TDS Rate Chart FY 2025-26 (AY 2026-27): Updated Tax Deduction Rates
Author: Editorial Team | in, Updated on: April 05, 2025
Overview : The Financial Year 2025-26 introduces significant changes to India's TDS framework. Key developments include new Section 194T for payments by firms to partners (10% rate), repeal of TCS on Sale of Goods (Section 206C(1H)), and omission of higher TDS rate Sections 206AB and 206CCA for non-filers. Threshold limits have been standardised with monthly rent at ₹50,000 and professional fees increased to ₹50,000 per category annually.
What is TDS and Why It Matters for Indian Taxpayers
Tax Deducted at Source (TDS) is a crucial mechanism implemented by the Indian government to collect income tax directly at the source of payment. When payments such as salary, professional fees, rent, interest, or commissions are made, the payer (known as the deductor) deducts a specified percentage of tax and deposits it directly into the government's account. This system ensures a steady revenue stream for the government while reducing tax evasion by collecting taxes in real time.
Understanding the latest TDS rates is essential for both individuals and businesses to maintain compliance with Indian tax regulations. This comprehensive guide covers all updated TDS rates effective from April 1, 2025, for the Financial Year 2025-26 (Assessment Year 2026-27), incorporating changes introduced in the Finance Act, 2025.
Simplified TDS Rate Chart for FY 2025-26 (Post Finance Act 2025)
The table below provides a quick reference to the most commonly used TDS rates effective from April 1, 2025. These rates apply to various types of payments made during the financial year 2025-26.
| Section | Nature of Payment | Rate (%) | Threshold Limit (₹) |
|---|---|---|---|
| 192 | Salary | Slab Rate | As per the Income Slab |
| 194A | Interest (Bank/PO/Coop Soc) | 10% | ₹1L (Sr. Cit) / ₹50K (Others) |
| 194A | Interest (Others) | 10% | ₹10,000 |
| 194C | Contractor Payments | 1% (Ind/HUF), 2% (Others)% | Single ≥₹30K; Agg. Ann. ≥₹1L |
| 194H | Commission/Brokerage | 2% | ₹20,000 (Ann.) |
| 194-I | Rent (L&B/Furniture) | 10% | ₹50,000 per month |
| 194-I | Rent (Plant & Machinery) | 2% | ₹50,000 per month |
| 194-IB | Rent by Ind/HUF (Not under Audit) | 2% | ₹50,000 per month |
| 194J | Professional/Director/Other Fees | 10% | ₹50,000 (Ann./Category, excl. Dir) |
| 194J | Technical Fees/Royalty(Sale)/Call Ctr | 2% | ₹50,000 (Ann./Category) |
| 194M | Certain Pay by Ind/HUF | 2% | ₹50 Lakhs (Ann.) |
| 194Q | Purchase of Goods | 0.1% (> 50L) | ₹50 Lakhs (Agg. Purch. Ann.) |
| 194R | Business Benefit/Perquisite | 10% | ₹20,000 (Ann.) |
| 194S | Virtual Digital Asset Transfer | 1% | ₹50K (Specified) / ₹10K (Others) (Ann.) |
| 194T (NEW) | Payment by Firm to Partner | 10% | ₹20,000 (Ann.) |
Comprehensive TDS Rate Chart: FY 2025-26 (Assessment Year 2026-27)
(Effective 1st April 2025 - Incorporating all changes)
For a more detailed understanding, the comprehensive chart below outlines all TDS rates and threshold limits under various sections of the Income Tax Act, 1961. This includes all changes introduced in the Finance Act, 2025 (effective April 1, 2025) and the Finance (No. 2) Act, 2024 (effective October 1, 2024).
| Section | Nature of Payment | Rate (%) | Threshold Limit (Rupees) |
|---|---|---|---|
| 192 | Salary Payments | Applicable Income Tax Slab Rate | Basic Exemption Limit as per Income Tax Slab |
| 192A | Premature EPF Withdrawal (if service is less than 5 years) | 10% | Exceeding 50,000 |
| 193 | Interest on Securities | 10% | Exceeding 10,000 (Annual Aggregate) |
| 194 | Dividend (other than dividend under Section 115-O) | 10% | Exceeding 10,000 (Annual Aggregate) |
| 194A | Interest (Other than Interest on Securities) | 10% |
|
| 194B | Winnings from Lotteries, Crossword Puzzles, Gambling, Betting etc. | 30% | Exceeding 10,000 (Per single transaction) |
| 194BA | Winnings from Online Gaming | 30% (Calculated on Net Winnings) | No Threshold |
| 194BB | Winnings from Horse Races | 30% | Exceeding 10,000 (Per single transaction/race) |
| 194C | Payment to Contractors / Sub-contractors | 1% (Individual/HUF Payee), 2% (Other Payees) |
|
| 194D | Insurance Commission | 5% (Other Payees), 10% (Company Payees) | Exceeding 20,000 (Annual Aggregate) |
| 194DA | Payment regarding Life Insurance Policy (Not exempt u/s 10(10D)) | 2% (on the taxable income component) | Aggregate Payment during the year is 1,00,000 or more |
| 194G | Commission, etc., on Sale of Lottery Tickets | 2% | Exceeding 20,000 (Annual Aggregate) |
| 194H | Commission or Brokerage (other than Insurance Commission) | 2% | Exceeding 20,000 (Annual Aggregate) |
| 194-I | Rent of Plant & Machinery | 2% | Exceeding 50,000 per month |
| 194-I | Rent of Land, Building, Furniture or Fittings | 10% | Exceeding 50,000 per month |
| 194-IA | Payment on Transfer of Immovable Property (other than Agricultural Land) | 1% (on Consideration or Stamp Duty Value, whichever is higher) | 50 Lakhs or more |
| 194-IB | Rent by Individual/HUF (not liable to tax audit) | 2% | Exceeding 50,000 per month |
| 194J | Fees - Professional / Royalty (not sale) / Director / Non-compete | 10% | Exceeding 50,000 (Per category per year, no threshold for Director fees) |
| 194J | Fees - Technical / Royalty (sale etc) / Call Centre | 2% | Exceeding 50,000 (Per category per year) |
| 194K | Income from Units of Mutual Fund/Specified Undertaking/Company | 10% | Exceeding 10,000 (Annual Aggregate) |
| 194LA | Compensation on Acquisition of Immovable Property | 10% | Exceeding 5,00,000 (Annual Aggregate) |
| 194LBC | Income from Investment in Securitisation Trust | 10% | No Threshold |
| 194M | Payment (Contract/Comm./Prof. Fees) by specified Ind./HUF | 2% | Exceeding 50 Lakhs (Annual Aggregate) |
| 194N | Cash Withdrawal from Bank/Post Office/Co-op Society | 2% (or 5% if ITR non-filer & >1 Cr) | Exceeding 1 Crore (General) / 20 Lakhs (ITR Non-Filer) (Annual Aggregate) |
| 194-O | Payment by E-commerce Operator to Participant | 0.1% (of Gross Sales/Services Amount) | Exceeding 5 Lakhs (Annual Agg. for Ind/HUF Participant with PAN/Aadhaar) |
| 194P | Tax Deduction by Bank for Specified Senior Citizens (75+) | Applicable Income Tax Slab Rate | Conditions Apply (Not a Monetary Threshold) |
| 194Q | TDS on Purchase of Goods by specified Buyer | 0.1% (on purchase value exceeding 50L) | Buyer's Turnover > 10 Crore AND Purchase Value Exceeds 50 Lakhs (Annual Aggregate) |
| 194R | Benefit or Perquisite from Business or Profession | 10% | Exceeding 20,000 (Annual Aggregate Value) |
| 194S | Payment on Transfer of Virtual Digital Asset (VDA) | 1% (of Consideration) | Specified Payer: Exceeding 50,000 / Others: Exceeding 10,000 (Annual Aggregate) |
| 194T | Payment by Firm to Partner (Salary, Bonus, Commission, Interest etc.) | 10% | Exceeding 20,000 (Annual Aggregate) |
| 194F | Omitted (w.e.f. 01-Oct-2024) | - | - |
| 206AB | Omitted (w.e.f. 01-Apr-2025) | - | - |
| 206CCA | Omitted (w.e.f. 01-Apr-2025) | - | - |
Important Notes:
- PAN/Aadhaar : If the payee does not provide a valid PAN/Aadhaar, TDS rates may increase significantly (often 20% or the applicable rate, whichever is higher, per Sec 206AA), with some exceptions.
- Specified Entity/Person : Generally exempts certain individuals/HUFs below tax audit thresholds from deducting TDS under specific sections.
- Section 206C(1H) : TCS on Sale of Goods is repealed w.e.f. 01.04.2025. Only Sec 194Q applies where relevant.
- Disclaimer : This chart is for informational purposes based on the provided content. Tax laws are complex. Consult official sources or professional advice.
Due Date and Interest on Delayed Payment
The deducted TDS must be deposited with the government by the 7th of the following month, except for deductions made in March, which should be deposited by the 30th of April. If TDS payment is delayed, interest at the rate of 1.5% per month or part of the month is charged from the due date until the actual payment date.
Consequences of Non-Compliance with TDS Provisions
Failure to comply with TDS provisions can lead to several serious consequences, including penalties, interest payments, and disallowance of expenses. The deductor may have to pay penalty amounts equal to the amount of tax not deducted or deposited. Non-compliance can also lead to prosecution under income tax laws, affecting both reputation and operational stability.
Setindiabiz offers comprehensive TDS Compliance Services
Our dedicated tax professionals ensure accurate TDS deductions, timely payments, and hassle-free compliance, protecting your business from penalties and legal complications. Partner with Setindiabiz for seamless TDS management and complete peace of mind in your tax compliance journey.
- Expert guidance on applicable TDS rates and exemptions
- Timely reminders for TDS deduction and deposit deadlines
- End-to-end support for TDS return filing
- Assistance with lower deduction certificate applications
- Resolution of TDS-related notices and demands
Conclusion
The TDS framework for FY 2025-26 reflects India's move toward a simplified tax regime while maintaining effective revenue collection. Setindiabiz offers expert TDS compliance solutions, including guidance on applicable rates, return filing support, assistance with lower deduction certificates, and notice resolution. Our professionals ensure accurate deductions and timely compliance, protecting your business while you focus on growth.
Disclaimer: This information is based on the Income Tax Act, 1961, and incorporates changes introduced in the Finance Act, 2025. While we strive for accuracy, tax laws are complex and subject to interpretation. We recommend consulting with a tax professional for advice specific to your situation.
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Author Bio
Editorial Team | in
Setindiabiz Editorial Team is a multidisciplinary collective of Chartered Accountants, Company Secretaries, and Advocates offering authoritative insights on India’s regulatory and business landscape. With decades of experience in compliance, taxation, and advisory, they empower entrepreneurs and enterprises to make informed decisions.