Frequently Utilized TDS Sections with Applicable TDS Rates for FY 2025-26

Introduction

Tax Deducted at Source (TDS) is an essential aspect of the Indian tax framework. It makes certain that tax is gathered at the point of income generation. For Financial Year (FY) 2025-26, it is important for businesses, professionals, and taxpayers to be informed about the current TDS rates relevant under various sections of the Income Tax Act. Here's a comprehensive overview of the most commonly cited TDS sections, their relevant rates, and threshold limits.

TDS Rates Relevant for Payments to Residents (FY 2025-26)

Below is a section-wise summary of frequently utilized TDS regulations:

Section 194A – Interest (Excluding Interest on Securities)

Nature of Payment: Interest (excluding securities)

TDS Rate:
Individual/HUF: 10%
Others: 10%
If No/Invalid PAN: 20%

Threshold Limit: Ôé╣10,000

Section 194C – Payments to Contractors

Nature of Payment: Payments made to contractors

TDS Rate:
Individual/HUF: 1%
Others: 2%
If No/Invalid PAN: 20%

Threshold Limit:
Ôé╣30,000 for a single payment
Ôé╣1,00,000 total in a financial year

Section 194H – Commission/Brokerage

Nature of Payment: Commission or brokerage

TDS Rate:
Individual/HUF: 2%
Others: 2%
If No/Invalid PAN: 20%

Threshold Limit: Ôé╣20,000

Section 194I – Rent

194I(a) – Rent for Plant, Machinery, Equipment
TDS Rate: 2%
Threshold Limit: Ôé╣50,000 per month

194I(b) – Rent for Land, Building, Furniture, Fittings
TDS Rate: 10%
Threshold Limit: Ôé╣50,000 per month

Section 194J – Professional or Technical Service Fees

Nature of Payment:

  • Technical Services, Call Centre, Royalty for Films: 2%
  • Professional Services: 10%

TDS Rate (for both categories):
Individual/HUF: As outlined above
Others: As outlined above
If No/Invalid PAN: 20%

Threshold Limit: Ôé╣50,000

Section 194T – Payments to Firm Partners

Nature of Payment: Salary, Remuneration, Commission, Bonus, or Interest

TDS Rate:
Individual/HUF: 10%
Others: 10%
If No/Invalid PAN: 20%

Threshold Limit: Ôé╣20,000

Relevant TDS Section for Turnover Exceeding Ôé╣10 Crore in Previous Year

Section 194Q – TDS on Goods Purchase

Applicability: When turnover in the last financial year surpassed Ôé╣10 crore

TDS Rate:
Individual/HUF: 0.1%
Others: 0.1%
If No/Invalid PAN: 5%

Threshold Limit: Ôé╣50,00,000

Note: TCS under Section 206C(1H) will no longer apply from April 1, 2025, streamlining compliance for buyers.

Summary Table of TDS Rates & Thresholds
Section    Nature of Payment TDS Rate    Threshold
194A Interest (non-security) 10% Ôé╣10,000
194C Contractors 1%-2% Ôé╣30,000 (single), Ôé╣1,00,000 (aggregate)
194H Commission/Brokerage 2% Ôé╣20,000
194I(a) Rent (Machinery/Equipment) 2% Ôé╣50,000/month
194I(b) Rent (Building/Furniture) 10% Ôé╣50,000/month
194J Technical Services 2% Ôé╣50,000
194J Professional Services 10% Ôé╣50,000
194T Payment to Partners 10% Ôé╣20,000
194Q Purchase of Goods 0.1% Ôé╣50,00,000

Key Compliance Tip

Always confirm the PAN information of the payee to prevent a higher TDS deduction of 20% or 5% under the respective sections. Accurate and timely filing of TDS returns also facilitates smooth processing of the payee's income tax return and helps avoid notices or penalties.

Conculsion,

Grasping and adhering to the applicable TDS rates is crucial for businesses, professionals, and taxpayers. With changes introduced in FY 2025-26—especially concerning TCS under Section 206C(1H)—remaining informed ensures compliance and financial effectiveness.

Need help with TDS compliance or income tax filing? Reach out to our team at myITRonline for efficient and professional assistance.