TDS Rates & Sections — FY 2025-26
Tax Deducted at Source (TDS) is a mechanism where the payer deducts a prescribed percentage of tax from the payment made to the payee and deposits it with the Income Tax Department. This creates a trail of transactions and ensures taxes are collected at the source of income rather than at the end of the year.
Key TDS Sections and Rates
| Section | Nature of Payment | TDS Rate | Threshold |
|---|---|---|---|
| 192 | Salary | As per slab | Basic exemption limit |
| 194A | Interest (Bank / Other) | 10% | ₹40,000 (₹50,000 senior) |
| 194C | Contractor (Individual/HUF) | 1% | ₹30,000 single / ₹1L p.a. |
| 194C | Contractor (Others) | 2% | ₹30,000 single / ₹1L p.a. |
| 194H | Commission / Brokerage | 5% | ₹15,000 |
| 194I(a) | Rent — Plant & Machinery | 2% | ₹2,40,000 p.a. |
| 194I(b) | Rent — Land / Building | 10% | ₹2,40,000 p.a. |
| 194IA | Immovable Property Transfer | 1% | ₹50,00,000 |
| 194J(a) | Technical / Call Centre Fees | 2% | ₹30,000 |
| 194J(b) | Professional Fees | 10% | ₹30,000 |
| 194O | E-Commerce Seller Payments | 1% | — |
| 194Q | Purchase of Goods | 0.1% | ₹50,00,000 |
| 194R | Benefit / Perquisite to Business | 10% | ₹20,000 |
| 194S | Crypto / VDA Transfer | 1% | ₹10,000 / ₹50,000 |
The No-PAN Rule — Section 206AA
If the person receiving the payment (deductee) does not provide their Permanent Account Number (PAN), Section 206AA mandates that TDS be deducted at the higher of: the rate specified in the relevant section, the rate in force, or 20%. This makes providing PAN essential for anyone receiving payments above TDS threshold limits.
TDS Threshold Limits — When Does TDS Apply?
TDS applies only when the payment in a financial year crosses the specified threshold. For example, TDS under 194J (professional fees) kicks in only if the total payment to a single person crosses ₹30,000 in the year. Below that, TDS is not required. However, once the threshold is crossed, TDS applies on the entire amount from the first payment, not just the excess.
Who Must Deduct TDS?
The obligation to deduct TDS depends on the section:
- All persons must deduct TDS on rent above ₹2.4 lakh under 194I (if liable for tax audit or specified entity)
- All persons must deduct TDS under 194IA on property purchase above ₹50 lakh
- Businesses liable for tax audit must deduct under 194C, 194J, 194H
- Individuals not under audit are generally exempt from 194C/194J unless turnover exceeds ₹1 crore (business) or ₹50 lakh (profession)
TDS Deposit — Due Dates
TDS deducted must be deposited by the 7th of the following month (for all months except March). TDS for March must be deposited by 30 April. Late deposit attracts interest at 1.5% per month under Section 201(1A).
Claiming TDS as the Payee — Form 16 / Form 16A
As the deductee (payee), the TDS deducted from your income is reflected in Form 26AS and Annual Information Statement (AIS) on the Income Tax portal. You claim it when filing your ITR — the TDS is treated as advance tax paid against your final tax liability. If TDS exceeds your tax liability, you get a refund.
- Form 16: TDS certificate for salary (issued by employer, annually)
- Form 16A: TDS certificate for non-salary payments (issued quarterly by deductor)