The Indian tax system employs a crucial mechanism known as Tax Deducted at Source (TDS), a system designed to ensure consistent revenue collection by deducting tax at the point of income generation. Essentially, if you’re the one making a specified payment, you’re also responsible for withholding a portion of it and depositing it with the government on behalf of the recipient. This proactive approach significantly curbs tax evasion and maintains a steady fiscal flow.
This guide provides a detailed breakdown of the TDS rate chart for the Financial Year 2024-25 (Assessment Year 2025-26), incorporating updates from the Union Budget 2025 and outlining key provisions under the Income Tax Act.
Union Budget 2025: Streamlining Compliance Through Threshold Revisions
The Union Budget 2025 has focused on simplifying tax compliance, particularly for middle-income taxpayers, by revising threshold limits across various TDS sections. Here’s a concise overview of the updated thresholds:
- Interest on Securities (Section 193): Threshold increased from NIL to ₹10,000.
- Interest (Excluding Securities) (Section 194A):
- Senior citizens: Increased from ₹50,000 to ₹1,00,000.
- Others (banks, cooperative societies, post offices): Increased from ₹40,000 to ₹50,000.
- Other cases: Increased from ₹5,000 to ₹10,000.
- Dividend Income for Individual Shareholders (Section 194): Increased from ₹5,000 to ₹10,000.
- Mutual Fund Income (Dividends) (Section 194K): Increased from ₹5,000 to ₹10,000.
- Lottery Winnings, Crossword Puzzles, and Horse Races (Sections 194B & 194BB): Changed from an aggregate of ₹10,000 annually to ₹10,000 per transaction.
- Insurance Commission (Section 194D): Increased from ₹15,000 to ₹20,000.
- Commission/Prizes on Lottery Ticket Sales (Section 194G): Increased from ₹15,000 to ₹20,000.
- Commission or Brokerage (Section 194H): Increased from ₹15,000 to ₹20,000.
- Rent Payments (Section 194-I): Increased from ₹2,40,000 per year to ₹6,00,000 per year.
- Professional/Technical Service Fees (Section 194J): Increased from ₹30,000 to ₹50,000.
- Compensation on Land Acquisition (Section 194LA): Increased from ₹2,50,000 to ₹5,00,000.
- Remittances Under LRS & Overseas Tour Packages (Section 206C(1G)): Increased from ₹7,00,000 to ₹10,00,000.
TDS Rates for Resident Individuals and Entities (FY 2024-25)
The following table outlines the TDS rates applicable to resident individuals and entities:
| Section | Payment Type | Threshold Limit (₹) | TDS Rate (%) |
|---|---|---|---|
| 192 | Salary payments | Employee’s basic exemption limit | As per applicable slab |
| 192A | Premature EPF withdrawal | 50,000 | 10 |
| 193 | Interest on securities | 10,000 | 10 |
| 194 | Dividend income | 10,000 | 10 |
| 194A | Interest from banks/post offices | Senior Citizens: 1,00,000 Others: 50,000 | 10 |
| 194B | Lottery/crossword winnings | 10,000 | 30 |
| 194C | Payments to contractors | Single Transaction: 30,000 Aggregate: 1,00,000 | 1 (Individuals/HUF), 2 (Others) |
| 194D | Insurance commission | 20,000 | 2 (effective from 1st October 2024) |
| 194H | Commission/brokerage | 20,000 | 2 (effective from 1st October 2024) |
| 194-I | Rent | 6,00,000 | 2 (Machinery/Equipment), 10 (Land/Building) |
| 194J | Professional/technical fees | 50,000 | 10 (Professional Services), 2 (Technical Services) |
| 194LA | Compensation for land acquisition | 5,00,000 | 10 |
| 194O | Payment for the sale of goods or provision of services by the e-commerce operator | 5,00,000 | 0.1 (effective from 1st October 2024) |
TDS Rates for Non-Residents (NRIs) and Foreign Companies
TDS rates for non-residents and foreign companies vary based on the nature of income. Refer to official income tax resources for precise percentages.
Special TDS Provisions
- Virtual Digital Assets (VDA) – Section 194S: 1% TDS with varying thresholds.
- E-Commerce Transactions – Section 194O: 0.1% TDS after October 2024, with a ₹5,00,000 threshold.
- Cash Withdrawals – Section 194N: 2% or 5% TDS based on withdrawal amounts and ITR filing status.
- Higher TDS for Non-Filers – Section 206AB: Double the applicable rate.
- PAN Unavailability – Section 206AA: Higher of the applicable rate or 20%.
- Payments to Partners (Section 194T): 10% TDS on payments exceeding ₹20,000, effective from April 1, 2025.
Key Changes Effective from 1st October 2024:
- Several TDS rates have been reduced to 2% and 0.1% to ease taxpayer burden. For any queries, Contact us!
Conclusion
Staying informed about TDS provisions is crucial for tax compliance. Consult official resources or a tax professional for the most accurate and up-to-date information.
