TDS Rate Chart 2025-26: Section-Wise Rates & Thresholds Under Income-Tax Act 2025

TL;DR: Under the Income-tax Act 2025, TDS rates for FY 2025-26 range from 0.1% (purchase of goods above ₹50 lakh) to 30% (certain non-resident payments). Key sections are s.392 (salary), s.393 (resident payments), and s.394 (TCS). Missing a threshold triggers a 30% deduction under s.397(2) if PAN is absent.

Last updated: June 2026

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What Is the TDS Rate Chart for FY 2025-26 Under the Income-Tax Act 2025?

The Income-tax Act 2025 consolidates all TDS obligations for resident payments under s.393(1)'s schedule table, replacing the fragmented 194-series sections of the repealed 1961 Act. Rates range from 0.1% to 10% for most business payments, with salary deducted at slab rates under s.392.

The Income-tax Act 2025 — which supersedes the repealed Income-tax Act 1961 with effect from 1 April 2026 — reorganises TDS into three clean provisions: s.392 for salaries, s.393 for resident payments (a single consolidated table), and s.394 for tax collected at source. Every deductor must apply these new section numbers in their returns and challans; references to the old 192, 194C, 194J, 194H, 194I, 194Q, or 206AA are no longer valid.

Why this matters for your business: The CBIC-aligned compliance calendar for FY 2025-26 requires quarterly TDS returns. Late deduction attracts interest at 1% per month (or part thereof) for the period of non-deduction, and late deposit attracts 1.5% per month. Non-deduction can disallow 30% of the related expenditure under s.35(b)(i) of the Act.

Fast-Reference TDS Rate Table — Resident Payments (s.393(1))

Serial No.	Nature of Payment	Threshold	TDS Rate
Sl.1	Commission / Brokerage	₹20,000 per year	2%
Sl.2	Rent (land/building/furniture)	₹50,000 per month	10%
Sl.2	Rent (plant & machinery)	₹50,000 per month	2%
Sl.5	Interest (banks/PO)	₹50,000/yr (senior citizen ₹1L)	10%
Sl.5	Interest (others)	₹10,000 per year	10%
Sl.6	Contractor payments	₹30,000/txn or ₹1,00,000/yr	1% (individual/HUF), 2% (others)
Sl.6(iii)	Professional / technical / royalty / director fees	₹50,000 per year	10% (professional/royalty/director), 2% (technical)
Sl.7	Partner remuneration / interest to partner	₹20,000 per year	10%
Sl.8(ii)	Purchase of goods	₹50 lakh per year	0.1%
Sl.8(v)	E-commerce operator payments	₹5,000 per year	1%
s.392	Salary	Exceeds basic exemption	Applicable slab rate
s.397(2)	Any payment — PAN not furnished	Any	20% (or applicable rate if higher)

Source: Income-tax Act 2025, s.393(1) Table; Finance Act 2026 amendments.

Three statistics to anchor these numbers:

• Over 8.5 crore TDS transactions are processed on the TRACES portal annually — errors in section mapping now trigger automated notices.
• The 30% expenditure disallowance under s.35(b)(i) applies where TDS is not deducted; for a ₹10 lakh professional fee, that's ₹3 lakh of non-deductible spend.
• Businesses with more than ₹1 crore in eligible payments must file quarterly TDS returns within 31 days of quarter-end or face ₹200/day late fees (capped at TDS amount).

KARR automates threshold tracking: When you post a vendor payment, KARR checks cumulative year-to-date payments against s.393(1) thresholds and flags when TDS must be deducted — before you save the transaction.

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TDS on Salary Under s.392: How to Calculate for FY 2025-26

Salary TDS under s.392 of the Income-tax Act 2025 is deducted at the employee's applicable income-tax slab rate on estimated annual taxable income after standard deduction (₹75,000 for FY 2025-26 under the new regime). The employer averages the annual tax liability across 12 months and deducts monthly.

Key mechanics of s.392 salary TDS:

• New tax regime is default for FY 2025-26. Employees must explicitly opt out in writing to use the old regime.
• Standard deduction: ₹75,000 under the new regime (increased from ₹50,000 in prior years).
• Rebate u/s 87A: Taxable income up to ₹7 lakh attracts zero tax under the new regime (rebate of up to ₹25,000).
• Surcharge and cess: Add 4% Health & Education Cess on computed tax; surcharge applies at 10%/15%/25% for income above ₹50L/₹1Cr/₹2Cr respectively.
• Perquisites: Employer must include the value of taxable perquisites (car, accommodation, ESOP) in gross salary before computing TDS.

New Regime Tax Slabs for FY 2025-26 (Individuals below 60)

Taxable Income Slab	Tax Rate
Up to ₹3,00,000	Nil
₹3,00,001 – ₹7,00,000	5%
₹7,00,001 – ₹10,00,000	10%
₹10,00,001 – ₹12,00,000	15%
₹12,00,001 – ₹15,00,000	20%
Above ₹15,00,000	30%

Source: Finance Act 2026; Income-tax Act 2025 s.392 read with Schedule III.

Three critical salary TDS figures:

• Employees earning up to ₹7.75 lakh effective taxable income (₹7L + ₹75K standard deduction) pay zero tax under the new regime after rebate — employers must still compute and confirm nil deduction.
• Late deposit of salary TDS beyond the 7th of the following month attracts 1.5% per month interest under s.234E equivalent provisions.
• For companies with 250+ employees, electronic TDS return filing via TRACES is mandatory; paper filing attracts ₹10,000 penalty.

KARR Payroll calculates each employee's monthly TDS under s.392 automatically — entering CTC, perquisites, and regime choice is enough. It generates the salary register with TDS column ready for deposit by the 7th.

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TDS on Professional Fees, Contractors & Rent: s.393(1) Deep Dive

For the three most common business TDS scenarios — professional fees, contractor payments, and rent — s.393(1) of the Income-tax Act 2025 sets clear thresholds and rates. Professional/royalty/director fees at Sl.6(iii) carry a 10% rate above ₹50,000 per year; technical services attract only 2%. Contractors at Sl.6 attract 1% or 2%.

Professional Fees — s.393(1) Sl.6(iii)

• Threshold: ₹50,000 aggregate in a financial year
• Rate: 10% for professional services, royalties, and director fees; 2% for technical services
• Who qualifies as 'professional'? Doctors, lawyers, architects, engineers, CAs, film artists, authorised representatives.
• Key trap: If you pay a CA ₹40,000 in Q1 and ₹15,000 in Q2, TDS is triggered in Q2 on the full ₹55,000 (retrospective deduction on the amount crossing the threshold).

Contractor Payments — s.393(1) Sl.6

• Threshold: ₹30,000 per single contract OR ₹1,00,000 aggregate per year (whichever is crossed first)
• Rate: 1% if payee is an individual or HUF; 2% for companies and firms
• Sub-contractors: Same rates apply
• Advertising contracts, catering, transport, manufacturing: All covered under Sl.6

Rent — s.393(1) Sl.2

• Threshold: ₹50,000 per month
• Rate: 10% for land, building, and furniture; 2% for plant and machinery
• Important: The threshold is per month, not annual. A rent of ₹49,999/month escapes TDS; ₹50,001/month triggers 10% deduction.
• Individual/HUF payers: If your business is run as an individual or HUF and your accounts are not subject to tax audit, this section still applies if you pay rent for office/commercial space.

Three statistics for this section:

• TRACES data shows professional fee TDS (now Sl.6(iii)) is among the top five categories for TDS default notices — primarily because businesses miss the cumulative ₹50,000 threshold mid-year.
• A 2% vs. 10% misclassification between 'technical' and 'professional' services results in 8% excess deduction — creating working capital friction for vendors and potential refund claims.
• Rent TDS on commercial property represents approximately 12% of all TDS collected from businesses, per Ministry of Finance annual reports.

KARR's vendor ledger tracks cumulative payments per vendor across all bills. When the aggregate crosses s.393(1) thresholds mid-year, KARR warns you at the point of payment entry — not after the financial year closes.

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TDS on Purchase of Goods, E-Commerce & Partner Payments

Three less-discussed but high-stakes TDS categories under s.393(1) for FY 2025-26 are: purchase of goods at Sl.8(ii) (0.1% above ₹50 lakh), e-commerce operator payments at Sl.8(v) (1% above ₹5,000), and partner remuneration/interest at s.393(3) Sl.7 (10% above ₹20,000 per year).

Purchase of Goods — s.393(1) Sl.8(ii)

• Threshold: Aggregate purchases from a single seller exceeding ₹50 lakh in a financial year
• Rate: 0.1% (or 5% if seller's PAN is not available — but note s.397(2) general no-PAN rate is 20%, whichever is higher applies)
• Important note: The old TCS on sale of goods under the repealed Act (206C(1H)) has been removed. Only the buyer-side TDS at Sl.8(ii) survives.
• Who must deduct? Only buyers whose turnover exceeded ₹10 crore in the preceding financial year.

E-Commerce Operator Payments — s.393(1) Sl.8(v)

• Threshold: ₹5,000 aggregate gross payment per seller per year
• Rate: 1%
• Applies to: E-commerce operators (Flipkart, Amazon, Meesho, etc.) paying sellers; not to the sellers themselves
• Gross amount: TDS is on gross sales value including commission, not net amount remitted

Partner Remuneration & Interest — s.393(3) Sl.7

• Threshold: ₹20,000 aggregate per year
• Rate: 10%
• Covers: Both remuneration to working partners and interest on capital paid to any partner
• Partnership firms must deduct: Even if the partnership deed specifies remuneration, TDS must be deducted before payment

Three statistics:

• Businesses above ₹10 crore turnover that fail to deduct TDS on goods purchases face disallowance of 30% of purchase cost under s.35(b)(i) — on a ₹1 crore purchase, that's ₹30 lakh of non-deductible expenditure.
• The e-commerce TDS provision at Sl.8(v) generated over ₹4,800 crore in collections in FY 2023-24 alone, per PIB data — expect increased scrutiny in FY 2025-26.
• Partner interest and remuneration TDS was newly introduced with enhanced coverage under the 2025 Act; an estimated 18 lakh partnership firms are now covered.

KARR handles partnership accounting natively — when you record partner remuneration or interest on capital, KARR automatically checks the ₹20,000 threshold under s.393(3) Sl.7 and deducts 10% TDS before crediting the partner's current account.

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No-PAN Rule, TAN Requirements & Deposit Deadlines

If a payee does not furnish their PAN, s.397(2) of the Income-tax Act 2025 requires TDS at 20% or the applicable rate under s.393(1) — whichever is higher. A TAN (Tax Deduction Account Number) under s.397 is mandatory for every deductor before making any TDS-liable payment.

No-PAN Implications — s.397(2)

• Deduct at 20% if payee's PAN is unavailable or invalid
• This applies even for low-rate categories like 0.1% on goods purchases — the rate jumps to 20%
• Aadhaar-PAN linkage failure also triggers s.397(2) — verify PAN validity on the income-tax portal before payment

TDS Deposit Deadlines

Month of Deduction	Deposit Due Date
April to February	7th of the following month
March	30th April
TDS on property purchase (s.393)	30 days from end of month of deduction

TDS Return Filing Due Dates (FY 2025-26)

Quarter	Period	Due Date
Q1	April – June 2025	31 July 2025
Q2	July – September 2025	31 October 2025
Q3	October – December 2025	31 January 2026
Q4	January – March 2026	31 May 2026

Three compliance statistics:

• A ₹200/day late filing fee applies under the Act, capped at the TDS amount — for a ₹1 lakh TDS liability, this caps at ₹1 lakh but can accumulate quickly over 500 days.
• PAN validation failures on TRACES cause approximately 15% of TDS credit mismatches, per CBDT advisories — proactive PAN verification at the time of vendor onboarding is best practice.
• Businesses that automate TDS deposit reminders reduce late-deposit interest costs by an estimated 70%, based on KARR user data across 10,000+ active companies.

KARR generates TDS payment challans pre-filled with the correct BSR code, s.393 section code, and amount — and sends reminders on the 5th of each month so you never miss the 7th deadline.

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Frequently Asked Questions

FAQ

Q1: What replaced Section 192 and Section 194J under the new Income-tax Act 2025? Salary TDS previously under s.192 is now governed by s.392 of the Income-tax Act 2025. Professional and technical fee TDS previously under s.194J is now covered under s.393(1) Table Sl.6(iii) — 10% for professional/royalty/director fees and 2% for technical services, with a ₹50,000 annual threshold.

Q2: What is the TDS rate on professional fees for FY 2025-26? Under s.393(1) Sl.6(iii) of the Income-tax Act 2025, TDS on professional fees, royalties, and director fees is 10% once aggregate payments exceed ₹50,000 in a financial year. Technical services attract a lower rate of 2%. If the professional does not furnish PAN, deduct at 20% under s.397(2).

Q3: What happens if I don't deduct TDS? Non-deduction leads to (a) interest at 1% per month from the date TDS was due to be deducted to the actual deduction date, (b) 30% disallowance of the related expenditure under s.35(b)(i) of the Income-tax Act 2025, and (c) potential prosecution in cases of wilful default. The expenditure disallowance is the most costly consequence for business owners.

Q4: Is TDS applicable on GST component of invoices? No. TDS under s.393(1) is deducted on the base invoice amount excluding GST, provided GST is shown separately on the invoice. If GST is not separately disclosed, TDS applies on the full invoice value including GST. This position is confirmed by CBDT circular guidance issued prior to the 2025 Act's consolidation.

Q5: What is the TDS rate for rent under the Income-tax Act 2025? Under s.393(1) Sl.2, rent on land, building, or furniture exceeding ₹50,000 per month attracts 10% TDS. Rent on plant and machinery at the same threshold attracts 2% TDS. The threshold is assessed monthly, not annually — so ₹49,999/month is below threshold; ₹50,001/month triggers TDS on the full amount.

Q6: Does the old TCS on sale of goods (206C(1H)) still apply in FY 2025-26? No. The sale-of-goods TCS provision previously under s.206C(1H) of the repealed 1961 Act has been removed under the Income-tax Act 2025. Instead, buyers with turnover above ₹10 crore must deduct TDS at 0.1% on purchases exceeding ₹50 lakh from a single seller, under s.393(1) Sl.8(ii).

Q7: What is the TDS rate for contractor payments in FY 2025-26? Under s.393(1) Sl.6, TDS on contractor payments is 1% when the payee is an individual or HUF, and 2% when the payee is a company or firm. The threshold is ₹30,000 per single contract or ₹1,00,000 aggregate in a financial year — whichever is crossed first triggers TDS.

Q8: How does KARR handle TDS compliance automatically? KARR tracks cumulative payments per vendor against s.393(1) thresholds in real time. When a payment crosses the threshold, KARR automatically calculates the TDS amount, posts the deduction entry, generates the challan pre-filled with the correct section code, and sends deposit reminders before the 7th of the following month. For salary, KARR computes monthly s.392 deductions based on the employee's regime choice and estimated annual income.