TDS Rate Chart for FY 2025-26 (AY 2026-27): A Simple Guide for Taxpayers in India
Tax Deducted at Source (TDS) is one of the most important concepts under the Indian Income Tax system. For many individuals and businesses, TDS is the first interaction they have with income tax. To help taxpayers stay compliant, the Income Tax Act prescribes different TDS rates, threshold limits, and sections depending on the nature of payment.
This article explains the TDS Rate Chart for FY 2025-26 (Assessment Year 2026-27) in simple terms so that even a non-tax professional can understand when TDS applies, how much is deducted, and what compliance is required.
What is TDS and Why Is It Important?
TDS means that tax is deducted at the time of payment or credit, whichever is earlier. The person making the payment deducts tax and deposits it with the government on behalf of the recipient. This ensures regular tax collection and reduces tax evasion.
For example, if you pay rent, professional fees, or contractor charges, you may be required to deduct TDS before making the payment.
Frequently Applicable TDS Sections Explained
Section 192 – TDS on Salary
TDS on salary is deducted by employers based on the employee’s income tax slab rates.
There is no minimum threshold, meaning TDS applies as soon as taxable salary arises. The employer calculates tax after considering exemptions and deductions claimed by the employee.
Section 194C – Payment to Contractors
This section applies when payments are made to contractors or subcontractors.
- Single transaction limit: ₹30,000
- Annual limit: ₹1,00,000
- TDS rate:
- 1% for Individual/HUF
- 2% for others
This is commonly used for transporters, construction work, and service contracts.
Section 194H – Commission or Brokerage
If you pay commission or brokerage (excluding insurance commission), TDS applies when payments exceed ₹20,000 in a financial year.
- TDS rate: 2%
This section is widely applicable to agents, brokers, and marketing commissions.
Section 194J – Professional and Technical Services
This section covers payments made to professionals like doctors, lawyers, consultants, and technical service providers.
- Threshold: ₹50,000
- TDS rate:
- 2% for technical services
- 10% for professional services
Section 194I – TDS on Rent
TDS is applicable on rent paid for land, building, furniture, or machinery.
- Threshold: ₹50,000 per month
- Rates:
- 2% for plant and machinery
- 10% for land, building, or furniture
Section 194IA – Purchase of Immovable Property
When purchasing property (excluding agricultural land), TDS must be deducted if the property value exceeds ₹50 lakh.
- TDS rate: 1%
The buyer is responsible for deducting and depositing TDS.
Section 194IB – Rent Paid by Individual or HUF
Individuals or HUFs not liable to tax audit must deduct TDS if monthly rent exceeds ₹50,000.
- TDS rate: 2%
Section 194M – Payments by Individual/HUF
This section applies when individuals or HUFs make large payments for professional services or contract work.
- Threshold: ₹50 lakh
- TDS rate: 2%
Section 194N – Cash Withdrawal
TDS is applicable on large cash withdrawals from banks.
- Threshold:
- ₹1 crore for individuals
- ₹3 crore for co-operative societies
- TDS rate: 2%
Section 194T – Payments by Partnership Firm to Partners
Payments such as salary, bonus, or interest made by a partnership firm to its partners attract TDS.
- Threshold: ₹20,000
- TDS rate: 10%
Other Important TDS Sections
- Section 194B – Lottery Winnings:
- Threshold: ₹10,000
- TDS rate: 30%
- Section 194BA – Online Gaming Winnings:
- Threshold: Nil
- TDS rate: 30%
- Section 194D – Insurance Commission:
- Threshold: ₹20,000
- Rate: 2% (Individual/HUF), 10% (Others)
- Section 194O – E-commerce Transactions:
- Threshold: ₹5 lakh
- TDS rate: 0.1%
- Section 194R – Benefits or Perquisites:
- Threshold: ₹20,000
- TDS rate: 10%
Important Compliance Rules You Must Know
- If PAN is not provided, TDS will be deducted at 20% or applicable rate, whichever is higher.
- TDS must be deducted at the earlier of payment or credit.
- TDS should be deposited by the 7th of the next month (for March, by 30th April).
- Interest penalties:
- 1% per month for non-deduction
- 1.5% per month for delayed deposit
TDS Return Filing Requirements
- Quarterly TDS returns are mandatory
- Due date: End of the month following the quarter
- January–March quarter: 31st May
- Penalty under Section 271H: ₹200 per day, subject to limits
Final Thoughts
Understanding the TDS Rate Chart for FY 2025-26 (AY 2026-27) is crucial for individuals, businesses, employers, and professionals. Proper deduction, timely payment, and accurate return filing help avoid penalties and ensure smooth tax compliance.
Whether it’s salary, rent, commission, professional fees, or online gaming winnings, knowing the applicable section and rate can save you from unnecessary tax troubles.
Stay informed, stay compliant—and when in doubt, consult a tax professional.
