Tax Deducted at Source (TDS) is a mechanism implemented by the Indian government to collect taxes at the source of income generation. Under this system, a person (deductor) responsible for making specified payments to another person (deductee) is required to deduct a certain percentage of tax before making the payment and remit it to the government.This ensures a steady inflow of revenue to the government and minimizes tax evasion.
The TDS rates and threshold limits are specified under various sections of the Income Tax Act, 1961, and are subject to amendments through Finance Acts. For the Financial Year (FY) 2025-26 (Assessment Year 2026-27), the applicable TDS rates and thresholds are as follows:
TDS Rate Chart for FY 2025-26 (AY 2026-27):
| Section | Nature of Payment | Threshold Limit (₹) | TDS Rate (%) |
| 192 | Salary | As per slab rates | As per slab rates |
| 192A | Premature withdrawal from EPF | 50,000 | 10 |
| 193 | Interest on securities | 10,000 | 10 |
| 194 | Dividend | 10,000 | 10 |
| 194A | Interest other than on securities (Banks) | 40,000 (50,000 for senior citizens) | 10 |
| 194B | Winnings from lotteries, crossword puzzles, etc. | 10,000 | 30 |
| 194BB | Winnings from horse races | 10,000 | 30 |
| 194C | Payment to contractors/sub-contractors | 30,000 (single transaction) or 1,00,000 (aggregate) | 1 (Individuals/HUF), 2 (Others) |
| 194D | Insurance commission | 15,000 | 5 |
| 194H | Commission or brokerage | 15,000 | 5 |
| 194I | Rent | 2,40,000 | 2 (Plant & Machinery), 10 (Land, Building, Furniture) |
| 194J | Fees for professional or technical services | 30,000 | 10 |
| 194N | Cash withdrawals | 1 crore | 2 |
Key Changes Effective from 1st April 2025:
- Section 194D (Insurance Commission): The threshold limit for TDS deduction has been increased from ₹15,000 to ₹20,000.
- Section 194G (Commission on Lottery Tickets): The threshold limit has been raised from ₹15,000 to ₹20,000.
- Section 194H (Commission or Brokerage): The threshold limit has been increased from ₹15,000 to ₹20,000.
- Section 194-I (Rent): The threshold limit for TDS on rent has been increased from ₹2.4 lakh per year to ₹6 lakh per year.
- Section 194A (Interest other than on securities): For senior citizens, the threshold limit has been increased from ₹50,000 to ₹1,00,000.
Notes:
- The TDS rates mentioned are applicable when the deductee has provided their Permanent Account Number (PAN). In cases where PAN is not furnished, TDS is deducted at a higher rate, typically 20%.
- The above chart includes some of the most commonly applicable TDS sections. For a comprehensive list of all sections and applicable rates, it is advisable to consult the Income Tax Department’s official resources or seek guidance from a tax professional.
- TDS is not applicable if the total income of the deductee is below the taxable limit, and they have submitted Form 15G/15H as applicable.
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