Tax Deducted at Source (TDS) is a mechanism used by tax authorities worldwide to collect tax at the source of revenue generation. It serves as an effective tool to ensure a steady flow of revenue for the government and to prevent tax evasion. TDS applies to various types of income such as salaries, interest payments, rent, commissions and others. In this guide, we present the updated TDS Rate Chart for FY 2024-2025 (AY 2025-2026), covering various income categories such as salaries, interest payments, rent, commissions, and more. Understanding TDS is essential for both deductors and deductees to ensure compliance with tax laws and avoid penalties.
|
Section |
Nature of Payment | Threshold (Rs.) | Individual / HUF TDS Rates (%) | Others TDS Rate (%) |
| 192 | Salaries | Rs. 2,50,000 | Slab Rates | Slab Rates |
| 192A | Premature EPF withdrawal | Rs. 50,000 | 10% | 10% |
| 193 | TDS on interest on securities | Rs. 10,000 | 10% | 10% |
| 194 | Payment of dividend | Rs. 5,000 | 10% | 10% |
| 194A | Interest issued by banks or post offices on deposits | Rs. 40,000 | 10% | 10% |
| Interest by others apart from on securities | Rs. 50,000 | 10% | 10% | |
| 194B | Amounts won through lotteries, puzzles, or games | Aggregate of Rs. 10,000 | 30% | 30% |
| 194BB | Amounts won from horse races | Rs. 10,000 | 30% | 30% |
| 194C | Payments to contractor or sub-contractor – Single Payments | Rs. 30,000 | 1% | 2% |
| Payments to contractor/sub-contractor | Rs. 1,00,000 | 1% | 2% | |
| 194D | Payment of insurance commission to domestic companies | Rs. 15,000 | NA | 10% |
| Payment of insurance commission to companies other than domestic ones | Rs. 15,000 | 5% | NA | |
| 194DA | Maturity of Life Insurance Policy | Rs. 1,00,000 | 5% | 5% |
| 194EE | Payment under NSS (National Savings Scheme) | Rs. 2,500 | 10% | 10% |
| 194F | Payment of repurchase of unit by UTI or any mutual fund | No Limit | 20% | 20% |
| 194G | Payments or commission on sale of lottery tickets | Rs. 15,000 | 5% | 5% |
| 194H | Commission or brokerage | Rs. 15,000 | 5% | 5% |
| 194I | Rent of land, building, or furniture | Rs. 2,40,000 | 10% | 10% |
| Rent of plant and machinery | Rs. 2,40,000 | 2% | 2% | |
| 194IA | Payment for transfer of immovable property other than agricultural land | Rs. 50,00,000 | 1% | 1% |
| 194IB | Rent payment that is made by an individual or HUF not covered under payment 194I | Rs. 50,000 (per month) | 5% | NA |
| 194IC | Payment made under Joint Development Agreement (JDA) to Individual/HUF | No Limit | 10% | 10% |
| 194J | Fees paid for professional services | Rs. 30,000 | 10% | 10% |
| Amount paid for technical services | Rs. 30,000 | 2% | 2% | |
| Amounts paid as royalty for sale/distribution/exhibition of cinematographic films | Rs. 30,000 | 2% | 2% | |
| 194K | Payment of income for units of a mutual fund, for example- dividends | Rs. 5,000 | 10% | 10% |
| 194LA | Payment made for compensation for acquiring certain immovable property | Rs. 2,50,000 | 10% | 10% |
| 194LB | Payment of interest on infrastructure bonds to Non-Resident Indians | NA | 5% | 5% |
| 194LBA(1) | Certain income distributed by a business trust among its unit holder | NA | 10% | 10% |
| 194LD | Payment of interest on rupee-denominated bonds, municipal debt security, and government securities | NA | 5% | 5% |
| 194M | Amounts paid for contract, brokerage, commission or professional fee (other than 194C, 194H, 194J) | Rs. 50,00,000 | 5% | 5% |
| 194N | Cash withdrawal over a certain amount from the bank, and ITR is filed | Rs. 1,00,00,000 | 2% | 2% |
| Cash withdrawal from a bank without filing ITR | Rs. 20,00,000 | 2% | 2% | |
| 194O | Amount paid for the sale of products/services by e-commerce service providers via their digital platform | Rs. 5,00,000 | 1% | 1% |
| 194Q | Payments made for the purchase of goods | Rs. 50,00,000 | 0.10% | 0.10% |
| 194S | TDS on the payment of any crypto or other virtual asset | NA | 1% | 1% |
| 206AA | TDS for non-availability of PAN | NA | 20% | 20% |
| 206AB | TDS on non-filers of Income tax return | NA | Rate higher of: 5% or 2 times the mentioned rate in provision |
Rate in force |
1. How does TDS work?
TDS works on the principle of deducting a certain percentage of tax at the time of making payments to individuals or legal entities. The payer, also known as the deductor, deducts the appropriate amount of TDS and remits it to the government on behalf of the payee, known as the deductor. The amount of TDS deducted is reflected in Form 26AS in income tax portal.
2. Applicability of TDS
TDS applies to various types of payments made by individuals or entities. Some common cases where TDS is applicable include:
Payment of commissions
Payments to contractor and subcontractors
Payment of salary or wages to employees
Interest payments by financial institutions and banks
Rent payments in excess of limit specified.
Professional fees payments
Dividend payments
3. Rates of TDS
TDS rates are different based on the type of income and the provisions of the tax laws. These rates are set by the Income tax authorities and are subject to regular revisions. So, it is essential for deductees to keep them up to date with the latest TDS rates.
4. TDS Deduction and Compliance
The deductors are required to deduct TDS at the rate prescribed and deposit the deducted amount to the government within the prescribed time limits. Failure to comply with TDS provisions may result in penalties and interest charges. Deductors are also required to submit TDS certificates like Form 16 (for income from salary) and Form 16A (for payments other than salary) to the deductors.
5. Filing of TDS return
Apart from TDS deduction and remittance, payers are also required to file TDS returns with the tax authorities. These returns contain details of TDS deducted, deposited and other relevant details. Failure to file TDS returns by the due date may result in penalties and legal consequences.
Conclusion: Navigating the intricacies of TDS is vital for businesses and individuals alike to fulfill their tax obligations. From understanding how TDS works to complying with deduction and filing requirements, staying informed about the latest TDS rates and regulations is crucial. By following these guidelines, taxpayers can ensure smooth tax operations and avoid any legal repercussions.
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The Author is an Income tax,TDS and GST Practitioner and can be contacted at 9024915488.
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