TDS Rate Chart FY 2025-26 (AY 2026-27) | Comprehensive Guide for Business Owners

TDS Rate Chart FY 2025-26 (AY 2026-27) | Comprehensive Guide for Business Owners

Introduction

As we enter the Financial Year 2025-26, the government has introduced significant relief measures and new compliance requirements in the TDS landscape. For business owners and finance teams, staying updated is not just about compliance—it’s about cash flow management.

This guide provides a consolidated view of the TDS Rates for FY 2025-26, incorporating all amendments from Budget 2025.

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🚨 Key Changes in Budget 2025 (Must Read)

Before you refer to the rate chart, please note these critical updates that will impact your accounting entries starting April 1, 2025:

1. Huge Relief on Rent (Sec 194I): The TDS threshold for rent on land, building, and furniture has been increased from ₹2.4 Lakhs to ₹6 Lakhs per annum. You no longer need to deduct TDS for smaller rental agreements.
2. New TDS on Partners (Sec 194T): A new section has been inserted. Partnership firms must now deduct 10% TDS on salary, remuneration, commission, or interest paid to partners if it exceeds ₹20,000 in a financial year.
3. Higher Thresholds for Professionals: The limit for deducting TDS on Professional Fees (194J) and Commission (194H) has been raised, reducing the compliance burden for small transactions.
4. No More “206AB” Check: The requirement to check if a vendor has filed their ITR (Section 206AB) has been removed for this financial year, simplifying the vendor onboarding process.

TDS Rate Reference Table (FY 2025-26)

Section	Nature of Payment	Threshold Limit (FY 25-26)	TDS Rate (Individual/HUF)	TDS Rate (Others)
192	Salary	Basic Exemption Limit	Slab Rate	Slab Rate
192A	EPF Premature Withdrawal	₹50,000	10%	10%
194	Dividend Income	₹10,000 (Increased)	10%	10%
194A	Interest (Bank/Post Office)	₹50k (Others) / ₹1L (Sr. Citizen)	10%	10%
194A	Interest (Unsecured Loans)	₹10,000	10%	10%
194C	Contractor (Single Bill)	₹30,000	1%	2%
194C	Contractor (Aggregate FY)	₹1,00,000	1%	2%
194D	Insurance Commission	₹20,000 (Increased)	5%	10%
194H	Commission / Brokerage	₹20,000 (Increased)	2%	2%
194I	Rent (Plant & Machinery)	₹6,00,000 p.a. (₹50k/month)	2%	2%
194I	Rent (Land/Building/Furniture)	₹6,00,000 p.a. (₹50k/month)	10%	10%
194IA	Purchase of Immovable Prop.	₹50 Lakhs	1%	1%
194IB	Rent by Individual/HUF (Non-Audit)	₹50,000 p.m.	5%	NA
194J	Professional Fees	₹50,000 (Increased)	10%	10%
194J	Tech Services / Royalty	₹50,000 (Increased)	2%	2%
194Q	Purchase of Goods (>10Cr T/O)	₹50 Lakhs	0.1%	0.1%
194R	Business Perquisites	₹20,000	10%	10%
194T	Partners’ Remuneration/Int.	₹20,000 (NEW)	10%	NA

(Note: If a valid PAN is not furnished, TDS is generally deducted at 20% or the applicable rate, whichever is higher.)

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COMMON QUERIES

Frequently Asked Questions

Clear answers to help you decide. No jargon, just facts

Has the TDS rate for Contractors (194C) changed?

No, the rates remain 1% for Individual/HUF contractors and 2% for Others. However, the aggregate limit is ₹1 Lakh per annum.

Is TDS applicable on Partner’s Remuneration?

Yes, effective FY 2025-26, under the new Section 194T, firms must deduct 10% TDS if the payment to a partner exceeds ₹20,000.

Do I still need to check if my vendor has filed ITR (Sec 206AB)?

No. The Finance Act 2025 has omitted the compliance burden of Section 206AB for normal transactions. You only need to verify their PAN.

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Avoid Late Fees and Interest Penalties

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