income tax
Published on 22 July 2025
TDS Rate Chart and Key Updates for FY 2025-2026
TDS Rate Chart & Budget 2025 Updates – FY 2025–26 (AY 2026–27)
What Is TDS?
Tax Deducted at Source (TDS) is a way for the government to collect tax right at the point of income generation. The person or entity making the payment deducts tax and deposits it with the Income Tax Department. TDS applies to salaries, interest, rent, commissions, and other types of income.
What's New in FY 2025–26?
Union Budget 2025 introduced significant changes to TDS thresholds and rates to simplify compliance and reduce the burden on small-value transactions. These changes are effective April 1, 2025, unless otherwise noted.
Major Threshold Changes
| Section | Payment Type | Old Limit | New Limit (From FY 25–26) |
|---|---|---|---|
| 193 | Interest on Securities | Nil | ₹10,000 |
| 194A | Bank/Post Office Interest | ₹50,000 (Sr.); ₹40,000 (others) | ₹1,00,000 (Sr.); ₹50,000/₹10,000 |
| 194 | Dividends | ₹5,000 | ₹10,000 |
| 194K | Mutual Fund Distributions | ₹5,000 | ₹10,000 |
| 194B/BB | Lottery/Winnings (each txn) | ₹10,000 (aggregate) | ₹10,000 per transaction |
| 194D/G/H | Commission Types | ₹15,000 | ₹20,000 |
| 194-I | Rent | ₹2.4 lakh/year | ₹50,000/month |
| 194J | Prof./Tech. Fees | ₹30,000 | ₹50,000 |
| 194LA | Property Compensation | ₹2.5 lakh | ₹5 lakh |
Rate Reductions (Effective Oct 1, 2024)
- Commission/Brokerage (194H): 5% → 2%
- Rent by Individuals/HUF (194-IB): 5% → 2%
- Payments by Individuals/HUFs (194M): 5% → 2%
- E-commerce (194-O): 1% → 0.1%
- Mutual Fund Repurchase (194F): Omitted
TDS Rate Chart for FY 2025–26
| Section | Nature of Payment | Threshold | TDS Rate |
|---|---|---|---|
| 192 | Salary | Taxable salary | Based on income slab |
| 192A | EPF Withdrawal | ₹50,000 | 10% |
| 193 | Interest on Securities | ₹10,000 | 10% |
| 194 | Dividend | ₹10,000 | 10% |
| 194A | Bank Interest | ₹1L (Sr.); ₹50K/₹10K (others) | 10% |
| 194B/BA/BB | Lottery/Games/Race Winnings | ₹10,000/txn | 30% |
| 194C | Contractor Payment | ₹30K (single), ₹1L (year) | 1% (Ind/HUF); 2% (others) |
| 194D | Insurance Commission | ₹20,000 | 5% (Ind); 10% (Company) |
| 194DA | Life Insurance Payout | ₹1,00,000 | 5% |
| 194G | Lottery Commission | ₹20,000 | 5% |
| 194H | Commission/Brokerage | ₹20,000 | 2% (from Oct 1, 2024) |
| 194-I | Rent (land/building) | ₹50,000/month | 10% |
| Rent (plant/machinery) | ₹50,000/month | 2% | |
| 194-IA | Transfer of Immovable Property | ₹50 lakh | 1% |
| 194-IB | Rent by Individual/HUF | ₹50,000/month | 2% (from Oct 1, 2024) |
| 194J | Prof./Royalty Fees | ₹50,000 | 2% (tech/royalty), 10% (others) |
| 194K | Mutual Fund Units | ₹10,000 | 10% |
| 194LA | Compensation on Land Acquisition | ₹5,00,000 | 10% |
| 194LB/LBA | Interest (Infra/Business Trust) | — | 5%/10% |
| 194LBB/LBC | Investment Funds / Securitization | — | 10–30% (based on entity) |
| 194M | Payment by Ind/HUF | ₹50 lakh | 2% (from Oct 1, 2024) |
| 194N | Cash Withdrawal | ₹20L/₹1Cr/₹3Cr (co-op) | 2–5% |
| 194-O | E-commerce Transactions | ₹5 lakh | 0.1% (from Oct 1, 2024) |
| 194P | Senior Citizen (75+) | — | Slab rate |
| 194Q | Purchase of Goods | ₹50 lakh | 0.1% |
| 194R | Business Perquisites | ₹20,000 | 10% |
| 194S | Crypto/Digital Assets | ₹50,000 (spec); ₹10,000 (others) | 1% |
| 194T | Partner Remuneration | ₹20,000 | 10% (from FY 25–26) |
| 195 | Non-Resident Payments | — | 20% (varies by DTAA/treaty) |
| 206AA | No PAN Furnished | — | Higher of 20% or section rate |
| 206AB | Non-filers | — | Higher of 5%, section rate, or 2x rate |
Important Notes
- Section 193: TDS now applies to interest from listed debentures.
- Section 194T: Introduced 10% TDS on partner remuneration if paid above ₹20,000/year.
- Cash Withdrawal (194N): Co-op societies get a higher limit—₹3 crore instead of ₹1 crore.
- PAN Not Furnished? Expect 20% TDS or more.
Frequently Asked Questions
1. Is every payment subject to TDS? No. TDS applies only if payment exceeds the threshold under the relevant section.
2. What if the payee doesn’t provide PAN? TDS will be deducted at the higher of the section rate or 20%.
3. How is salary TDS determined? It’s based on your selected tax regime (old/new) and your taxable income after considering deductions.
4. Where can I stay updated? Check the Income Tax Department website, or use reliable portals like ClearTax, Tax2win, or RSM India.
Conclusion
Budget 2025's TDS reforms aim to simplify tax deduction, reduce over-compliance for small payers, and ensure fair taxation. With many thresholds raised and rates lowered, it's crucial for businesses, accountants, and individuals to review payment types, stay compliant, and use digital tools for timely deposits and reporting.