income tax
Published on 25 July 2025
TDS Rates for FY 2025-2026: Complete Guide and Key Changes
TDS Rates for FY 2025–26 (AY 2026–27): What’s Changed and What You Need to Know
Tax Deducted at Source (TDS) continues to play a key role in India’s tax ecosystem. Whether you're a salaried employee, a business owner, or a consultant, it's critical to stay updated on the latest rates, exemptions, and compliance tweaks. With the Union Budget introducing some significant changes this year, here’s a crisp yet complete overview of everything TDS-related for FY 2025–26.
Highlights from the Latest Budget
The government has taken clear steps toward easing compliance—especially for seniors and small investors—while maintaining tight oversight on high-risk or high-income categories.
Key Updates (Effective April 1, 2025):
| Section | Previous Threshold | New Threshold (FY 2025–26) |
|---|---|---|
| 193 – Interest on securities | NIL | ₹10,000 |
| 194A – Bank interest | ₹40k (₹50k for Sr. Citizens) | ₹50k (₹1L for Sr. Citizens) |
| 194 – Dividend | ₹5,000 | ₹10,000 |
| 194K – Mutual funds | ₹5,000 | ₹10,000 |
| 194D – Insurance commission | ₹15,000 | ₹20,000 |
| 194G/194H – Commission | ₹15,000 | ₹20,000 |
| 194J – Professional fees | ₹30,000 | ₹50,000 |
| 194LA – Land acquisition | ₹2.5 lakh | ₹5 lakh |
| 194-I – Rent | ₹2.4 lakh/year | ₹50,000/month |
Additional Rationalisations (From Oct 1, 2024):
| Section | Old Rate | New Rate |
|---|---|---|
| 194H – Commission | 5% | 2% |
| 194M – Certain personal payments | 5% | 2% |
| 194IB – Individual/HUF Rent | 5% | 2% |
| 194-O – E-commerce | 1% | 0.1% |
| 194F – Mutual fund repurchase | Omitted | — |
TDS Rate Chart for FY 2025–26
Here’s a quick-reference table to guide you through the most relevant TDS provisions this year:
| Section | Payment Type | Threshold | TDS Rate |
|---|---|---|---|
| 192 | Salary | Taxable income | As per slab |
| 192A | EPF premature withdrawal | ₹50,000 | 10% |
| 193 | Interest on securities | ₹10,000 | 10% |
| 194 | Dividend | ₹10,000 | 10% |
| 194A | Bank/Post interest | Sr. Citizens: ₹1L<br>Others: ₹50k/₹10k | 10% |
| 194B / 194BA / 194BB | Lottery/Online/Horse wins | ₹10,000 per transaction | 30% |
| 194C | Contractor payments | ₹30k per bill / ₹1L annual | 1% (Ind/HUF), 2% (others) |
| 194D | Insurance commission | ₹20,000 | 5% (Ind), 10% (Companies) |
| 194DA | Life insurance payout (non-exempt) | ₹1L | 5% |
| 194EE | NSS Deposits | ₹2,500 | 10% |
| 194G | Lottery agent commission | ₹20,000 | 5% |
| 194H | Commission/Brokerage | ₹20,000 | 5% (→2% from Oct 1) |
| 194-I | Rent (building/plant) | ₹50k/month | 10% / 2% |
| 194IA | Property sales | ₹50L | 1% |
| 194IB | Rent (by Ind/HUF not liable to audit) | ₹50k/month | 5% (→2% from Oct 1) |
| 194J | Professional/Technical fees | ₹50,000 | 2% (tech), 10% (others) |
| 194K | Mutual Fund Income | ₹10,000 | 10% |
| 194LA | Land acquisition | ₹5 lakh | 10% |
| 194M | Specified personal payments | ₹50 lakh | 5% (→2% from Oct 1) |
| 194N | Cash withdrawals | See below | 2% / 5% |
| 194O | E-commerce sales | ₹5 lakh | 1% (→0.1% from Oct 1) |
| 194Q | Goods purchase | ₹50 lakh | 0.1% |
| 194R | Business perquisites | ₹20,000 | 10% |
| 194S | Virtual Digital Asset (crypto, NFTs) | ₹50k (Ind/HUF) / ₹10k (others) | 1% |
| 195 | Foreign remittances | — | Varies as per treaty/law |
| 206AA | Missing PAN | — | 20% or higher |
| 206AB | Non-filers (3 years) | — | Double section rate or 5% |
Sector-Specific Changes Worth Noting
-
E-commerce (194-O): Reduced rate from 1% to 0.1% eases pressure on sellers starting Oct 2024.
-
Gaming Winnings (194BA): No aggregate cap—30% applies per win, not overall.
-
Rent (194IB): Significant relief for tenants with a new 2% rate for non-audit individuals.
-
Mutual Funds (194F): This section is now scrapped, reducing redundancy.
-
Cash Withdrawals (194N):
- ₹20 lakh threshold for non-filers
- ₹1 crore for regular filers
- ₹3 crore for cooperative societies
Frequently Asked Questions (FAQs)
1. Why is TDS deducted even when I'm under the taxable limit? TDS is deducted based on transaction types and threshold limits—not your final tax liability. You can claim a refund while filing your ITR.
2. What if I don’t provide PAN to the payer? As per Section 206AA, you’ll face TDS at 20% or higher. Always ensure your PAN is linked and shared.
3. Are online game winnings taxed even if small? Yes. From FY 2023–24 onwards, Section 194BA requires 30% TDS per win, regardless of the amount or aggregate total.
4. Can I avoid TDS on FD interest? Submit Form 15G/15H (for senior citizens) if your income is below the taxable limit and you want to avoid TDS on interest.
Quick Reminders for Hassle-Free Compliance
- Always check current thresholds before making or receiving any payment.
- Ensure PAN and KYC details are updated with all deductors.
- File your ITR on time to avoid getting flagged under Section 206AB.
- Maintain TDS certificates (Form 16/16A) and reconcile them with Form 26AS regularly.
In Summary
The TDS structure for FY 2025–26 shows the government's focus on lowering the compliance burden on small taxpayers while keeping strict checks on high-risk income streams like gaming, high-value purchases, and foreign payments.
If you're responsible for making payments—whether as an individual, employer, or business owner—make sure you’re deducting and depositing TDS correctly. It’s one of the easiest ways to stay on the right side of tax laws.