The concept of TDS ensures tax collection at the very source of income. A deductor making specified payments to a deductee must deduct tax and deposit it with the government. The deductee can claim credit for TDS based on Form 26AS or the TDS certificate.
TDS Rates for FY 2025-26
| Section | Particulars | Threshold (₹) | TDS Rate (%) |
|---|---|---|---|
| 192 | Salary Income | As per slab | Slab rates (Old/New Regime) |
| 192A | EPF – Premature withdrawal | 50,000 | 10% (30% if no PAN) |
| 193 | Interest on Securities | 10,000 | 10% |
| 193 | Interest on Debentures | 5,000 | 10% |
| 194 | Dividend | 10,000 | 10% |
| 194A | Interest from banks/post office | 50,000 (100,000 for seniors) | 10% |
| 194A | Interest from others | 10,000 | 10% |
| 194B | Winnings from Lottery/Games | 10,000 (Single transaction) | 30% |
| 194BB | Winnings from Horse Races | 10,000 (Single transaction) | 30% |
| 194C | Contractor Payments | 30,000 (Single)/100,000 (Aggregate) | 1% (Ind./HUF), 2% (Others) |
| 194D | Insurance Commission | 20,000 | 5% (Ind.), 10% (Companies) |
| 194DA | Life Insurance Proceeds | 100,000 | 5% |
| 194E | Payments to Non-resident Sportspersons | NA | 20% |
| 194EE | NSS Withdrawal | 2,500 | 10% |
| 194G | Lottery Commission | 20,000 | 5% |
| 194H | Commission/Brokerage | 20,000 | 2% ( WEF 01.10.2024) |
| 194I | Rent (Land/Building/Furniture) | 600,000 | 10% |
| 194I | Rent (Plant & Machinery) | 600,000 | 2% |
| 194IB | Rental Payments by Individuals (Non-Tax Audit) | 50,000 per month | 5% |
| 194IA | Property Sale (except Agriculture Land) | 5,000,000 | 1% |
| 194IC | Joint Development Agreement Payments | NA | 10% |
| 194J | Professional/Technical Fees | 50,000 | 2% (Technical), 10% (Others) |
| 194LA | Compensation for Immovable Property Acquisition | 500,000 | 10% |
| 194LB | Interest on Infrastructure Bonds to NRIs | NA | 5% |
| 194LD | Interest on Bonds/Govt. Securities | NA | 5% |
| 194N | Cash Withdrawal > ₹1 Crore | 10,000,000 | 2% |
| 194Q | Purchase of Goods | 5,000,000 | 0.1% |
| 194T | Remuneration, Interest, Commission to Partners | 20,000 | 10% |
| 194P | TDS for Senior Citizens (75+ with No ITR) | NA | Slab rates |
Tax Collected at Source (TCS) Rates
Certain transactions require sellers to collect tax at source while receiving payments.
TCS Rates for FY 2025-26
| Section | Goods/Services Liable for TCS | Threshold (₹) | TCS Rate (%) |
| 206C(1) | Alcoholic Liquor for Human Consumption | NA | 1% |
| 206C(1) | Timber (Forest Lease) | NA | 2.5% |
| 206C(1) | Timber (Other Sources) | NA | 2.5% |
| 206C(1) | Other Forest Produce (excluding Timber/Tendu) | NA | 2.5% |
| 206C(1) | Scrap | NA | 1% |
| 206C(1) | Tendu Leaves | NA | 5% |
| 206C(1) | Minerals (Coal/Lignite/Iron Ore) | NA | 1% |
| 206C(1C) | Parking Lot, Toll Plaza, Mining & Quarrying | NA | 2% |
| 206C(1F) | Sale of Motor Vehicles (>₹10 lakh) | 1,000,000 | 1% |
| 206C(1G) | Overseas Tour Packages | 1,000,000 | 5% (10% if no PAN) |
| 206C(1G) | Education Loan Remittance (LRS) | 700,000 | Nil |
| 206C(1H) | Sale of Goods | 5,000,000 | 0.1% |
Key Compliance Considerations:
Higher TDS/TCS Rates for Non-filers: Non-compliant taxpayers face a higher TDS rate of 5% or twice the standard rate.
Senior Citizens (75+): Section 194P allows automatic TDS deduction, exempting them from ITR filing.
Lottery & Winnings: Flat 30% TDS applies on winnings from lotteries, games, and horse races.
Rental Payments: Individuals (non-tax audit cases) must deduct 5% TDS if monthly rent exceeds ₹50,000.
TCS on Overseas Tour Packages: Sellers must collect 5% TCS on tour packages above ₹10 lakh, increasing to 10% if PAN/Aadhaar is not provided.
Adhering to the revised TDS and TCS rates is crucial for tax compliance and avoiding penalties.
