units): 10% TDS on income exceeding Rs.10,000.

• Section 194LA (Compensation on Land Acquisition): 10% TDS if compensation exceeds Rs.5 lakh.

• Section 194LBA, 194LBB, and 194LBC: Business trusts and investment funds must deduct TDS at 10% on distributions.

• Section 194M (High-Value Individual/HUF Payments): 2% TDS for payments over Rs.50 lakh not covered under 194C/194H/194J.

• Section 194N (Cash Withdrawals): 2% TDS on withdrawals above Rs.1 crore (Rs.3 crore for cooperative societies). For non-ITR filers, 2% TDS above Rs.20 lakh and 5% above Rs.1 crore.

• Section 194O (E-commerce Transactions): 1% TDS on payments above Rs.5 lakh.

• Section 194P (Senior Citizens above 75 Years): TDS based on slab rates.

• Section 194Q (Goods Purchase): 0.1% TDS if the purchase value exceeds Rs.50 lakh.

• Section 194R (Perquisites): 10% TDS on benefits exceeding Rs.20,000.

• Section 194S (Virtual Digital Assets): 1% TDS on transactions above Rs.10,000 (Rs.50,000 for specified individuals).

• Section 194T (Partner’s Remuneration): TDS at 10% on remuneration above Rs.20,000.

TDS Rate Chart – For Non-Residents (Other Than a Company)

When payments are made to non-resident individuals or entities (not companies), different TDS rates are applicable, and generally, no threshold limits apply (except in section 192A).

• Section 192 (Salary): TDS is deducted as per income tax slab rates.

• Section 192A (EPF Withdrawal): TDS at 10% for withdrawals above Rs.30,000.

• Section 194B/194BB: 30% TDS on lottery/horse race winnings.

• Section 194E: 20% on payments to non-resident sportsmen or entertainers.

• Section 194LB/LC/LD: TDS at 5% or 4% on specific interest payments to non-residents.

• Section 195: Covers a wide range of payments including interest, royalty, technical fees, and capital gains to NRIs and other non-residents. TDS ranges from 12.5% to 30% depending on the nature of income.

• Sections 196B, 196C, and 196D: TDS varies from 10% to 20% on income from offshore funds, foreign currency bonds, GDRs, and Foreign Institutional Investors (FIIs).

TDS Rate Chart – For Domestic Companies

Domestic companies are also subject to TDS on various transactions:

• Section 193, 194, and 194A: TDS on interest and dividends at 10%.

• Section 194B/194BB: 30% on winnings.

• Section 194C: 1% for individuals/HUFs and 2% for others.

• Section 194D/DA: 10% and 2% respectively.

• Sections 194EE to 194J: TDS varies from 2% to 20% depending on nature of transaction.

• Section 194K: 10% TDS on mutual fund unit income.

• Section 194LA, 194LBA, 194LBB, 194LBC: 10% TDS on distributions or compensation.

• Section 194M to 194S: Applicable TDS rates range from 0.1% to 10% based on nature and volume of the transaction.

TDS Rate Chart – For Foreign Companies

For foreign companies, TDS must be deducted irrespective of the amount paid. No threshold limit applies. The applicable TDS rates are as follows:

• Section 194B/194BB: 30% for winnings from lotteries or horse races.

• Section 194E: 20% for non-resident sportsmen or entertainers.

• Section 194G: 5% TDS on commission for sale of lottery tickets.

• Section 194LB to 194LD: TDS rates range between 4% and 5% on interest payments.

• Section 195: TDS ranges between 12.5% to 35% based on income type like capital gains, royalty, interest, or technical fees.

• Sections 196B and 196C: TDS ranges from 10% to 12.5% on income from offshore funds and bonds.

• Section 196D: 20% on income from FIIs, excluding dividends and capital gains.

Conclusion

The TDS system ensures timely collection of revenue and reduces chances of tax evasion. Knowing the applicable TDS rates, thresholds, and compliance requirements is essential for businesses, individuals, and deductors. With the revised limits and simplified provisions coming into effect from April 1, 2025, taxpayers must update their accounting systems and ensure timely compliance to avoid penalties.

If you need any support you can connect with Compliance Calendar experts through mail info@ccoffice.in or Call/Whatsapp at +91 9988424211.

FAQs

Q1. What is the basic concept of TDS and why is it deducted?

Ans. TDS stands for Tax Deducted at Source. It is a mechanism introduced by the Income Tax Department to collect tax at the time the income is earned, rather than at a later date. The person making a specified payment is required to deduct tax at a prescribed rate and deposit it with the government. It applies to payments like salary, interest, commission, rent, professional fees, etc. TDS helps in preventing tax evasion and ensures a steady inflow of revenue to the government.

Q2. What are the major TDS changes applicable from April 1, 2025?

Ans. From April 1, 2025, the government has increased the threshold limits for TDS deductions under several sections to reduce the burden on small taxpayers. For example:

• Section 193 (Interest on securities): Threshold increased to Rs.10,000.

• Section 194A (Interest on bank deposits): Now Rs.1 lakh for senior citizens and Rs.50,000 for others.

• Section 194 (Dividend) and 194K (Mutual fund units): Now Rs.10,000. Also, Section 206AB, which earlier imposed higher TDS for non-filers of ITR, has been removed.

Q3. How is TDS deducted on salary income?

Ans. TDS on salary is deducted under Section 192. The employer is responsible for calculating the total salary income of the employee, applying applicable income tax slab rates after considering exemptions, deductions, and rebates, and then deducting TDS accordingly every month. There is no fixed rate – it depends on the taxable salary of the employee.

Q4. What is the TDS rate for rent paid by an individual or HUF?

Ans. There are two provisions depending on the payer:

• Section 194-I: For entities (not individuals/HUF), TDS on rent is:

2% for rent of plant and machinery.
10% for land, building, or furniture.
Threshold: Rent exceeding Rs.50,000 per month.

• Section 194-IB: If an individual or HUF not liable for tax audit pays rent exceeding Rs.50,000/month, TDS of 2% is applicable.

Q5. What is the TDS rate for winnings from lottery or game shows?

Ans. Under Section 194B, if a person receives income from lottery, crossword puzzles, or game shows exceeding Rs.10,000 in a single transaction, TDS at 30% is applicable. For winnings from online games, as per Section 194BA, TDS is also at 30%, with no threshold.

Q6. Is TDS applicable on cash withdrawals?

Ans. Yes, TDS is applicable on cash withdrawals under Section 194N. The rules are:

• For general cases: If withdrawals exceed Rs.1 crore in a year – TDS at 2%.

• For cooperative societies: Threshold is Rs.3 crore.

• If the person has not filed ITRs for the last three years:

Withdrawals above Rs.20 lakh and up to Rs.1 crore – TDS at 2%.
Withdrawals above Rs.1 crore – TDS at 5%.

Q7. How is TDS deducted on purchase of property?

Ans. Under Section 194-IA, if any person (including individuals) purchases an immovable property (excluding agricultural land) for Rs.50 lakh or more, TDS at the rate of 1% of the total sale consideration is to be deducted. The buyer must deposit this TDS with the government using Form 26QB within 30 days from the end of the month in which the payment is made.