Introduction
Tax Deducted at Source (TDS) is an important mechanism under the Income Tax Act that enables the government to collect tax at the source of income. Under this system, the person making certain payments such as salary, interest, commission, rent, or professional fees must deduct tax before paying the amount to the recipient.
The Finance Act 2025 introduced several amendments to simplify compliance and reduce the burden on taxpayers. These changes include higher threshold limits, rationalized TDS rates, and the introduction of new provisions such as Section 194T.
This article explains the latest TDS rate chart applicable for Financial Year 2025–26 (Assessment Year 2026–27) along with important compliance rules.
TDS Rate Chart for FY 2025–26
The following table summarizes the major TDS provisions currently applicable.
| Section | Nature of Payment | Threshold Limit | TDS Rate |
|---|---|---|---|
| 192 | Salary | Basic exemption limit | As per income tax slab |
| 192A | Premature withdrawal from EPF | ₹50,000 | 10% (20% if PAN not provided) |
| 194A | Interest on bank/post office deposits | ₹50,000 (₹1,00,000 for senior citizens) | 10% |
| 194B | Lottery or crossword winnings | ₹10,000 | 30% |
| 194C | Contractor or sub-contractor payments | ₹30,000 per contract / ₹1,00,000 aggregate | 1% (Individual/HUF) / 2% (Others) |
| 194D | Insurance commission | ₹20,000 | 2% |
| 194G | Lottery ticket commission | ₹20,000 | 2% |
| 194H | Commission or brokerage | ₹20,000 | 2% |
| 194I | Rent (plant or machinery) | ₹2,40,000 | 2% |
| 194I | Rent (land, building or furniture) | ₹2,40,000 | 10% |
| 194IA | Purchase of immovable property | ₹50,00,000 | 1% |
| 194IB | Rent paid by individual/HUF (not under audit) | ₹50,000 per month | 2% |
| 194J | Professional services | ₹50,000 | 10% |
| 194J | Technical services / royalty | ₹50,000 | 2% |
| 194M | Payment to contractor/professional by individual or HUF | ₹50,00,000 | 2% |
| 194O | E-commerce participant payments | ₹5,00,000 (for individuals/HUF) | 0.1% |
| 194Q | Purchase of goods | ₹50,00,000 | 0.1% |
| 194S | Transfer of virtual digital assets (crypto etc.) | ₹50,000 (specified persons) / ₹10,000 (others) | 1% |
| 194N | Cash withdrawal from bank | ₹1 crore | 2% |
| 194T | Payment by firm to partner (salary, interest, commission etc.) | ₹20,000 | 10% |
New Provision – Section 194T
The Finance Act 2025 introduced Section 194T, which brings payments made by partnership firms to partners under the TDS framework.
Under this provision, a partnership firm must deduct TDS at 10% when it pays salary, remuneration, commission, bonus, or interest to partners, provided the total payment exceeds ₹20,000 in a financial year.
This rule improves transparency and ensures proper tax reporting of such payments.
PAN Requirement for TDS
The deductee must provide a valid Permanent Account Number (PAN) to the deductor. If the deductee fails to furnish PAN, the deductor must deduct tax at 20% or the applicable rate, whichever is higher, according to Section 206AA.
Therefore, taxpayers should always ensure that their PAN details are correctly shared.
Due Date for TDS Payment
After deducting tax, the deductor must deposit it with the government within the prescribed time.
- Monthly TDS payment: On or before the 7th of the following month
- TDS deducted in March: On or before 30 April
Timely payment prevents interest and penalties.
TDS Return Filing Due Dates
Deductors must file quarterly TDS returns using the prescribed forms.
| Quarter | Period | Due Date |
|---|---|---|
| Q1 | April – June | 31 July |
| Q2 | July – September | 31 October |
| Q3 | October – December | 31 January |
| Q4 | January – March | 31 May |
Salary payments are reported in Form 24Q, while other payments are reported in Form 26Q.
Issuance of TDS Certificates
After filing TDS returns, the deductor must issue TDS certificates to the deductee.
- Form 16 (for salary): issued by 15 June
- Form 16A (for other payments): issued within 15 days from filing the TDS return
These certificates allow taxpayers to claim credit for the tax deducted.
Conclusion
The TDS provisions for FY 2025–26 aim to simplify tax compliance and improve transparency in financial transactions. With updated threshold limits, revised TDS rates, and the introduction of Section 194T, taxpayers and businesses must carefully follow the applicable rules.
By understanding the current TDS rate chart, compliance requirements, and due dates, taxpayers can ensure proper deduction and timely filing, thereby avoiding penalties and maintaining smooth tax compliance.