Tax Deducted at Source (TDS) is an essential component of the Indian tax system. It ensures timely tax collection and minimizes tax evasion. Understanding the TDS rates applicable for FY 2025-26 (AY 2026-27) is crucial for efficient tax planning. In this guide, we provide a comprehensive overview of the TDS Rate Chart 2025-26 to help you maximize your tax savings.
What is TDS?
TDS, or Tax Deducted at Source, is a mechanism by which the government collects taxes at the time of income generation. It ensures a steady flow of revenue and helps in minimizing tax evasion. The person making the payment deducts tax at a prescribed rate and deposits it with the government.
Why is TDS Important?
- Ensures regular revenue flow to the government.
- Minimizes tax evasion by collecting tax at the source of income.
- Simplifies the tax payment process for individuals and businesses.
- Helps taxpayers in easy tracking of income and tax deducted through Form 26AS.
TDS Rate Chart 2025-26 (AY 2026-27)
Here’s the detailed TDS Rate Chart for FY 2025-26 (AY 2026-27):
| Section | Nature of Payment | Threshold | Individual/HUF | Others |
|---|---|---|---|---|
| 192 | Salary Payment | ₹2,50,000 | Slab Rates | Slab Rates |
| 192A | PF Withdrawal (Early) | ₹50,000 | 10% | 10% |
| 193 | Interest on Securities | ₹10,000 | 10% | 10% |
| 194 | Dividend Income | ₹10,000 | 10% | 10% |
| 194A | Interest on Deposits | ₹50,000 (Seniors) / ₹10,000 (Others) | 10% | 10% |
| 194B | Lottery & Game Winnings | ₹10,000 per transaction | 30% | 30% |
| 194BA | Online Game Winnings | No Threshold | 30% | 30% |
| 194BB | Horse Race Winnings | ₹10,000 per transaction | 30% | 30% |
| 194C | Contractor Payments | ₹30,000 (Single) / ₹1,00,000 (Annual) | 1% | 2% |
| 194D | Insurance Commission | ₹20,000 | 5% (Individuals) / 10% (Companies) | Not Applicable |
| 194DA | Life Insurance Maturity | ₹1,00,000 | 2% | 2% |
| 194I | Rent Payments | ₹50,000 per month (₹6,00,000 per year) | 10% | 10% |
| 194IA | Property Transactions | ₹50,00,000 | 1% | 1% |
| 194J | Professional Fees | ₹50,000 | 10% (Professional) / 2% (Technical) | 10% |
| 194S | Cryptocurrency Transactions | ₹50,000 (Specified) / ₹10,000 (Others) | 1% | 1% |
Note: TDS rates vary for different types of payments. Ensure to check the applicable section before making a deduction.
Detailed Explanation of Major TDS Sections
1. TDS on Salary (Section 192)
- Threshold Limit: ₹2,50,000
- TDS Rate: As per income slab rates
- Employers are responsible for deducting TDS on salary payments. The rate depends on the employee’s income slab.
2. TDS on Employee Provident Fund Withdrawal (Section 192A)
- Threshold Limit: ₹50,000
- TDS Rate: 10%
- Applicable on premature withdrawals if PAN is provided. If PAN is not provided, TDS is deducted at the maximum marginal rate.
3. TDS on Cryptocurrency Transactions (Section 194S)
- Threshold Limits:
- ₹50,000 (Specified person)
- ₹10,000 (Others)
- TDS Rate: 1%
- Introduced to regulate cryptocurrency transactions. TDS is deducted at the time of payment or credit.
4. TDS on Rent Payments (Section 194I & 194IB)
- Threshold Limits:
- ₹50,000 per month (For 194IB)
- ₹6,00,000 per year (For 194I)
- TDS Rate: 10% (Land, building, furniture), 2% (Plant & machinery)
- Applicable to rent payments exceeding the threshold limit.
TDS on Cryptocurrency Transactions
Cryptocurrency transactions are gaining popularity. Under Section 194S, a 1% TDS is applicable on specified cryptocurrency transactions above the threshold limit. This provision aims to bring transparency and regulation to digital transactions.
How to Claim TDS Refunds
If excess TDS is deducted, you can claim a refund by filing your Income Tax Return (ITR). The refund amount will be credited to your bank account after verification. Ensure to check Form 26AS for the TDS details.
Steps to Claim TDS Refund:
- File your Income Tax Return using the applicable ITR form.
- Mention the TDS amount deducted.
- Verify the details with Form 26AS.
- Submit the ITR and wait for processing.
- If approved, the refund will be credited to your registered bank account.
Staying updated with the latest TDS Rate Chart 2025-26 helps in efficient tax planning and compliance. Whether you are an individual, a business owner, or a professional, understanding TDS rates ensures smooth financial transactions and maximizes your tax savings.
Pro Tips for Maximizing Tax Savings:
- Keep track of income sources to avoid excess TDS.
- Submit Form 15G/15H if eligible for exemption.
- File ITR timely for TDS refund claims.
Optimize Your Tax Planning Today!
Use this TDS Rate Chart 2025-26 as a guide to stay compliant and optimize your tax savings. For personalized advice, consult a tax professional.
Frequently Asked Questions
If PAN is not provided, TDS will be deducted at the highest of the following rates:
- 20%
- Twice the prescribed rate
- Rate applicable in the Income Tax Act
Yes, under Section 194S, a 1% TDS is applicable on specified cryptocurrency transactions above the threshold limit.
You can claim a refund while filing your income tax return if the TDS deducted exceeds your actual tax liability.
Yes, if the transaction value exceeds ₹50,00,000, TDS at 1% must be deducted by the buyer under Section 194IA.
No, but the threshold limit for TDS on bank interest for senior citizens is ₹50,000, higher than the ₹10,000 limit for others.
