TDS Rate Chart FY 2025-26 — All Sections at a Glance

Tax Deducted at Source is the government’s mechanism for collecting tax at the moment income is paid rather than at the end of the year. If you run a business, pay contractors, rent premises, or pay professional fees, you are almost certainly a deductor — and the penalties for getting it wrong fall on you, not on the person you paid. This guide walks through the TDS framework section by section so you know which provision applies to a payment. Because rates and thresholds are revised in most Finance Acts, use the TAXAJ TDS rate finder to pull the exact rate and limit applicable to your payment rather than relying on a static chart.

How TDS works in practice

The person making a specified payment deducts tax before releasing the money, deposits it with the government by the prescribed date, files a quarterly return reporting the deduction, and issues a certificate to the recipient. The recipient then claims that amount as credit against their own liability. Four obligations, four separate failure points — deduction, deposit, return, certificate.

Two conditions must both be satisfied before you deduct: the payment must fall within a section that mandates TDS, and it must cross the threshold prescribed for that section. Below the threshold, no deduction is required.

Payments to contractors and sub-contractors

Section 194C governs payments under a contract for carrying out any work, including supply of labour. It distinguishes between individual and HUF payees on one hand and other entities on the other, applying different rates to each. It also carries a dual threshold — a per-transaction limit and an aggregate annual limit — so a series of small payments to the same contractor can trigger the obligation even where no single bill crosses the line.

Professional and technical services

Section 194J covers professional fees, technical services fees, royalty and certain non-compete payments. It is the section most commonly missed by growing businesses that engage consultants, designers, developers and advisors. Note that technical services and professional services attract different rates within the same section, so identifying which category a payment falls into matters.

Rent

Section 194-I applies to rent for land, buildings, plant, machinery and equipment, with different rates for immovable property versus plant and machinery. A separate provision applies to individuals and HUFs who pay rent above a specified monthly amount but are not otherwise subject to tax audit — a rule frequently overlooked by salaried tenants in high-rent metros.

Commission, brokerage and salary

• Section 192 — salary. Unlike other sections, deduction is on the estimated annual tax liability of the employee, spread across the year, and depends on the tax regime the employee has declared.
• Section 194H — commission and brokerage payments.
• Section 194A — interest other than interest on securities, most commonly bank deposit interest and interest on business loans from non-banking lenders.

Property, dividends and cash withdrawals

• Section 194-IA — purchase of immovable property above a prescribed consideration. The buyer is the deductor, files Form 26QB, and does not need a TAN for this specific obligation.
• Section 194 — dividends distributed by domestic companies.
• Section 194N — cash withdrawals from bank accounts beyond specified aggregate limits, with a stricter threshold where returns have not been filed.
• Section 194Q — purchase of goods by buyers above a turnover threshold, which interacts with the TCS provisions and needs careful sequencing.

Payments to non-residents

Section 195 applies to any sum chargeable to tax paid to a non-resident. It is materially different from the domestic sections: there is no minimum threshold, the rate depends on the nature of income read together with the applicable Double Taxation Avoidance Agreement, and a Form 15CA/15CB certification process usually applies. Getting section 195 wrong on a cross-border payment is one of the more expensive mistakes a growing company can make, so check the treaty position before remitting.

Higher deduction where PAN is not furnished

Where the payee does not furnish a valid PAN, section 206AA mandates deduction at a higher rate than the section would otherwise prescribe. A parallel provision applies a higher rate to payees who have not filed their income tax returns for the specified period. Both are absolute — you cannot waive them on the payee’s assurance, and the shortfall becomes your liability. Verify PAN before the first payment, not after.

Deposit deadlines, returns and consequences

Tax deducted must be deposited by the prescribed monthly due date, with a different deadline for deductions made in March. Quarterly statements in the relevant Form 24Q or 26Q follow, and TDS certificates in Form 16 or 16A are issued from the TRACES portal after the return is processed.

Failures carry distinct consequences: interest runs for late deduction and again, at a higher rate, for late deposit; a daily late fee applies for delayed returns subject to a cap linked to the tax amount; and expenditure on which TDS was not deducted can face disallowance when computing business income. That last consequence is often the costliest — the tax effect of a disallowance can dwarf the TDS itself. Use the TDS rate finder at the point of payment approval rather than at return-filing time, when it is already too late to fix.

A practical compliance routine

• Collect PAN and, where relevant, a lower-deduction certificate before onboarding any vendor
• Tag each vendor to the correct section in your accounting system so deduction is automatic
• Track aggregate annual payments per vendor, not just individual invoices
• Reconcile deposited challans against your books before every quarterly return
• Download certificates promptly so vendors do not chase you months later

Businesses building out their wider compliance calendar will find the ROC annual filing guide and the state-wise professional tax guide useful companions, since payroll deductions and statutory filings typically fall due in the same weeks.

Frequently asked questions

Do I need a TAN to deduct TDS?

Yes, for almost all sections. The main exception is TDS on purchase of immovable property under section 194-IA, where the buyer reports through Form 26QB using PAN instead of TAN.

What happens if I deduct TDS but deposit it late?

Interest applies for the period of delay at a higher rate than the interest for failure to deduct. Prolonged non-deposit of tax already deducted can attract prosecution provisions, so this is the one failure to never let drift.

Can a vendor ask me not to deduct TDS?

Only if they produce a valid lower or nil deduction certificate obtained from the assessing officer, or fall within a specific statutory exemption. A verbal request or a self-declaration is not sufficient protection for you as deductor.

Where do I find the exact rate for my payment?

Use the TAXAJ TDS rate finder, which is maintained for the current financial year and lets you select the section and payee type to see the applicable rate and threshold.