TDS rates are the percentages at which tax is deducted from various types of payments made to individuals or entities.
The concept of TDS was introduced with an aim to collect tax from the source of income. As per this concept, a person (deductor) who is liable to make payment of specified nature to any other person (deductee) shall deduct TDS and remit the same into the account of the Central Government.
There are various provisions of Tax Deduction at Source with different thresholds and multiple rates between 0.1%, 1%, 2%, 5%, 10%, 20%, 30% and above.
To make tax compliance easy and improve ease of doing business, the government planned to reduce some TDS rates.
Reduced TDS Rates Applicable from 1st Oct 2024
| Section | Present TDS Rate | Proposed TDS Rate |
| Section 194DA – Payment in respect of life insurance policy | 5% | 2% w.e.f. 1-10-2024 |
| Section 194G – Commission etc on sale of lottery tickets | 5% | 2% w.e.f. 1-10-2024 |
| Section 194H – Payment of commission or brokerage | 5% | 2% w.e.f. 1-10-2024 |
| Section 194-IB – Payment of rent by certain individuals or HUF | 5% | 2% w.e.f. 1-10-2024 |
| Section 194M – Payment of certain sums by certain individuals or Hindu undivided family | 5% | 2% w.e.f. 1-10-2024 |
| Section 194-O – Payment of certain sums by e-commerce operator to e-commerce participant | 1% | 0.1% w.e.f. 1-10-2024 |
| Section 194F relating to payments on account of repurchase of units by Mutual Fund or Unit Trust of India | Proposed to be omitted | Proposed to be omitted w.e.f. 1-10-2024 |
| Section 194D – Payment of insurance commission (in case of person other than company) | 5% | 2% w.e.f. 1-4-2025 |
However, there will be no changes in certain sections. The unchanged TDS rates include:
- Salary
- Virtual digital assets
- Winnings from lottery, etc.
- Race horses
- Payments related to the transfer of immovable property
- Payments to non-residents
- Contracts
These specific sections will continue to maintain with their current rates.
Updated TDS Threshold For FY 2025-26
| Section | Current Threshold For FY 24-25 | Proposed Threshold For FY 25-26 |
| 193 – Interest on securities | Nil | Rs. 10,000/- |
| 194A – Interest other than Interest on securities | (i) Rs. 50,000/- for senior citizen; (ii) Rs. 40,000/- in case of others when payer is bank, cooperative society and post office; (iii) Rs. 5,000/- in other cases; | (i) Rs. 1,00,000/- for senior citizen; (ii) Rs. 50,000/- in case of others when payer is bank, co-operative society and post office; (iii) Rs. 10,000/- in other cases; |
| 194 – Dividend for an individual shareholder | Rs. 5,000/- | Rs. 10,000/- |
| 194K – Income in respect of units of a mutual fund or specified company or undertaking | Rs. 5,000/- | Rs. 10,000/- |
| 194B – Winnings from lottery, crossword puzzle, etc. 194BB – Winnings from horse race | Aggregate of amounts exceeding Rs. 10,000/-during the financial year | Rs. 10,000/- in respect of a single transaction |
| 194D – Insurance commission | Rs. 15,000/- | Rs. 20,000/- |
| 194G – Income by way of commission, prize etc. on lottery tickets | Rs. 15,000/- | Rs. 20,000/- |
| 194H – Commission or brokerage | Rs. 15,000/- | Rs. 20,000/- |
| 194-I Rent | Rs. 2,40,000/- during the financial year | Rs. 50,000/- per month or part of a month |
| 194J – Fee for professional or technical services | Rs. 30,000/- | Rs. 50,000/- |
| 194LA – Income by way of enhanced compensation | Rs. 2,50,000/- | 5,00,000/- |
TDS provisions have various thresholds of amount of payment or amount of income, beyond which tax is required be deducted. It is proposed to rationalize these thresholds as below –
TDS Rates For The FY 2024-25 and 2025-26
| Section | Nature of Payment | Threshold Limit (Rs) | TDS Rate (%) |
| 192 | Payment of salary | Basic exemption limit | Normal Slab Rate |
| 192A | Premature EPF withdrawal | 50000 | 10% , Without a PAN number is now 20% |
| 193 | Interest on securities | 10000 | 10% |
| 194 | Payment of any dividend | 5000 | 10% |
| 194A | Interest other than “Interest on securities” | (i) Rs. 50,000 for senior citizen; w.e.f. 1st April 2025 Rs. 1,00,000 (ii) Rs. 40,000 in case of others; w.e.f. 1st April 2025 Rs. 50,000 when payer is bank, cooperative society and post office | 10% |
| 194A | Interest other than “Interest on securities” u/s 193 | 5000; w.e.f. 1st April 2025 Rs. 10,000 | 10% |
| 194B | Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort | Aggregate of amounts exceeding Rs. 10,000 during the financial year; w.e.f. 1st April 2025 Rs. 10,000 in respect of a single transaction | 30% |
| 194BA | Income from online games | NA | 30% |
| 194BB | Income from horse races | Aggregate of amounts exceeding Rs. 10,000 during the financial year; w.e.f. 1st April 2025 Rs. 10,000 in respect of a single transaction | 30% |
| 194C | Payment to contractor/sub-contractor (HUF/Individuals) | Single contractor payment 30,000 Aggregate contractor payment 1,00,000 | 1% |
| 194C | Payment to contractor/sub-contractor (Others) | Single contractor payment 30,000 Aggregate contractor payment 1,00,000 | 2% |
| 194D | Income of foreign Institutional Investors from securities | NA | 20% |
| 194D | Insurance commission (Domestic Companies) | 15000; w.e.f. 1st April 2025 Rs. 20,000 | 10% |
| 194D | Insurance commission (Other than companies) | 15000; w.e.f. 1st April 2025 Rs. 20,000 | 5% 2% w.e.f. 1st Apr 2025 |
| 194DA | Payment in respect of life insurance policy | 1,00,000 | 5% 2% w.e.f. 1st Oct 2024 |
| 194E | Payment to non-resident sportsmen/sports association | NA | 20% |
| 194EE | Payment in respect of deposit under National Savings scheme | 2500 | 10% |
| 194F | Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India | NA | 20% Provisions of this section are not applicable w.e.f. 1-10-2024 |
| 194G | Commission, etc., on sale of lottery tickets | 15000; w.e.f. 1st April 2025 Rs. 20,000 | 5% 2% w.e.f. 1st Oct 2024 |
| 194H | Commission or brokerage | 15000; w.e.f. 1st April 2025 Rs. 20,000 | 5% 2% w.e.f. 1st Oct 2024 |
| 194-I | Rent – Plant & Machinery | 2,40,000 during the financial year; w.e.f. 1st April 2025 Rs. 6,00,000 | 2% |
| 194-I | Rent – Land or building or furniture or fitting | 2,40,000 | 10% |
| 194-IA | Payment for transfer of immovable property other than agricultural land | 50,00,000 | 1% |
| 194-IB | Payment of rent by individual or HUF not liable to tax audit | 50000 | 5% 2% w.e.f. 1st Oct 2024 |
| 194-IC | Payment that are made under Joint Development Agreement (JDA) to Individual/HUF | NA | 10% |
| 194J | Fees for professional or technical services | ||
| 194J | Amount paid towards fees for technical services | 30000; w.e.f. 1st April 2025 Rs. 50,000 | 2% |
| 194J | Amount paid as royalty for sale/distribution/exhibition of cinematographic films | 30000; w.e.f. 1st April 2025 Rs. 50,000 | 2% |
| 194J | Amount paid by way of fee for professional services | 30000; w.e.f. 1st April 2025 Rs. 50,000 | 10% |
| 194K | Income in respect of units of a mutual fund or specified company or undertaking | Rs. 5,000; w.e.f. 1st April 2025 Rs. 10,000 | 10% |
| 194LA | Payment of compensation on acquisition of certain immovable property | 2,50,000; w.e.f. 1st April 2025 Rs.5,00,000 | 10% |
| 194LB | Payment of interest on infrastructure bonds to Non-Resident Indians | NA | 5% |
| 194LC | Payment of interest by an Indian Company or a business trust in respect of money borrowed in foreign currency under a loan agreement or by way of issue of long-term bonds | NA | 5% or 4% or 9% |
| 194LD | Payment of interest on rupee denominated bond of an Indian Company or Government securities to a Foreign Institutional Investor or a Qualified Foreign Investor | NA | 5% |
| 194LBA(1) | Certain income distributed by a business trust among its unit holder | NA | 10% |
| 194LBA(2) | Interest income of a business trust from SPV distribution to its unit holders | NA | 5% |
| 194LBA(2) | Dividend income of a business trust from SPV, in which it holds the entire share capital exempt the capital held by the government, and distribution to its unitholders | NA | 10% |
| 194LBA(3) | Rental income payment of assets owned by the business trust to the unitholders of such business trust | NA | 30% |
| 194LBA(3) | Rental income payment of assets owned by the business trust to the unitholders of such business trust | NA | 40% |
| 194LBB | Investment fund paying an income to a unit holder | NA | 10% , Non Resident 30% Foreign Company 40% |
| 194LBC | Income in respect of investment made in a securitisation trust | NA | Individual – 25%or HUF – 25% , Domestic Company – 10%, NRI – 30% , Foreign Company – 40% |
| 194M | Payments by Individual/HUF not liable to deduct TDS under Section 194C, 194H, and 194J | 50,00,000 | 5% 2% w.e.f. 1st Oct 2024 |
| 194N | Cash withdrawal exceeding a certain amount | Co-operative society – 3 Crore , Others – 1 crore | 2% |
| 194N | Cash withdrawal for those persons who have not filed ITR for three previous years immediately preceding the previous year | if exceeds Rs. 20 / if exceeds Rs. 1 crore | 2% / 5% |
194O | Payment by the e-commerce operator to e-commerce participant | 5,00,000 | 1% , Without PAN 5% 0.1% w.e.f. 1st Oct 2024 |
| 194P | Deduction of tax by specified bank in case of senior citizen having age of 75 or more | Basic exemption limit | Normal tax slab rates |
| 194Q | Payments for the purchase of goods | 50,00,000 | 0.1% |
| 194R | Perquisite or benefit to a business or profession | 20000 | 10% |
| 194S | Payment on transfer of Virtual Digital Asset | Specified Persons- 50,000 , Others- 10,000 | 1% |
| 194T | Payments of salary, remuneration, commission, bonus, or interest to a partner of a firm | if the total payments exceed Rs 20,000 in a financial year w.e.f 01-04-25 | 10% |
| 195 | Income in respect of investment made by a Non-resident Indian Citizen | NA | 20% |
| 195 | Income by way of long-term capital gains referred to in Section 115E in case of a Non-resident Indian Citizen | NA | 10% |
| 195 | Income by way of long-term capital gains referred to in sub-clause (iii) of clause (c) of sub-Section (1) of Section 112 | NA | 10% |
| 195 | Income by way of long-term capital gains as referred to in Section 112A | NA | 10% |
| 195 | Income by way of short-term capital gains referred to in Section 111A | NA | 15% |
| 195 | Any other income by way of long-term capital gains | NA | 20% |
| 196B | Income from units (including long-term capital gain on transfer of such units) to an offshore fund | NA | 10% |
| 196C | Income from foreign currency bonds or GDR of an Indian company (including long-term capital gain on transfer of such bonds or GDR) | NA | 10% |
TDS Certificate
TDS certificates are to be issued by a person deducting TDS to the assessee from whose TDS was deducted while making payment.
Different types of Certificate
| Certificate | Filling | Due date |
| Form 16 TDS on salary payment | Yearly | 31st May |
| Form 16A TDS on non salary payments | Quarterly | 15 days from the due date of filling return |
| Form 16B TDS on sale of property | Every Transaction | 15 days from the due date of filling return |
| Form 16C TDS on rent | Every Transaction | 15 days from the due date of filling return |
TDS Return Forms
| Form | Particulars | Due Dates |
| Form 24Q | Quarterly statement for tax deducted at source from “Salaries” | Q1 – 31st Jul Q2 – 31st Oct Q3 – 31st Jan Q4 – 31st May |
| Form 26Q | Quarterly statement of tax deducted at source in respect of all payments other than “Salaries” | Q1 – 31st Jul Q2 – 31st Oct Q3 – 31st Jan Q4 – 31st May |
| Form 26QB | Challan cum statement of deduction of tax u/s 194-IA | 30 days from the end of the month in which TDS is deducted |
| Form 26QC | Challan cum statement of deduction of tax u/s 194-IB | 30 days from the end of the month in which TDS is deducted |
| Form 27Q | Quarterly statement of deduction of tax from interest, dividend or any other sum payable to non-residents | Q1 – 31st Jul Q2 – 31st Oct Q3 – 31st Jan Q4 – 31st May |
| Form 27EQ | Quarterly statement of collection of tax at source (TCS) | Q1 – 31st Jul Q2 – 31st Oct Q3 – 31st Jan Q4 – 31st May |
TDS Rate Chart for FY 2024-25 (AY 2025-26) Click Here
FAQs
What are the new TDS changes?
The Finance Bill, 2024 proposes to reduce the TDS rate from 5% to 2%.
When will the proposed reduction in TDS rates take effect?
It will came into effect from 1st October 2024
What are the reasons behind the reduction in TDS rates?
The reduction in TDS is to simplify tax compliance and reduce the burden on taxpayers and businesses.