Complete TDS rate chart for FY 2025-26 — all sections, rates, and thresholds for salary, contractors, rent, professional fees, e-commerce, and non-residents.
TDS Rate Chart FY 2025-26 — All Sections with Limits
For FY 2025-26 (Assessment Year 2026-27), TDS rates range from 0.1% on goods purchases under Section 194Q to 30% on lottery winnings under Section 194B. Finance Act 2025 revised thresholds on Section 194H (rate cut to 2%, threshold raised to Rs. 15,000), reduced the Section 194IB rent rate to 2%, and made the new tax regime the default withholding basis for salary. This chart lists every operative section with its current rate, threshold, and the filing mechanics your AP team needs right now — Q4 TDS returns for FY 2025-26 are due 31 May 2026.
What Changed in FY 2025-26: Finance Act 2025 Highlights
Finance Act 2025 (Union Budget presented February 1, 2025) delivered targeted rationalisation rather than a wholesale rate overhaul. The changes most likely to affect a mid-size business's daily accounts-payable workload are:
Section 194H — Commission and Brokerage Rate cut from 5% to 2%; threshold raised from Rs. 5,000 to Rs. 15,000 per year. If your vendor master still carries the old 5% flag, you have been over-deducting since April 2025 and will need to issue revised TDS certificates.
Section 194IB — Rent Paid by Individuals and HUF Rate reduced from 5% to 2%. The Rs. 50,000-per-month trigger is unchanged. This section applies only to individual or HUF payers who are not required to get their accounts audited — company payers use Section 194-I at 10%.
Section 192 — Salary: New Regime as Default From FY 2025-26, if an employee does not submit a written declaration opting for the old regime, the employer must apply new-regime slabs. The standard deduction under the new regime is Rs. 75,000. The enhanced rebate under Section 87A (up to Rs. 60,000) makes income effectively nil-tax up to Rs. 12,00,000 under the new regime — meaning most employees earning below that threshold will have zero TDS liability if they stay on the new regime.
Section 194O — E-Commerce Operators The rate was rationalised to 0.1% by Finance Act 2024 (effective from the date notified), making it consistent with Section 194Q on goods purchases. Confirm the effective date in the CBDT notification if you were deducting at 1% earlier in the year.
TDS Rate Chart: Salary, Interest, and Dividend
Section 192 — Salary
| Detail | Rate / Rule |
|---|---|
| TDS rate | As per applicable income-tax slab |
| Default regime | New tax regime (employee must opt out in writing for old regime) |
| Standard deduction (new regime) | Rs. 75,000 |
| Section 87A rebate (new regime) | Up to Rs. 60,000; income up to Rs. 12,00,000 effectively nil-tax |
| Surcharge applicability | 10% on income above Rs. 50 lakh; 15% above Rs. 1 crore; 25% above Rs. 2 crore (capped at 25% under new regime) |
Mid-year employer change: When an employee joins a new employer, they must submit Form 12B disclosing prior-employer salary and TDS already deducted. The new employer must factor this in to avoid short deduction. Failure here is the single most common cause of short-deduction notices against employers.
January–March recalculation: Collect confirmed investment declarations by January 15. Spread any shortfall or excess across the remaining pay runs. Do not adjust solely in the March salary — this creates a one-month cash spike for the employee and may cause short-deposit notices for the employer.
Section 193 — Interest on Securities
| Rate | 10% |
|---|---|
| General threshold | Rs. 10,000 per year |
| Debenture threshold | Rs. 5,000 per year (listed debentures issued by companies) |
| NIL cases | Interest to individuals / HUF holding listed securities in demat form where Form 15G / 15H has been filed |
Section 194 — Dividend
| Rate | 10% |
|---|---|
| Threshold | Rs. 5,000 per shareholder per financial year |
| NIL cases | Dividends paid to LIC, GIC, notified entities; eligible Form 15G / 15H holders |
| Timing rule | Deduct at payment or credit to account, whichever is earlier |
Section 194A — Interest Other Than on Securities
This is the section governing bank FD interest, recurring deposit interest, and inter-company loans — the income stream most individual taxpayers receive.
| Payer type | Rate | Annual threshold |
|---|---|---|
| Bank / post office / co-operative bank — general depositor | 10% | Rs. 40,000 |
| Bank / post office / co-operative bank — senior citizen | 10% | Rs. 50,000 |
| All others (NBFC, company, firm, individual under audit) | 10% | Rs. 5,000 |
Aggregation rule: For the bank threshold, interest is aggregated across all branches of the same bank using PAN linkage. A depositor holding three FDs at different branches of the same bank does not get three separate Rs. 40,000 exemptions — the Rs. 40,000 applies to the bank as a whole.
TDS Rate Chart: Contractors, Commission, and Rent
Section 194C — Payments to Contractors and Sub-contractors
| Payee category | TDS rate |
|---|---|
| Individual or HUF | 1% |
| Company, firm, LLP, or any other person | 2% |
- Single payment threshold: Rs. 30,000
- Aggregate threshold: Rs. 1,00,000 in a financial year from the same deductor to the same contractor
Transport operator carve-out: Payments to transport operators who own ten or fewer goods carriages and furnish their PAN attract nil TDS under Section 194C — but the transporter must submit a self-declaration to this effect. Without the declaration, deduct at the standard rate.
Advertising and event management contracts fall squarely under Section 194C, not Section 194J. If an event management company supplies food, décor, and coordination under a single invoice, the entire payment is under 194C.
Section 194H — Commission or Brokerage
| Rate | 2% (revised from 5% in Finance Act 2025) |
|---|---|
| Threshold | Rs. 15,000 per year (raised from Rs. 5,000) |
| Scope | Commission, brokerage, discount, or similar consideration to a non-employee agent |
| Exempt | Commission paid by BSNL / MTNL to public call office franchisees |
Note: Insurance commission paid to agents is governed by Section 194D (5%, threshold as notified), not Section 194H.
Section 194-I — Rent (Companies, LLPs, Audit-Required Assesses)
| Asset type | TDS rate |
|---|---|
| Land, building, furniture, fittings | 10% |
| Plant and machinery | 2% |
- Annual threshold: Rs. 2,40,000 (i.e., Rs. 20,000 per month equivalent); confirm the exact notified figure before processing
- Who deducts: Any person other than an individual or HUF not required to have their accounts audited
Section 194IB — Rent by Individuals and HUF (Not Under Audit)
| Rate | 2% (revised from 5% in Finance Act 2025) |
|---|---|
| Trigger | Rent exceeds Rs. 50,000 per month |
| Frequency | Deduct once a year (typically in March) or at the end of tenancy, whichever comes first |
| Form | 26QC (challan-cum-statement; no TAN required) |
| Certificate | Form 16C to landlord within 15 days of Form 26QC due date |
Section 194IC — Monetary Consideration under a Joint Development Agreement
| Rate | 10% |
|---|---|
| Threshold | None — deduct on every payment |
| Scope | Cash or cheque component paid to the land owner by a developer under a JDA |
TDS Rate Chart: Property, Securities, and E-Commerce
Section 194-IA — Purchase of Immovable Property (Other Than Agricultural Land)
| Rate | 1% |
|---|---|
| Threshold | Rs. 50 lakh per transaction |
| Form | 26QB (buyer deposits; no TAN needed) |
| Deposit due date | 30 days from the end of the month of deduction |
| TDS certificate | Form 16B, issued to seller within 15 days of 26QB due date |
Whole-amount rule: When the consideration is exactly Rs. 50 lakh, TDS applies at 1% on the entire Rs. 50 lakh (Rs. 50,000 TDS). It is not applied only on the amount above the threshold — unlike income-tax slabs, this is an all-or-nothing trigger.
Section 194Q — Purchase of Goods
| Rate | 0.1% |
|---|---|
| Threshold | Rs. 50 lakh aggregate purchases from a single seller in the year |
| Deductor eligibility | Buyer whose turnover exceeded Rs. 10 crore in the preceding financial year |
| Interaction with TCS u/s 206C(1H) | Where the seller is already collecting TCS on the same transaction, the buyer need not deduct TDS under 194Q — but only one party can act, not both |
Section 194O — E-Commerce Operators
| Rate | 0.1% |
|---|---|
| Scope | Gross sales or service amount facilitated by the operator on behalf of a resident seller |
| Threshold | Rs. 5 lakh for individual / HUF sellers; nil threshold for others |
| Timing | Credit or payment to the seller, whichever is earlier |
Section 194S — Virtual Digital Assets (VDA)
| Rate | 1% |
|---|---|
| Lower threshold | Rs. 50,000 per year — specified persons (individuals / HUF with business turnover below audit threshold or income below Rs. 2.5 lakh) |
| Standard threshold | Rs. 10,000 per year — all other deductors |
| P2P transactions | Specified persons use Form 26QE; no TAN required |
TDS Rate Chart: Professional, Technical, and Director Payments
Section 194J — Professional Services, Technical Services, Royalty
| Payment category | TDS rate |
|---|---|
| Professional services (doctor, lawyer, CA, architect, engineer, etc.) | 10% |
| Technical services | 2% |
| Royalty | 10% |
| Call centre services | 2% |
| Director's remuneration other than salary | 10% |
- Threshold: Rs. 30,000 per year (aggregate per payee across all categories)
- No threshold for director's remuneration — deduct from the first rupee
Common classification trap: Management consulting, software AMC, and data processing typically attract 2% as technical services. Legal retainers, audit fees, and medical consultancy attract 10% as professional services. If an invoice bundles both, apply the higher rate to the entire amount unless the values are separately itemised and supportable.
Section 194R — Benefits and Perquisites
| Rate | 10% |
|---|---|
| Threshold | Rs. 20,000 per year per recipient |
| Scope | Any benefit or perquisite — cash or in-kind — given to a resident person arising from their business or profession |
| In-kind rule | If the benefit is wholly in kind, the deductor must ensure tax is paid before releasing the benefit or deduct from the next cash payment |
This section catches sponsored travel, product gifting, and hospitality offered to dealers, distributors, and business partners. Marketing and events teams rarely flag these to the accounts function — creating exposure every year-end.
TDS on Non-Resident Payments: Quick Reference
Non-resident TDS is governed by Section 195 for general payments and a set of specific sections for defined income streams. The operative rule: deduct at the lower of the domestic Income-tax Act rate or the applicable DTAA rate.
| Section | Payment type | Default IT Act rate |
|---|---|---|
| 195 | Any sum to a non-resident (interest, royalty, FTS, capital gains) | Rate as per IT Act or DTAA |
| 194E | Non-resident sportsmen or entertainers | 20% |
| 194LB | Interest on infrastructure bonds to NR | 5% |
| 194LBA | Certain income from business trusts to NR | 5% / 10% as applicable |
| 194LBC | Income from securitisation trust to NR | As per Finance Act notification |
| 196A | Income of offshore fund from Indian mutual fund units | 20% |
| 196D | Income of FII / FPI on Indian securities | 20% |
DTAA claim procedure — four steps:
- Obtain the payee's Tax Residency Certificate (TRC) issued by their home-country tax authority
- Obtain Form 10F — the payee's self-declaration of treaty eligibility
- Apply the DTAA rate (confirm the relevant article — royalty, FTS, interest — in the specific treaty)
- Retain TRC and Form 10F in your records; they are the first thing asked for in a Section 195 scrutiny
If the payee does not provide TRC and Form 10F, you must deduct at the full domestic rate. There is no discretion.
Worked Example: How a Single Section Misclassification Becomes a Rs. 1.8 Lakh Problem
Scenario: A Chennai-based private limited company pays Rs. 1,20,000 per month (Rs. 14,40,000 per year) in office rent to an individual landlord. The accounts executive codes it under Section 194IB at 2% (Rs. 28,800 annual TDS) instead of the correct Section 194-I at 10% (Rs. 1,44,000 annual TDS). The error runs undetected for a full financial year.
Consequences on discovery:
| Item | Calculation | Amount |
|---|---|---|
| Correct TDS required | Rs. 14,40,000 × 10% | Rs. 1,44,000 |
| TDS actually deducted | Rs. 14,40,000 × 2% | Rs. 28,800 |
| Shortfall | ||
| Rs. 1,15,200 | ||
| Interest u/s 201(1A) — short deduction: 1% per month × 12 months | Rs. 1,15,200 × 1% × 12 | Rs. 13,824 |
| Penalty u/s 271C — minimum equal to TDS not deducted | ||
| Rs. 1,15,200 | ||
| Section 234E late-filing fee if revised return is filed 60 days late | Rs. 200 × 60 days | Rs. 12,000 |
| Approximate total exposure | ||
| ~Rs. 1,41,024 |
This is before professional fees for rectification or any representation before the Assessing Officer.
Root cause: Section 194IB exists only for individual and HUF payers who are not subject to tax audit. A company — regardless of its size — has no access to Section 194IB. It always uses Section 194-I.
Fix right now: Pull your vendor master and filter all records tagged "rent." For each one, check whether the payer is a company or LLP (use 194-I at 10% for buildings) or a non-audit individual/HUF (use 194IB at 2% for monthly rent above Rs. 50,000). Correct the coding before the next payment run.
TDS Deposit and Return Due Dates
Monthly Deposit Deadlines (Rule 30)
| Deductor type | Month | Deposit due date |
|---|---|---|
| Non-government | April 2025 – February 2026 | 7th of the following month |
| Non-government | March 2026 | 30 April 2026 |
| Government (book adjustment) | Any month | 7th of following month |
| Government (treasury payment) | Any month | Same day |
Late deposit attracts interest at 1.5% per month (or part thereof) from the date of deduction to the date of actual payment. This is mandatory — it cannot be waived on the grounds of inadvertent delay.
Quarterly TDS Return Due Dates — FY 2025-26
| Quarter | Period | Form 24Q / 26Q / 27Q | Due date |
|---|---|---|---|
| Q1 | April – June 2025 | All forms | 31 July 2025 |
| Q2 | July – September 2025 | All forms | 31 October 2025 |
| Q3 | October – December 2025 | All forms | 31 January 2026 |
| Q4 | January – March 2026 | All forms | 31 May 2026 |
Late filing fee u/s 234E: Rs. 200 per day of delay, subject to a maximum of the TDS amount for that return. A company with Rs. 3,00,000 TDS in Q1 that files 50 days late owes Rs. 10,000 in Section 234E fees — before any penalty under Section 271H (Rs. 10,000 to Rs. 1,00,000).
TDS Certificate Issuance — FY 2025-26
| Certificate | Section | Issued to | Due date |
|---|---|---|---|
| Form 16 (salary) | 192 | Employee | 15 June 2026 |
| Form 16A (non-salary quarterly) | All other sections | Deductee | 15 days from quarterly return due date |
| Form 16B (property purchase) | 194-IA | Seller | 15 days from Form 26QB due date |
| Form 16C (rent — individuals) | 194IB | Landlord | 15 days from Form 26QC due date |
Common Mistakes and Pitfalls to Avoid
1. Using Section 194IB for company rent payments As shown in the worked example, 194IB is an individual/HUF-only section. Every company payer must use 194-I at 10% for buildings.
2. Not activating Section 194Q on time Section 194Q is triggered by the preceding year's turnover crossing Rs. 10 crore. A company that first crossed this threshold in FY 2024-25 becomes a 194Q deductor from 1 April 2025. Teams that wait for audited accounts (often July–September) create four to six months of un-deducted TDS.
3. Running both 194Q and TCS under 206C(1H) simultaneously Only one mechanism should operate on a single transaction. Establish at the start of the year — in writing — whether the buyer or the seller will act, and document it.
4. Aggregating Section 194J payments incorrectly Professional fees and technical fees paid to the same vendor are aggregated for the Rs. 30,000 threshold test — even if invoiced under different heads or different months. Paying Rs. 25,000 for "consulting" and Rs. 20,000 for "software support" to the same party triggers 194J on both.
5. Missing Section 194R on marketing spend Product samples, dealer incentive trips, sponsored conferences, and brand-logo merchandise given to business partners all potentially fall under Section 194R if the per-recipient value crosses Rs. 20,000 in the year. Conduct a year-end sweep of your marketing and channel spend before Q4 return filing.
6. Not obtaining TRC and Form 10F before applying DTAA rates A DTAA rate is a statutory entitlement, but the paperwork must exist at the time of deduction. Retrospectively collecting these documents after a notice is issued is possible but creates unnecessary audit risk.
7. Applying wrong surcharge to senior employees Under the new tax regime, the surcharge is capped at 25% even for income above Rs. 5 crore (the 37% surcharge applies only under the old regime). If your payroll software carries the old 37% flag for high-income employees who have not opted out of the new regime, you are over-deducting.
8. Treating Form 15G/15H as blanket exemption A Form 15G (for individuals below 60 with income below basic exemption) or Form 15H (senior citizens) obliges you to accept it only if the declaration is correctly filled and the conditions are genuinely met. If a depositor submits Form 15G on interest income that clearly makes their total income taxable, you remain exposed if you accept it without scrutiny.
Key Takeaways
- New tax regime is the FY 2025-26 salary default. Employees who want old-regime withholding must declare in writing; absent that, apply new-regime slabs and the Rs. 75,000 standard deduction.
- Section 194H rate is now 2%, threshold Rs. 15,000. Update your vendor master for all commission and brokerage payees; check whether any over-deduction in April–May 2025 needs to be adjusted.
- Section 194IB rent rate is 2% — but only for individual / HUF payers not under audit. Company and LLP payers always use Section 194-I at 10% on buildings.
- Section 194Q activates based on the prior year's turnover, not the current year's. If you crossed Rs. 10 crore in FY 2024-25, 194Q was mandatory from 1 April 2025.
- Q4 FY 2025-26 TDS returns are due 31 May 2026. Late filing attracts Rs. 200 per day under Section 234E, up to the TDS amount in the return.
- DTAA savings on cross-border SaaS, licensing, and cloud fees are legitimate and material. You need only a TRC and Form 10F — two documents that most foreign vendors can supply within a week.
- Section 194R at 10% on benefits above Rs. 20,000 per recipient applies to dealer trips, gifting programmes, and sponsored events. Run a year-end check on your marketing ledger before filing the Q4 return.
