Tax Deducted at Source (TDS) is a mechanism where the payer deducts tax at the time of payment and deposits it with the government. As an employer, contractor, tenant, or business owner, you must deduct TDS at the correct rate before making payments to individuals and entities. Here is the complete TDS rate chart for FY 2025-26 (AY 2026-27).
Important: Budget 2025 made several changes to TDS rates effective April 1, 2025. Always verify current rates for new financial years, as rates can change.
Key TDS Sections — Salary and Employment
| Section | Nature of Payment | Threshold | TDS Rate |
|---|
| 192 | Salary to employees | Basic exemption limit | As per income tax slab |
| 192A | Premature EPF withdrawal | ₹50,000 | 10% (30% if no PAN) |
| 194J | Director fees (not salary) | ₹30,000 | 10% |
TDS on Contractor and Professional Payments
| Section | Nature of Payment | Threshold | TDS Rate |
|---|
| 194C | Payment to contractors (individual/HUF) | ₹30,000 single / ₹1,00,000 annual | 1% |
| 194C | Payment to contractors (others) | ₹30,000 single / ₹1,00,000 annual | 2% |
| 194J | Professional fees / technical services | ₹30,000 per year | 10% |
| 194J | Fee for technical services (FTS) | ₹30,000 per year | 2% |
| 194J | Royalty for sale / distribution of films | ₹30,000 per year | 2% |
TDS on Rent and Property
| Section | Nature of Payment | Threshold | TDS Rate |
|---|
| 194I(a) | Rent — plant, machinery, equipment | ₹2,40,000 per year | 2% |
| 194I(b) | Rent — land, building, furniture | ₹2,40,000 per year | 10% |
| 194IB | Rent paid by individuals/HUF (not audit cases) | ₹50,000 per month | 5% |
| 194IC | Payment under Joint Development Agreement | No threshold | 10% |
TDS on Interest and Dividends
| Section | Nature of Payment | Threshold | TDS Rate |
|---|
| 193 | Interest on securities | ₹10,000 | 10% |
| 194 | Dividend from domestic company | ₹5,000 | 10% |
| 194A | Interest from banks/post office | ₹40,000 (₹50,000 for seniors) | 10% |
| 194A | Interest from cooperative societies | ₹40,000 | 10% |
| 194A | Interest from others | ₹5,000 | 10% |
TDS on Property Purchase and Sale
| Section | Nature of Payment | Threshold | TDS Rate |
|---|
| 194IA | Purchase of immovable property (buyer deducts) | ₹50,00,000 | 1% |
| 194LA | Compulsory land acquisition compensation | ₹2,50,000 | 10% |
TDS on E-Commerce and Digital Payments
| Section | Nature of Payment | Threshold | TDS Rate |
|---|
| 194O | E-commerce operator to participant | ₹5,00,000 | 1% |
| 194P | Senior citizen (>75 yrs) bank deduction | Applicable slab | As per slab |
| 194Q | Purchase of goods (buyer with >₹10 crore turnover) | ₹50,00,000 per vendor | 0.1% |
TDS on Lottery, Games, and Other Payments
| Section | Nature of Payment | Threshold | TDS Rate |
|---|
| 194B | Lottery, crossword puzzle winnings | ₹10,000 | 30% |
| 194BB | Horse race winnings | ₹10,000 | 30% |
| 194BA | Online gaming winnings | No threshold | 30% |
| 194D | Insurance commission | ₹15,000 | 5% |
| 194DA | Maturity of life insurance policy | ₹1,00,000 | 5% (on income portion) |
| 194EE | NSS withdrawal | ₹2,500 | 10% |
| 194G | Commission on lottery ticket sale | ₹15,000 | 5% |
| 194H | Commission or brokerage | ₹15,000 | 5% |
TDS on NRI and Foreign Payments
| Section | Nature of Payment | Threshold | TDS Rate |
|---|
| 195 | Payment to non-residents (royalty, interest, etc.) | No threshold | As per DTAA / 20–30% |
| 194E | Payments to non-resident sportsmen/entertainers | No threshold | 20% |
| 196A | Income from units to NRI | No threshold | 20% |
Key Rules for TDS Compliance
Deduction timing: Deduct TDS at the time of payment OR credit to the payee's account — whichever is earlier.
Deposit deadline: Deposit TDS with the government by the 7th of the following month (for March: April 30).
TDS Returns: File quarterly returns — Form 24Q (salary), Form 26Q (non-salary residents), Form 27Q (NRI payments).
TDS Certificate: Issue Form 16 (salary) by June 15 and Form 16A (non-salary) within 15 days of due date of quarterly return.
Higher TDS (Section 206AA): If PAN is not furnished, TDS is deducted at 20% or the applicable rate — whichever is higher.
Penalties for TDS Non-Compliance
- ▸Late deduction (Section 201): Interest at 1% per month from the date tax was deductible to date of actual deduction
- ▸Late deposit (Section 201): Interest at 1.5% per month from the date of deduction to date of deposit
- ▸Late filing of TDS return (Section 234E): ₹200 per day (max = TDS amount)
- ▸Non-filing of TDS return: Penalty ₹10,000 to ₹1,00,000 under Section 271H
- ▸Wrong PAN furnished: Penalty under Section 272B
Conclusion
Correct TDS deduction, timely deposit, and quarterly return filing are critical obligations for every employer, contractor, and business. Errors in TDS attract interest, penalties, and income tax notices for both the deductor and deductee.
Biswa Corporate Solutions handles complete TDS compliance — monthly deduction calculation, challan payment, quarterly returns (24Q/26Q), and Form 16/16A issuance. Contact us for a free TDS compliance consultation.
