Tax Deducted at Source (TDS) is a mechanism where tax is collected at the point of income generation. As a business, understanding TDS is crucial for compliance and avoiding penalties. This guide covers the latest TDS rates and changes for FY 2025-26.
💡 What's New in FY 2025-26
The new Income Tax Act 2025 replaces the 1961 Act from April 1, 2025, with 536 sections. Key TDS changes include revised thresholds for rent (₹50,000/month) and lottery winnings (₹10,000 per transaction).
Common TDS Rates (FY 2025-26)
| Section | Nature of Payment | Threshold | TDS Rate |
|---|---|---|---|
| 192 | Salary | Above basic exemption | As per slab rates |
| 194A | Interest (other than securities) | ₹40,000 (₹50,000 for seniors) | 10% |
| 194B | Lottery/Games winnings Updated | ₹10,000 per transaction | 30% |
| 194C | Contractor payments | ₹30,000 single / ₹1,00,000 yearly | 1% (Individual) / 2% (Others) |
| 194H | Commission/Brokerage | ₹15,000 | 5% |
| 194I | Rent Updated | ₹50,000 per month | 2% (Plant) / 10% (Land/Building) |
| 194J | Professional/Technical fees | ₹30,000 | 10% (2% for technical services) |
| 194Q | Purchase of goods | ₹50 lakhs | 0.1% |
| 194R | Benefits/Perquisites | ₹20,000 | 10% |
| 194LBC | Securitization Trust income Updated | Any amount | 10% (was 25%/30%) |
⚠️ Important Change: TDS on Rent (194I)
From FY 2025-26, the threshold for TDS on rent is revised to ₹50,000 per month (instead of annual ₹2,40,000). If monthly rent exceeds ₹50,000, TDS applies on the entire amount.
TDS for Non-Residents (Section 195)
| Nature of Income | TDS Rate |
|---|---|
| Royalty | 10% |
| Technical Services | 10% |
| Interest | 20% |
| Other income | 40% (Company) / 30% (Others) |
TDS Return Filing Due Dates
| Quarter | Period | Due Date |
|---|---|---|
| Q1 | April - June | July 31 |
| Q2 | July - September | October 31 |
| Q3 | October - December | January 31 |
| Q4 | January - March | May 31 |
TDS Deposit Due Dates
- Government deductors: Same day of deduction
- Other deductors: 7th of the following month
- March deductions: 30th April
Key Compliance Requirements
- TAN Registration: Obtain Tax Deduction Account Number before deducting TDS
- Deduct at correct rate: Use applicable rate based on section and PAN availability
- Higher TDS (206AB/206CCA): 5% or twice the rate for non-filers of ITR
- Issue TDS certificates: Form 16/16A to deductees
- File quarterly returns: Form 24Q (Salary), 26Q (Non-salary), 27Q (Non-residents)
💡 Lower/NIL TDS Certificate
If your actual tax liability is lower, apply for a Lower Deduction Certificate under Section 197 to reduce TDS burden on your income.
Penalties for Non-Compliance
| Default | Penalty |
|---|---|
| Non-deduction of TDS | Interest @ 1% per month + disallowance of expense |
| Late deposit | Interest @ 1.5% per month from deduction to deposit |
| Late filing of return | ₹200 per day (max: TDS amount) |
| Incorrect PAN/details | ₹10,000 to ₹1,00,000 |
Need Help with TDS Compliance?
Our team can handle your complete TDS compliance - from deduction to filing returns and issuing certificates.
Get Free Consultation →