TDS Deduction Rates for FY 2025-26 — Complete Chart for All Sections

Knowing the correct TDS rate for each type of payment is essential for every business. Deducting TDS at the wrong rate can lead to short deduction demand notices from the Income Tax department. Here is the complete TDS rate chart for FY 2025-26 covering all major sections.

Section 192 — Salary

TDS on salary is deducted at the average rate of income tax on the estimated annual salary of the employee. No fixed rate — it depends on the employee's estimated income and deductions. If the employee has not submitted Form 12BB (declaration of deductions), TDS must be deducted at the higher rate (old regime).

Section 194A — Interest (Other than on Securities)

• Rate: 10%
• Threshold: ₹40,000 per year from banks (₹50,000 for senior citizens); ₹5,000 from others
• Applies to: interest on fixed deposits, recurring deposits, inter-company loans, etc.

Section 194C — Payments to Contractors

• Rate: 1% for individuals/HUFs; 2% for others (companies, firms)
• Threshold: Single payment above ₹30,000 or aggregate above ₹1,00,000 in a year
• Applies to: contracts for work, labour, carriage, advertising, catering

Section 194H — Commission or Brokerage

• Rate: 5%
• Threshold: Payments exceeding ₹15,000 in a year
• Applies to: commission to agents, dealers, distributors, brokers (other than insurance agents)

Section 194I — Rent

• Rate: 10% for rent of land, building or furniture; 2% for rent of plant, machinery or equipment
• Threshold: Payments exceeding ₹2,40,000 per year (₹20,000 per month)
• Applies to: office rent, warehouse rent, equipment lease payments

Section 194J — Professional or Technical Fees

• Rate: 10% for professional fees; 2% for technical services (since 2020)
• Threshold: Payments exceeding ₹30,000 per year to a single person
• Applies to: CA fees, lawyer fees, doctor fees, consultancy, technical services, royalties

Section 194Q — Purchase of Goods

• Rate: 0.1% of the purchase value exceeding ₹50 lakh
• Threshold: Only buyers with turnover above ₹10 crore in the previous year must deduct TDS
• Applies to: purchase of any goods (not services) from a resident supplier above the threshold

Section 195 — Payments to Non-Residents

TDS on payments to non-residents varies widely — from 20% for royalties and technical service fees to as high as 30% on other income. The applicable rate under the relevant Double Taxation Avoidance Agreement (DTAA) may be lower. A Tax Residency Certificate (TRC) from the non-resident is required to apply DTAA rates.

Lower or Nil TDS Deduction

A deductee can apply to the Assessing Officer for a lower or nil TDS certificate (Form 13) if their overall tax liability justifies it. If a valid certificate is obtained, TDS must be deducted at the reduced rate specified in the certificate.

Conclusion

Applying the correct TDS rate on every payment type is a critical compliance requirement. SPOTON provides ongoing TDS advisory and return filing services for businesses across Kerala, ensuring correct deductions and timely filings. Contact us for comprehensive TDS compliance services.