TDS (Tax Deducted at Source) is one of the most complex compliance requirements in India's tax system. With over 30 different TDS sections applicable to various payment types, getting the rates and thresholds right is critical to avoid interest and penalties.
Key TDS Rates for FY 2025-26:
Section 192 — Salary:
Rate: As per slab (no fixed rate). Deductible from every monthly salary payment. Employee must submit investment declarations in April, and the employer must reconcile at year-end.
Section 194C — Contractors:
- Individual/HUF: 1% | Company/LLP: 2%
- Threshold: 30,000 per transaction or 1,00,000 in aggregate per FY
- Key rule: Single contract below 30,000 — no TDS. But watch the annual aggregate.
Section 194H — Commission/Brokerage:
Rate: 5% | Threshold: 15,000 per year
Applies to insurance agents, stock brokers, travel agents receiving commission.
Section 194J — Professional/Technical Fees:
- Professional services (doctors, lawyers, CAs, etc.): 10%
- Technical services (call centres, IT services): 2%
- Director fees (non-salary): 10%
- Threshold: 30,000 per year
Section 194I — Rent:
- Land/Building/Furniture: 10%
- Plant & Machinery: 2%
- Threshold: 2,40,000 per year
Section 194Q — Purchase of Goods:
Rate: 0.1% | Threshold: Aggregate purchase > 50 Lakhs in FY
Due Dates:
- Monthly deductions: 7th of following month
- March deductions: 30th April
- Quarterly returns (26Q/24Q): 31st July, 31st October, 31st January, 31st May
No-PAN Rule (Section 206AA):
If payee doesn't provide PAN, TDS must be deducted at the higher of: (a) the applicable rate, (b) twice the rate, or (c) 20%. This makes PAN collection mandatory for all payments above threshold.