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TDS Rates & Sections — FY 2025-26

Tax Deducted at Source (TDS) is a critical compliance requirement for Indian businesses. Understanding the correct TDS section and rate ensures you stay compliant and avoid penalties.

Common TDS Sections & Rates

SectionNature of PaymentRate (PAN)Rate (No PAN)Threshold
193Interest on Securities10%20%₹10,000
194Dividends10%20%₹10,000
194AInterest — Banks/Co-op/Post Office10%20%₹50,000
194AInterest — Others10%20%₹10,000
194CContractor (Individual/HUF)1%20%₹30,000 / ₹1,00,000 agg.
194CContractor (Others)2%20%₹30,000 / ₹1,00,000 agg.
194DInsurance Commission (Individual/HUF)2%20%₹20,000
194DInsurance Commission (Company)10%20%₹20,000
194DALife Insurance Policy Payout2%20%₹1,00,000
194HCommission / Brokerage2%20%₹20,000
194IRent (Plant & Machinery)2%20%₹6,00,000
194IRent (Land & Building)10%20%₹6,00,000
194IATransfer of Immovable Property1%20%₹50,00,000
194J(a)Technical Services2%20%₹50,000
194J(b)Professional Fees / Royalty10%20%₹50,000
194J(b)Director Fees / Remuneration10%20%Nil
194KIncome from Mutual Fund Units10%20%₹10,000
194OE-commerce Operator0.1%5%₹5,00,000
194QPurchase of Goods0.1%5%₹50,00,000
194RBenefits / Perquisites10%20%₹20,000
194SVirtual Digital Assets (Specified Person)1%20%₹50,000
194TPayment to Partners (Salary/Bonus/Interest)10%20%₹20,000

How TDS Works

  • Deduction: The payer deducts TDS at the applicable rate before making the payment
  • Deposit: The deducted amount is deposited with the government by the 7th of the following month
  • Certificate: The deductor issues Form 16/16A to the deductee as proof of TDS
  • Credit: The deductee claims credit for TDS while filing their income tax return

Important Points

  • Threshold limits are for the aggregate annual payment, not individual transactions
  • Lower deduction certificate (Section 197) can reduce TDS rate for eligible payees
  • Form 15G/15H can be submitted by individuals to avoid TDS on interest income (if total income is below taxable limit)
  • Non-compliance with TDS provisions can lead to disallowance of the expense under Section 40(a)(ia)

Frequently Asked Questions

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