The TDS Rate Chart for FY 2025-26 has undergone significant changes that affect millions of taxpayers. The government has revised several threshold limits and rates in the latest update, with one of the most notable changes relating to interest income. The threshold for deduction of tax on interest earned from banks, post offices, and certain financial institutions has been increased:
- For Individuals below 60 years: ₹40,000 per financial year.
- For Senior Citizens (60 years and above): ₹50,000 per financial year.
Furthermore, these changes aim to reduce compliance burden while ensuring better tax collection efficiency.
Did You Know?
TDS contributes to nearly 35% of India’s total direct tax collection, making it one of the most crucial revenue mechanisms for the government. Additionally, over 2 crore TDS certificates are issued annually across various income categories.
The Tax Deducted at Source (TDS) system ensures that income tax is collected at the point of income generation itself. In this blog, we discuss the latest TDS Rates for the financial year 2025-2026 in different categories and sections.
Key Changes in CBDT TDS Rates for FY 2025-26
The Budget 2025 introduced several important modifications to the TDS Rate Chart managed by the Central Board of Direct Taxes (CBDT). Consequently, taxpayers must understand these changes to ensure proper compliance.
| Section | Nature of Payment | Previous Threshold | New Threshold | Previous Rate | New Rate | Effective Date |
| 194A | Interest | ₹40,000 | ₹50,000 | 10% | 10% | April 1, 2025 |
| 194I | Rent | ₹2,40,000 (annually) | ₹50,000 (monthly) | 10% | 10% | April 1, 2025 |
| 194J | Professional Services | ₹30,000 | ₹50,000 | 10% | 10% | April 1, 2025 |
| 194H | Commission/Brokerage | ₹15,000 | ₹20,000 | 5% | 2% | October 1, 2024 |
| 194T | Partner Payments | N/A | ₹20,000 | N/A | 10% | April 1, 2025 |
| 194LBC | Infrastructure Investment Trust | Various | Uniform | Various | 10% | April 1, 2025 |
| 206AB/206CCA | Higher TDS for Non-filers | Applicable | Omitted | 20%/5% | Removed | April 1, 2025 |
New TDS Rate Chart Threshold Changes
As per the latest TDS rate chart for FY 2025-26, the government has focused on easing compliance and improving cash flow for individuals and businesses. These updates, reflected in the CBDT TDS rate chart 2025-26, are especially relevant for salaried taxpayers, investors, landlords, and small businesses.
1. Section 194A – Interest Payments
Budget 2025 increases TDS thresholds on interest income for various payers and senior citizens, effective April 1, 2025.
Impact:
- Previous Threshold: ₹40,000 annually.
- New Threshold: ₹50,000 annually.
- Rate: Remains 10%.
- Benefit: Individual depositors will face fewer frequent TDS deductions, improving cash flow.
- Coverage: Applies to interest from banks, cooperative societies, and post office deposits.
2. Section 194I – Rent Payments
Section 194-I amendment raises rent TDS threshold to Rs. 50,000 per month, effective April 2025.
Major Change Analysis:
- Previous: ₹2,40,000 annually (₹20,000 per month).
- New: ₹50,000 monthly (₹6,00,000 annually).
- Rate: Continues at 10%.
- Significant Impact: This represents a 150% increase in the annual threshold.
- Practical Effect:
- Many small property owners will no longer face TDS.
- Reduced compliance burden for tenants.
- Better cash flow for the property rental market.
3. Section 194J – Professional Services
Section 194J increases the tax deduction threshold for professional services, technical services, royalty, and sums under section 28 from Rs. 30,000 to Rs. 50,000.
Detailed Impact:
- Previous Threshold: ₹30,000 annually.
- New Threshold: ₹50,000 annually.
- Rate: Maintains 10%.
- Coverage Expansion:
- Professional fees (CA, lawyers, consultants)
- Technical services
- Royalty payments
- Advertising payments
- Business Benefit: Reduced administrative burden for small service providers.
4. Section 194T – New Introduction
Section 194T was introduced in Budget 2024 to broaden the tax base and enhance compliance among partnership firms and LLPs. This section mandates that TDS be deducted at a rate of 10% on payments made to partners.
New Provision Details:
- Threshold: ₹20,000 annually.
- Rate: 10%.
- Applicability: Partnership firms and LLPs making payments to partners.
- Purpose: Enhanced tax compliance in partnership structures.
TDS Rate Chart for Residents
The TDS Rate Chart for residents forms the backbone of the domestic tax deduction.
Below is the table for various income categories:
| Section | Nature of Payment | Threshold Limit (₹) | TDS Rate | Key Details |
| 192 | Salary | 2,50,000 (Old Tax Regime) | When PAN is not furnished | Basic exemption limit |
| 192A | EPF/PPF Withdrawal | No threshold | 20% | The rate depends on payee type |
| 193 | Interest on Securities | 10,000 | 10% | Debentures: ₹5,000 limit, Savings Bonds: ₹10,000 limit |
| 194 | Dividend | 10,000 | 10% | For individual shareholders |
| 194A | Bank Interest | Bank/Co-op/Post Office: 50,000 (1,00,000 for senior citizens) Others: 10,000 | 10% | Enhanced limits from April 2025 |
| 194B | Lottery/Crossword Winnings | 10,000 | 30% | Per single transaction (not aggregate) |
| 194BB | Horse Race Winnings | 10,000 | 30% | Per single transaction (not aggregate) |
| 194C | Contractor Payments | Individual/HUF: 30,000 Others: 75,000 | Individual/HUF: 1% Company: 2% | The rate depends on the payee type |
| 194D | Insurance Commission | 20,000 | 5% | Enhanced threshold from ₹15,000 |
| 194G | Commission on Lottery Sale | 20,000 | 5% | Enhanced threshold from ₹15,000 |
| 194H | Commission/Brokerage | 20,000 | 2% | Rate reduced from 5% to 2% (Oct 2024) |
| 194I | Rent Payment | 50,000 (monthly) | 10% | Changed from annual ₹2,40,000 to monthly ₹50,000 |
| 194IA | Property Purchase | 50,00,000 | 1% | Real estate transactions |
| 194IB | Property Rent | 50,000 (monthly) | 5% | Separate from 194I |
| 194J | Professional Services | 50,000 | 10% | CA, lawyer, architect, etc. |
| 194J | Technical Services | 50,000 | 2% | Engineering, technical consultancy |
| 194K | Mutual Fund Units | 10,000 | 10% | Enhanced threshold from ₹5,000 |
| 194LA | Land Acquisition Compensation | 5,00,000 | 10% | Enhanced threshold from ₹2,50,000 |
| 194LBC | Securitization Trust Income | No threshold | 10% | Uniform rate for all residents (previously 25%/30%) |
| 194M | Contractor Payment by Individuals | 50,00,000 | 5% | Only for individual/HUF contractors |
| 194N | Cash Withdrawal | 1,00,00,000 | 2% | From bank accounts |
| 194O | E-commerce Transactions | 5,00,000 | 1% | Platform operator to seller |
| 194Q | Purchase of Goods | 50,00,000 | 0.1% | Business purchases |
| 194R | Benefits/Perquisites | 20,000 | 10% | Non-cash benefits |
| 194S | Cryptocurrency | 10,000 | 1% | Virtual digital assets |
| 194T | Partner Payments | 20,000 | 10% | New section effective April 1, 2025 |
TDS Rate Chart for Non-Residents
Non-residents face different TDS rates under the TDS Rate Chart. Notably, no threshold limits apply to most non-resident payments:
| Section | Nature of Payment | Threshold Limit | TDS Rate | Additional Details |
| 192A | Salary to NRI | ₹2,50,000 | When an individual/HUF is payer | When an individual/HUF is the payer |
| 193 | Interest on Securities | No threshold | 10% | Government securities, debentures |
| 194A | Interest (other than securities) | No threshold | 20% | Bank deposits, fixed deposits |
| 194B | Lottery/Crossword Winnings | No threshold | 30% | All winnings from games of chance |
| 194BB | Horse Race Winnings | No threshold | 30% | Winnings from horse racing |
| 194C | Contractor Payments | No threshold | 30% | Construction, supply contracts |
| 194D | Insurance Commission | No threshold | 20% | All insurance-related commissions |
| 194E | Payments to Non-Residents in Sports | No threshold | 20% | Sports personalities, events |
| 194F | Payments on Mutual Fund Units | No threshold | 20% | Repurchase of mutual fund units |
| 194G | Commission on Lottery | No threshold | 30% | Lottery ticket sales commission |
| 194H | Commission/Brokerage | No threshold | 5% | All brokerage and commission payments |
| 194I | Rent to NRI | No threshold | 30% | Property rental payments |
| 194J | Professional Services | No threshold | 10% | CA, legal, medical, architectural |
| 194J | Technical Services | No threshold | 10% | Engineering, IT, consultancy |
| 194K | Mutual Fund Income | No threshold | 20% | Dividend, capital gains from MF |
| 194LA | Land Acquisition Compensation | No threshold | 20% | Compensation for land acquisition |
| 194LB | Infrastructure Debt Fund | No threshold | 5% | Income from IDF units |
| 194LC | Securitisation Trust Income | No threshold | 25% | Income from securitization trusts |
| 194LD | Interest on Infrastructure Bonds | No threshold | 5% | Interest on notified bonds |
| 194M | Contract Payments by Individuals | No threshold | 30% | When an individual/HUF is the payer |
| 194N | Cash Withdrawals | No threshold | 30% | Large cash withdrawals |
| 194O | E-commerce Transactions | No threshold | 30% | Platform payments to sellers |
| 195 | Other Income to NRI | No threshold | 30% | Catch-all provision for unlisted payments |
Salary TDS Rate Chart for FY 2025-26
TDS on salary isn’t a fixed rate like other sections. It’s calculated based on individual tax liability after considering allowances, deductions (like standard deduction, HRA), and exemptions.
| Income Range | Tax Rate |
|---|---|
| Up to ₹4,00,000 | 0% |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
TDS Rate Chart for Domestic Companies (Domestic and Foreign)
The TDS Rate Chart distinguishes between domestic and foreign companies. This distinction ensures appropriate tax treatment based on ClearTax guidelines:
Complete TDS Rate Chart for Domestic Companies
| Section | Nature of Payment | Threshold Limit (₹) | TDS Rate |
| 193 | Interest on Securities | 10,000 | 10% |
| 194A | Interest other than Securities | 5,000 | 10% |
| 194C | Payments to Contractors | 30,000 | 2% |
| 194D | Insurance Commission | 20,000 | 5% |
| 194G | Commission on Lottery | 20,000 | 5% |
| 194H | Commission/Brokerage | 20,000 | 2% |
| 194I | Rent | 50,000 (monthly) | 10% |
| 194J | Professional Services | 50,000 | 10% |
| 194J | Technical Services | 50,000 | 2% |
| 194K | Mutual Fund Income | 10,000 | 10% |
| 194LA | Compensation for Land | 5,00,000 | 10% |
Complete TDS Rate Chart for Foreign Companies
| Section | Nature of Payment | Threshold Limit | TDS Rate |
| 194E | Payment to Non-Resident Sportsmen | NIL | 20% |
| 194F | Units of Mutual Fund | NIL | 20% |
| 194G | Commission on Lottery | NIL | 30% |
| 194H | Commission/Brokerage | NIL | 5% |
| 194I | Rent | NIL | 30% |
| 194J | Professional Services | NIL | 10% |
| 194J | Technical Services | NIL | 20% |
| 194K | Income from Units | NIL | 20% |
| 194LB | Infrastructure Debt Fund | NIL | 5% |
| 194LC | Income from Securitisation Trust | NIL | 25% |
| 194LD | Interest on Rupee-Denominated Bonds | NIL | 5% |
| 195 | Other Income to Non-Residents | NIL | 30% |
GST TDS vs Income Tax TDS
Tax Deducted at Source (TDS) operates differently under GST and Income Tax regimes, each serving distinct purposes in India’s tax ecosystem. While both involve deduction of tax at the source of payment, they differ significantly in their application, rates, procedures, and compliance requirements. Here’s a detailed comparison highlighting the key differences between GST TDS and Income Tax TDS.
| Aspect | GST TDS | Income Tax TDS |
| Rate Structure | Uniform 2% across all supplies | Payment value, excluding taxes in most cases |
| Threshold Limit | ₹2,50,000 per contract for supplies | Varies by section – ₹30,000 for professional services, ₹1,80,000 for rent, ₹2,40,000 for salary, etc. |
| Deduction Base | Total invoice value including GST | Payment value, excluding taxes, in most cases |
| Credit Utilization | Available as a tax credit against income tax liability | Available as an Input Tax Credit (ITC) to the supplier |
| Filing Requirements | GSTR-7 monthly return by the 10th of the following month | Quarterly TDS returns (24Q, 26Q, 27Q) and annual TCS return (27EQ) |
| Applicability | Only government entities, local authorities, and notified persons/entities | Quarterly – by the 7th of April, July, October, and January |
| Certificate Issuance | Indirect tax on the supply of goods/services | Form 16/16A certificates issued by deductors |
| Payment Timeline | TDS certificate through the GST portal | By the 10th of the month following deduction |
| PAN Requirement | GSTIN of the supplier is required | PAN of deductee mandatory for TDS deduction |
| Nature of Tax | Through the regular GST refund mechanism | Direct tax on income earned |
| Refund Process | Through income tax return filing or a separate refund application | Separate TDS audit if the threshold exceeded |
| Penalty for Non-compliance | Interest at 18% per annum plus penalty up to ₹10,000 | Interest at 1.5% per month plus a penalty equal to the TDS amount |
| Audit Requirements | Part of regular GST audit | Limited to B2B supplies above the threshold |
| Set-off Mechanism | Can be set off against GST liability | Can be set off against income tax liability only |
| Registration Impact | Does not require separate registration | May require TAN (Tax Deduction Account Number) |
| Scope of Deduction | Supplier can recover GST TDS from the buyer | Covers salary, rent, professional fees, commission, interest, etc. |
| Documentation | Invoice with TDS details | Challan, certificate, and return filing |
| Recovery from Deductee | Generally not recoverable from the payee | Long-established system since the Income Tax Act inception |
| Applicability Timeline | Effective from October 1, 2018 | Separate TDS audit if the threshold is exceeded |
TDS Rate on Brokerage
The TDS rate on brokerage has seen significant changes in the current financial year.
Understanding these modifications is crucial for businesses:
Section 194H – Commission or Brokerage
- Current Rate: 2% (reduced from 5%).
- Threshold: ₹20,000 (increased from ₹15,000).
- Effective Date: October 1, 2024.
Types of Brokerage Covered
- Real estate brokerage
- Insurance brokerage
- Stock market brokerage
- General commercial brokerage
Exception: Commission paid to directors as remuneration attracts a 194j TDS Rate of 10% instead of brokerage rates.
Important TDS Provisions and Rules
Several key provisions govern the application of the TDS Rate Chart.
These rules ensure proper implementation:
1. PAN Requirements
Higher TDS rates apply when PAN is not furnished, ensuring proper taxpayer identification and compliance.
| Scenario | TDS Rate | Details |
| PAN Furnished | As mentioned in the respective sections | Normal deduction rates apply |
| PAN Not Furnished | 20% | Higher rate for all sections |
| Specific Higher Rates | As mentioned in respective sections | E.g., 30% for lottery winnings |
Key Rules:
- Mandatory: PAN required for all high-value transactions.
- Verification: Deductor must verify PAN authenticity.
- Documentation: PAN copy must be maintained in the records.
- Exception: Some sections specify rates higher than 20% even without PAN.
2. Certificate Requirements
Mandatory issuance of TDS certificates within prescribed timelines to provide proof of tax deduction to payees.
| Certificate Type | Applicable For | Time Limit | Format |
| Form 16 | Salary TDS | 15th June of following year | Annual certificate |
| Form 16A | Non-salary TDS | Within 15 days of quarterly return filing | Quarterly/transaction-wise |
| Form 16B | Property transactions | 15 days from TDS deduction | Transaction-specific |
| Form 16C | Rent payments | 15 days from TDS deduction | Transaction-specific |
Key Requirements:
- Digital Signatures: Certificates must be digitally signed
- Correction Process: Revised certificates for any errors
- Penalty: ₹100 per day for delayed issuance
- Format Compliance: Must follow prescribed government formats
Calculation Examples
Understanding the TDS Rate Chart through real examples helps in practical application. Consider these detailed scenarios:
Example 1: Rent Payment Analysis – Section 194I Impact
A company, ABC Pvt. Ltd., pays ₹60,000 rent per month for a commercial office to Mr. Sharma (a resident Indian).
Important Info:
- Monthly Rent: ₹60,000
- Annual Rent: ₹60,000 × 12 = ₹7,20,000
- Security Deposit: ₹3,00,000 (No TDS on this)
- TDS Threshold: ₹50,000 per month
- TDS Rate: 10%
TDS Calculation:
- Rent is more than ₹50,000 → TDS applies.
- Monthly TDS = ₹60,000 × 10% = ₹6,000
- Annual TDS = ₹6,000 × 12 = ₹72,000
If the rent per month is more than ₹50,000, the company must deduct 10% TDS and pay it to the government.
Example 2: New Partnership TDS – Section 194T Application
A partnership firm, M/s Tech Solutions, pays salary and interest to its 3 partners.
TDS Rule (Section 194T) – Effective from 1 April 2025:
- TDS applies if any partner gets more than ₹20,000 per year
- TDS Rate = 10%
Partner Payments:
Partner A:
- Salary: ₹25,000 × 12 = ₹3,00,000
- Bonus: ₹50,000
- Interest: ₹10,000 × 12 = ₹1,20,000
- Total = ₹4,70,000
- TDS = ₹4,70,000 × 10% = ₹47,000
Partner B:
- Commission: ₹30,000 × 12 = ₹3,60,000
- Profit Share: ₹1,00,000
- Total = ₹4,60,000
- TDS = ₹4,60,000 × 10% = ₹46,000
Partner C:
- Remuneration: ₹20,000 × 12 = ₹2,40,000
- Interest: ₹15,000 × 12 = ₹1,80,000
- Total = ₹4,20,000
- TDS = ₹4,20,000 × 10% = ₹42,000
Total TDS for Firm
₹47,000 + ₹46,000 + ₹42,000 = ₹1,35,000 per year.
If partners get paid more than ₹20,000 in a year (salary, interest, bonus, etc.), TDS at 10% must be deducted.
As Benjamin Franklin wisely said, “An investment in knowledge pays the best interest”, – and nowhere is this truer than when it comes to understanding the TDS Rate Chart. The changes in FY 2025-26 aren’t just numbers on a government notification; they’re opportunities for smarter financial planning and substantial savings.
Remember, every rupee saved through proper TDS planning is a rupee that stays in your pocket. Don’t let ignorance become your most expensive tax – embrace these changes, update your compliance systems, and transform what many see as a burden into your competitive advantage.
Don’t wait for the next compliance deadline. Contact RegisterKaro now and ensure your business stays ahead of all TDS requirements for FY 2025-26.
Frequently Asked Questions
The TDS Rate Chart for FY 2025-26 includes significant revisions with enhanced threshold limits and new sections. Major changes include increased limits for sections 194A (₹50,000), 194I (₹50,000 monthly), and 194J (₹50,000). The 194H TDS rate has been reduced to 2% from the previous 5%, providing substantial relief to businesses paying brokerage.
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