TDS Rate Chart For FY 2025–26

Tax Deducted at Source (TDS) remains one of the most important compliance mechanisms under the Indian Income Tax Act, 1961. For Financial Year 2025–26 (Assessment Year 2026–27), the government has notified updated and consolidated TDS rates applicable across a wide range of transactions. These rates impact individuals, Hindu Undivided Families (HUFs), firms, domestic companies, and non-resident entities.

TDS Rates Chart for FY 2025-26 (AY 2026-27) outlines the revised tax deducted at source rates across various transactions. Noteworthy changes include salary payments under both tax regimes, EPF withdrawals, interest on securities, dividends, and rent thresholds. The provisions also extend to contractor payments, insurance commissions, professional fees, winnings from games, digital assets, and cross-border payments.

This article presents a comprehensive overview of the applicable TDS rates, categorized by resident status and nature of payee, to ensure clarity and compliance. Platforms like TMWala help taxpayers and businesses stay updated with such changes and ensure accurate TDS compliance through expert guidance and automated support.

TDS Rate Applicable To Persons Other Than Companies

Where The Person is a Resident in India

1) Section 192 – Payment of Salary

TDS on salary continues to be deducted as per the Normal Slab Rate, depending upon whether the employee opts for the old or new tax regime.

2) Section 192A – EPF Withdrawals

Payment of the accumulated balance of the provident fund, which is taxable in the hands of an employee, attracts TDS at 10%, subject to PAN availability.

3) Section 193 – Interest on Securities

Interest paid on securities such as:

• Debentures issued by local authorities or statutory corporations
• Listed debentures issued by companies
• Central or State Government securities, including 8% Savings (Taxable) Bonds, 2003, 7.75% Savings (Taxable) Bonds, 2018, and Floating Rate Savings Bonds, 2020 (Taxable)

is subject to TDS at 10%.

4) Section 194 & 194A – Dividend and Interest (Other Than Securities)

Dividend income and interest other than interest on securities are both subject to TDS at 10%.

Winnings and Gaming Income

• Section 194B: Winnings from lotteries, crossword puzzles, card games, gambling, or betting – 30%
• Section 194BA: Income by way of winnings from any online game – 30%
• Section 194BB: Winnings from horse races – 30%

These rates apply without any basic exemption threshold.

Payments To Contractors and Professionals

• Section 194C:
  • Individuals/HUF – 1%
  • Others – 2%
• Section 194D: Insurance commission – 5%
• Section 194DA: Life insurance policy payouts – 2%
• Section 194J:
  • Fees for technical services – 2%
  • Royalty for cinematographic films – 2%
  • Any other professional fees – 10%

Note: With effect from June 1, 2017, the rate of TDS would be 2% in case of a payee engaged in the business of operation of a call center.

TMWala supports businesses in identifying the correct TDS section and rate, reducing the risk of non-compliance.

Rent and Property-Related Payments

• Section 194-I:
  • Plant & machinery – 2%
  • Land, building, furniture, or fittings – 10%
• Section 194-IA: Transfer of immovable property (other than agricultural land) – 1%
• Section 194-IB: Rent paid by individual/HUF not liable to tax audit – 2%
• Section 194-IC: Monetary consideration under Joint Development Agreements – 10%

Special Transactions and Other Provisions

• Section 194K: Income from mutual fund units – 10%
• Section 194LA: Compensation on acquisition of immovable property – 10%
• Section 194M: Commission, brokerage, contractual or professional fee paid by individuals/HUFs (not liable to audit) – 2%, applicable when annual aggregate exceeds ₹50 lakh
• Section 194O: E-commerce payments – 0.1%
• Section 194Q: Purchase of goods exceeding ₹50 lakh – 0.1%
• Section 194R: Business benefits or perquisites exceeding ₹20,000 – 10%

Cash Withdrawal – Section 194N

• 2% on cash withdrawals exceeding ₹1 crore
• For non-filers of ITR, TDS applies as follows:
  • 2% if withdrawals exceed ₹20 lakh
  • 5% if withdrawals exceed ₹1 crore

The threshold limit of Rs. 1 crore is increased to Rs. 3 crores if the withdrawal of cash is made by a co-operative society.

Virtual Digital Assets – Section 194S

TDS at 1% applies on transfer of Virtual Digital Assets.

No tax shall be deducted under this provision in the following circumstances:

• If the consideration does not exceed ₹10,000 for non-specified persons
• If the consideration does not exceed ₹50,000 for specified persons

New Provision – Section 194T

Payments of any sum, like salary, remuneration, commission, bonus, or interest, to a partner of the firm.

• Effective from 01-04-2025
• TDS rate: 10%
• No deduction if aggregate payment does not exceed ₹20,000

Where The Person Is Not Resident In India

Non-resident payments are subject to higher TDS rates, subject to DTAA benefits.

• Section 194E: Payments to non-resident sportsmen/sports associations – 20%
• Section 194LB / 194LC / 194LD: Interest on infrastructure bonds or foreign borrowings 4% / 5% / 9%, depending on structure
• Section 195: Other payments, including royalties, technical fees, dividends, and capital gains, ranging from 10% to 30%

Tax shall be deducted at the rate provided under DTAA if the same is lower than the existing TDS rate of 20%.

TDS Rates In Case Of Companies

Domestic Companies

Domestic companies are subject to largely similar provisions as resident individuals, with variations in insurance commission (10%) and standard application of sections such as 194C, 194J, 194Q, 194R, and 194S.

Dividend, interest, rent, contractor payments, and professional fees generally attract TDS between 1% and 10%, while winnings from games and lotteries remain taxed at 30%.

Companies Which Are Not Domestic Companies

Foreign companies are subject to enhanced withholding:

• Section 194LBA / 194LBB / 194LBC: Income from business trusts and investment funds – 35%
• Section 195:
  • Long-term capital gains – 12.5%
  • Short-term capital gains – 20%
  • Dividends – 20%
  • Royalties & technical fees – 20% to 50%

For more information, visit: TDS Rates

Conclusion

The TDS Rate Chart for FY 2025–26 (AY 2026–27) reflects the government’s continued focus on widening tax compliance, tracking high-value transactions, and ensuring timely tax collection. From traditional income streams such as salary, rent, and interest to emerging areas like virtual digital assets, online gaming, and e-commerce, TDS provisions now cover almost every form of taxable income.

Taxpayers, businesses, and professionals must ensure the correct application of TDS rates, timely deposit, and accurate reporting to avoid interest, penalties, and disallowances. PAN availability, residential status, and filing history play a crucial role in determining applicable rates, making careful compliance more important than ever. With expert platforms like TMWala, managing TDS obligations becomes simpler, more accurate, and stress-free.

FAQs

1. What is the applicable TDS rate on salary for FY 2025–26?
TDS on salary under Section 192 is deducted as per the Normal Slab Rate, depending on whether the employee opts for the old or new tax regime.

2. What is the TDS rate on EPF withdrawals during FY 2025–26?
Under Section 192A, TDS at 10% is applicable on taxable EPF withdrawals, subject to the availability of PAN.

3. How much TDS is deducted on interest from securities?
As per Section 193, interest on securities such as government bonds and listed debentures is subject to TDS at 10%.

4. What is the TDS rate on dividend income and bank interest?
Dividend income and interest other than interest on securities are subject to TDS at 10% under Sections 194 and 194A.

5. What is the TDS rate on winnings from lotteries and online games?
Winnings from lotteries, online games, gambling, and horse races attract TDS at 30% with no basic exemption limit.

6. What TDS rate applies to payments made to contractors and professionals?
Payments to contractors attract 1% (Individuals/HUFs) or 2% (Others) under Section 194C, while professional fees under Section 194J attract 2% or 10%, depending on the nature of service.

7. What is the TDS rate on rent payments?
Under Section 194-I, TDS on rent is 2% for plant and machinery and 10% for land, building, furniture, or fittings.

8. Is TDS applicable to cash withdrawals from bank accounts?
Yes. Under Section 194N, 2% TDS applies on cash withdrawals exceeding ₹1 crore, with higher rates for non-filers of income tax returns.

9. What is the TDS rate on transfer of Virtual Digital Assets (VDA)?
TDS at 1% is applicable under Section 194S on transfer of VDAs, subject to specified monetary thresholds.

10. What is the new TDS provision applicable from FY 2025–26?
Section 194T, effective from April 1, 2025, mandates a 10% TDS on payments such as salary, remuneration, commission, bonus, or interest paid to partners, if the aggregate payments exceed ₹20,000.