TDS Rate Chart FY 2025-26: Complete Section-wise Guide for CAs & Tax Professionals
Every April, the first thing CAs and accountants across India reach for is an updated TDS rate chart. This one covers all major sections of the Income Tax Act — rates, thresholds, who deducts, when to deduct, Budget 2025 amendments, and the critical compliance deadlines your clients cannot afford to miss.
New for FY 2025-26: Section 194T (partner remuneration), revised Section 194A and 194J thresholds, and the removal of Section 206AB. All covered in full detail below.
1. What Is TDS and Why Does the Rate Chart Matter
Tax Deducted at Source (TDS) is one of the government’s primary mechanisms to collect income tax at the point of income generation — before the money reaches the recipient. Under Sections 192 to 196D of the Income Tax Act, 1961, specified payers are required to deduct a percentage of the payment and deposit it with the Central Government on behalf of the recipient.
For CAs and tax professionals, the rate chart is not just a reference table. It’s a liability checklist. An incorrect TDS rate doesn’t just mean a shortfall — it triggers interest under Section 201(1A), potential disallowance of 30% of the expense under Section 40(a)(ia), and in egregious cases, prosecution. The stakes are high enough that getting the chart right is non-negotiable.
What makes FY 2025-26 particularly important is that Budget 2025 made the most substantive changes to TDS provisions in several years — a new section, revised thresholds across multiple high-frequency sections, and the removal of a provision that has been causing friction in deductor compliance for years.
2. Budget 2025: Key TDS Changes Effective 1 April 2025
Finance Minister’s Budget 2025 speech introduced several significant changes to TDS provisions. These are not cosmetic — they affect day-to-day compliance for most deductors. Here’s what changed:
- Section 194A (Interest): Threshold for banks raised to ₹50,000 (non-senior citizens) and ₹1,00,000 (senior citizens). Non-banking threshold raised to ₹10,000. CHANGED
- Section 194J (Professional/Technical fees): Threshold raised from ₹30,000 to ₹50,000 per annum. CHANGED
- Section 194-I (Rent): Monthly threshold raised from ₹2,40,000 per annum to ₹50,000 per month (i.e., ₹6,00,000 per annum). CHANGED
- Section 194T (Partner remuneration): Brand new section — TDS at 10% on salary, remuneration, interest, bonus or commission to partners exceeding ₹20,000 per financial year. NEW
- Section 192 (Salary): Employers can now credit TDS on non-salary income of the employee against the salary TDS liability — eliminating double deduction. CHANGED
- Section 206AB (Higher TDS for non-filers): Fully removed. The provision requiring higher TDS rates for taxpayers who had not filed ITRs for the past two years no longer applies. REMOVED
- Section 194B/194BB (Lottery/Race winnings): Threshold changed from aggregate basis to per transaction ₹10,000. Multiple small wins below ₹10,000 each are now exempt. CHANGED
3. TDS Rate Chart FY 2025-26 — All Sections at a Glance
The table below covers all major TDS sections applicable to resident deductees for FY 2025-26 (AY 2026-27). For non-resident payments, refer to Sections 195, 196B, 196C, and 196D — or the relevant DTAA.
| Section | Nature of Payment | Threshold (₹) | Rate — Ind/HUF | Rate — Co/Firm | Notes |
|---|---|---|---|---|---|
| 192 | Salary | Basic exemption limit | Slab rates | N/A | New/Old regime as per employee declaration |
| 192A | Premature EPF withdrawal | ₹50,000 | 10% | N/A | Nil if Form 15G/H submitted |
| 193 | Interest on securities | ₹10,000 (debentures); ₹10,000 (others) | 10% | 10% | Govt securities exempt u/s 193 |
| 194 | Dividend | ₹10,000 | 10% | 10% | Applies to domestic companies |
| 194A CHANGED | Interest (other than securities) | Banks: ₹50,000 (others) / ₹1,00,000 (senior); Non-bank: ₹10,000 | 10% | 10% | Threshold doubled from FY 2025-26 |
| 194B CHANGED | Lottery / Crossword / Card games | ₹10,000 per transaction | 30% | 30% | Now per-transaction, not aggregate |
| 194BB CHANGED | Horse race winnings | ₹10,000 per transaction | 30% | 30% | Per-transaction basis from FY 2025-26 |
| 194C | Payment to contractors | Single: ₹30,000; Aggregate: ₹1,00,000 | 1% | 2% | Nil for transport if PAN furnished (Sec 194C(6)) |
| 194D | Insurance commission | ₹20,000 | 5% | 10% | — |
| 194DA | Life insurance maturity (taxable) | ₹1,00,000 | 5% | 5% | On income component, not full maturity |
| 194G | Lottery ticket sales commission | ₹20,000 | 5% | 5% | — |
| 194H | Commission / Brokerage | ₹20,000 | 5% | 5% | Insurance commission under 194D, not here |
| 194-I(a) | Rent — Plant, machinery, equipment | ₹50,000/month CHANGED | 2% | 2% | Previous threshold was ₹2,40,000 p.a. |
| 194-I(b) | Rent — Land, building, furniture | ₹50,000/month CHANGED | 10% | 10% | Raised to monthly threshold basis |
| 194-IA | Purchase of immovable property | ₹50,00,000 | 1% | 1% | Buyer deducts; no PAN alternative |
| 194-IB | Rent by individual/HUF (not 194-I) | ₹50,000/month | 5% | N/A | No TAN required; deposit via Form 26QC |
| 194J CHANGED | Professional / Technical fees | ₹50,000 | 10% (Prof) / 2% (Technical) | 10% (Prof) / 2% (Technical) | Distinguish professional vs technical carefully |
| 194K | Income from mutual fund units | ₹5,000 | 10% | 10% | Capital gains distributions excluded |
| 194LA | Compensation for land acquisition | ₹2,50,000 | 10% | 10% | Exempt if under RFCTLARR Act |
| 194LBC CHANGED | Income from securitisation trusts | Nil | 10% | 10% | Rate reduced from 25%/30% to 10% from Apr 2025 |
| 194M | Payment by individual/HUF to contractor/professional | ₹50,00,000 p.a. | 5% | N/A | No TAN needed; Form 26QD |
| 194N | Cash withdrawal from bank | ₹1 crore (regular filer); ₹20 lakh (non-filer) | 2% | 2% | 5% on cash above ₹3 cr for non-filers |
| 194O | Payments to e-commerce participants | ₹5,00,000 (Ind/HUF with PAN) | 1% | 1% | Amazon, Flipkart, etc. deduct from sellers |
| 194P | Pension + interest (senior citizens — 75+) | Basic exemption limit | Slab rates | N/A | Only specified bank; no ITR filing needed |
| 194Q | Purchase of goods (buyer turnover > ₹10 cr) | ₹50,00,000 per seller | 0.1% | 0.1% | Does not apply if 194C/194J already applies |
| 194R | Benefits/perquisites from business/profession | ₹20,000 p.a. | 10% | 10% | Applies to gifts, free samples, junkets |
| 194S | TDS on Virtual Digital Assets (crypto) | ₹10,000 (specified) / ₹50,000 (others) | 1% | 1% | Covers all VDA transfers |
| 194T NEW | Payment to partners (salary, interest, commission, bonus) | ₹20,000 p.a. per partner | 10% | 10% | Effective 1 April 2025. Applies to all partnership firms and LLPs |
Source: Finance Act 2025, CBDT Circulars, incometaxindia.gov.in. Rates are for resident deductees with valid PAN. Non-residents — refer Section 195 and applicable DTAA.
4. Section 192: TDS on Salary — How Employers Must Calculate
Section 192 remains the section most relevant to the largest number of taxpayers and their employers. The mechanics are unique — unlike other TDS sections where a flat rate applies, salary TDS is computed on estimated annual taxable income at the applicable slab rates.
Step-by-Step Calculation
- Estimate gross salary for the full financial year — including all components: basic, HRA, special allowance, bonus, perquisites.
- Deduct exemptions — HRA under Section 10(13A), LTA under Section 10(5), and standard deduction (₹75,000 under New Regime / ₹50,000 under Old Regime).
- Employee declares regime choice — New Regime is default from FY 2023-24. Employee must file Form 10IEA to opt for Old Regime.
- Add other income (if the employee has disclosed it) — interest income, rental income, etc. From FY 2025-26, TDS already deducted on such income by other deductors can be credited against salary TDS.
- Deduct Chapter VI-A deductions (Old Regime only) — 80C, 80D, 80G, etc., based on investment declarations in Form 12BB.
- Apply slab rates to arrive at annual tax liability. Add 4% cess.
- Divide by months remaining in the financial year. That is the monthly TDS amount.
TDS on salary is reported in Form 24Q (quarterly return). The employer must issue Form 16 to each employee by 15 June following the financial year-end.
For clients handling payroll for 50+ employees, this section is also addressed in detail in our guide on TDS on Salary Section 192 — Computation Guide FY 2025-26.
5. Section 194T: New TDS on Partner Payments — What Every CA Must Know
This is the most consequential new addition for FY 2025-26. Section 194T requires every partnership firm and LLP to deduct TDS at 10% on any of the following payments to a partner exceeding ₹20,000 in aggregate during the financial year:
- Salary or remuneration under Section 40(b)
- Interest on capital
- Bonus
- Commission
ABC & Co. pays three partners — Partner A (salary ₹1,20,000/month + interest ₹36,000/year), Partner B (salary ₹80,000/month), Partner C (interest on capital ₹18,000/year).
Section 194T analysis: Partners A and B have aggregate payments well above ₹20,000 — TDS at 10% must be deducted monthly on their salary payments. Partner C receives only ₹18,000 in interest — below the ₹20,000 threshold, so no TDS required for Partner C in this case. However, if Partner C also receives any commission during the year taking the total above ₹20,000, TDS kicks in for the entire amount.
CA action: Set up TDS deduction in the firm’s payroll/accounting system from April 2025 onward. Deposit by 7th of following month via Challan 281. File Form 26Q quarterly. Issue Form 16A to partners annually.
6. TDS Without PAN: Section 206AA Rates
Section 206AA mandates higher TDS deduction when the deductee fails to furnish a Permanent Account Number. The rate applied must be the higher of:
- The rate specified in the relevant section
- The rate in force (as per Finance Act)
- 20%
In practice, this means a contractor without PAN will face 20% TDS instead of 1%/2%. A professional will face 20% instead of 10%. For high-volume deductors like e-commerce players or large manufacturers, PAN collection and validation is a mission-critical process at vendor onboarding stage.
7. TDS Deposit & Return Due Dates FY 2025-26
| Month of Deduction | TDS Deposit Due Date | Quarterly Return | Return Due Date | Form 16/16A Issue |
|---|---|---|---|---|
| April 2025 | 7 May 2025 | Q1 (Apr–Jun) | 31 July 2025 | 15 Aug 2025 |
| May 2025 | 7 June 2025 | |||
| June 2025 | 7 July 2025 | |||
| July 2025 | 7 Aug 2025 | Q2 (Jul–Sep) | 31 Oct 2025 | 15 Nov 2025 |
| August 2025 | 7 Sep 2025 | |||
| September 2025 | 7 Oct 2025 | |||
| October 2025 | 7 Nov 2025 | Q3 (Oct–Dec) | 31 Jan 2026 | 15 Feb 2026 |
| November 2025 | 7 Dec 2025 | |||
| December 2025 | 7 Jan 2026 | |||
| January 2026 | 7 Feb 2026 | Q4 (Jan–Mar) | 31 May 2026 | 15 Jun 2026 (Form 16) 15 Jun 2026 (Form 16A) |
| February 2026 | 7 Mar 2026 | |||
| March 2026 | 30 April 2026 |
Forms: Form 24Q — Salary TDS; Form 26Q — Non-salary TDS to residents (including new 194T); Form 27Q — TDS on non-resident payments.
See also: How to resolve TDS mismatches in Form 26AS — for when deposited TDS doesn’t reflect correctly in the deductee’s account.
8. Consequences of TDS Default: Interest, Penalty & Disallowance
| Type of Default | Consequence | Section | Rate / Amount |
|---|---|---|---|
| Failure to deduct TDS | Interest (from due date to deduction date) | 201(1A) | 1% per month or part |
| Deducted but deposited late | Interest (from deduction date to deposit date) | 201(1A) | 1.5% per month or part |
| Late filing of TDS return | Late fee | 234E | ₹200 per day (max = TDS amount) |
| Failure to deduct (domestic) | Expense disallowance | 40(a)(ia) | 30% of payment disallowed |
| Wrong TDS deduction / short deduction | Penalty | 271C | Equal to TDS amount |
| Failure to issue Form 16/16A | Penalty | 272A(2)(g) | ₹100 per day of default |
| TDS return with inaccurate information | Penalty | 271H | ₹10,000 – ₹1,00,000 |
Video: TDS rate chart FY 2025-26 — Budget 2025 changes and compliance calendar explained
9. CA’s Practical Checklist: April TDS Compliance Reset
Every April, a CA advising business clients should run through this checklist to ensure TDS settings are aligned with the new financial year’s rules:
- Update TDS rate master in accounting software (Tally, Zoho Books, etc.) with FY 2025-26 rates and revised thresholds
- Review all partnership/LLP clients — set up Section 194T deduction on partner salary/interest. Register for TAN if firm doesn’t have one
- Check 194A: if any client pays interest above revised thresholds (₹10,000 for non-banks) — update TDS settings accordingly
- Check 194J: professional/technical fee thresholds raised to ₹50,000 — update vendor payment settings
- Check 194-I: rent threshold now monthly (₹50,000/month) — review lease agreements and TDS triggers
- Confirm Section 206AB has been disabled in TDS software — no longer applicable from FY 2025-26
- Collect PAN from all new vendors before first payment to avoid 20% Section 206AA rate
- Verify employees have filed Form 10IEA (Old Regime election) — default is New Regime
- Collect Form 12BB from employees declaring investment proofs — deadline typically January
- Cross-check previous Q4 (Jan-Mar) TDS deposit due by 30 April 2025 — missed deposits attract 1.5% per month
- Reconcile Form 26AS credits for clients for FY 2024-25 before filing ITRs
10. Real-World Scenarios: Where CAs Commonly Go Wrong
A CA firm deducts TDS at 2% on all Section 194J payments, treating them uniformly as “technical services.” However, payments to a practising advocate, independent consulting CA, or management consultant qualify as “professional services” — taxable at 10%, not 2%. The difference compounds quickly on large retainer payments. The Income Tax Act defines “professional services” to include legal, medical, engineering, accounting, technical consultancy, interior decoration, and advertising.
Fix: Split your 194J vendor ledger into two sub-categories — Professional and Technical. Apply rates accordingly. When in doubt, 10% is the safer default.
A company rents three separate units from the same landlord — Unit A (₹18,000/month), Unit B (₹20,000/month), Unit C (₹14,000/month). Each lease is a separate agreement. The company’s accountant argues no TDS applies since each unit is below ₹50,000/month. However, the aggregate rent paid to the same person is ₹52,000/month — above the threshold. Section 194-I applies to the entire ₹52,000.
Fix: Threshold applies per landlord, not per unit or per agreement. Always aggregate payments to the same payee (PAN) when calculating 194-I applicability.
A manufacturer with ₹15 crore turnover buys raw materials from 40+ vendors. For Vendor X, purchases reach ₹48 lakh in Q3. The accountant says “we’re below ₹50 lakh, no TDS.” But by December, cumulative purchases from Vendor X cross ₹52 lakh — and Section 194Q kicks in on the excess above ₹50 lakh, retroactively. TDS was due on ₹2 lakh with interest from the payment date.
Fix: Run monthly vendor-wise purchase summaries for all buyers with turnover above ₹10 crore. Set an alert at ₹45 lakh cumulative per vendor to trigger TDS proactively.
Key official references for this post:
- Income Tax Act, 1961 — Sections 192–196D (incometaxindia.gov.in)
- CBDT Circulars and Notifications — cbic.gov.in
- TRACES Portal — TDS/TCS Statements, Form 16 download, defaults (tdscpc.gov.in)
- Income Tax e-Filing Portal — Challan 281, Form 26AS, AIS (eportal.incometax.gov.in)
Related guides on ClearTax Advisors:
- TDS on Salary Section 192 — Detailed calculation guide FY 2025-26
- How to Resolve TDS Mismatch in Form 26AS — step-by-step
- GSTR-9 Annual Return Guide — reconcile TDS credits against GST liability
- GST Audit under Section 65 & 66 — complete guide for CAs
Need Help Setting Up TDS Compliance for FY 2025-26?
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Disclaimer: This article is for educational purposes only and reflects provisions of the Income Tax Act, 1961 and Finance Act 2025 as understood at the time of writing. Tax provisions are subject to CBDT notifications and judicial interpretation — always verify with the official Income Tax India portal or consult a qualified tax professional before relying on any rates for compliance. For professional advice specific to your situation, contact our team.