TDS Rate Chart for FY 2024-25 (AY 2025-26)

A TDS rate chart provides a structured overview of the tax deduction rates applicable to different types of income. It serves as a key reference for taxpayers to understand their liabilities. Changes have been introduced in the tax slabs and exemptions for the Financial Year (FY) 2025-26, corresponding to the Assessment Year (AY) 2026-27. Let us outline the latest TDS rate chart and its impact on taxpayers.

Union Budget 2025 New TDS Provisions

The government of India has introduced several amendments to the TDS section in the Union Budget 2025 to enhance tax compliance and streamline tax collection. Key updates include:

Increased TDS Thresholds

• Interest Income for Senior Citizens (Section 194A): The TDS exemption limit has been doubled from ₹50,000 to ₹1 lakh, providing substantial relief to senior citizens.
• Rental Income (Section 194I): The annual TDS threshold on rent payments has been raised from ₹2.4 lakh to ₹6 lakh, reducing compliance burdens for landlords.

Rationalization of TDS Rates

• Insurance Commission (Section 194D): The TDS rate on insurance commission payments has been reduced from 5% to 2%, effective from April 1, 2025.
• Income from Securitization Trusts (Section 194LBC): The TDS rate has been lowered to 10% from the previous 25% and 30%, acknowledging the sector’s improved organization.
• Online Gaming Winnings (Section 194BA): The 30% TDS on winnings from online gaming platforms remains unchanged, but a new provision mandates direct deduction at withdrawal rather than aggregate annual calculation.

Simplification Measures

• Removal of Higher TDS/TCS Rates for Non-Filers: Sections 206AB and 206CCA, which imposed higher TDS and TCS rates on non-filers of income tax returns, have been omitted to ease compliance.
• Tax Collection at Source (TCS) on Overseas Remittances (Section 206C): The threshold for TCS on foreign remittances under the Liberalised Remittance Scheme has been increased from ₹7 lakh to ₹10 lakh, benefiting individuals remitting funds abroad.
• Lower TDS on Professional Fees (Section 194J): The TDS rate on professional and technical service fees have been standardized to 7.5% from 10%, except for royalty and call center payments, which remain at 2%.

These amendments to the TDS rate chart aim to enhance taxpayer convenience, promote compliance, and streamline the tax deduction process across various income categories.

TDS Rates in India

The following charts list the various TDS rates relevant to resident and non-resident payments, along with TDS rates for domestic and foreign companies in India. The TDS chart FY 2025-26 helps ensure timely tax collection, minimize tax evasion, and streamline compliance for taxpayers.

TDS Rate Charts for the FY 2025-26 and AY 2026-27

The TDS rate chart for FY 2025-26 outlines the tax deduction mechanism where any person making a specified payment is responsible for deducting tax at the source and depositing it with the government within the stipulated due date.

TDS Rates for Non-Resident Indians

TDS Rates for a Domestic Company

TDS Rates Where the Company is Not a Domestic Company

These amendments to the TDS rate chart aim to enhance taxpayer convenience, promote compliance, and streamline the tax deduction process across various income categories.

Tax Exemption Under 80C

Section 80C is amongst the most well-known sections for tax persons since it permits them to lower their tax liability by undertaking tax-saving investments. It provides a maximum deduction of ₹1.5 lakhs from the person’s overall income each year. Individuals and HUFs can both take advantage of this exemption, and this deduction is not available to corporations, partnership businesses, or LLPs.

Tax exemption under 80C and its subsections are as follows:

• 80CCC: Allows a deduction for contributions made to certain pension funds.
• 80CCD(1): Provides a deduction for contributions made to the National Pension System (NPS) by employees and self-employed individuals.
• 80CCD(1B): Offers an added deduction of up to ₹50,000 for voluntary contributions to NPS.
• Section 80CCD(2): Allows a deduction for employer contributions to NPS, up to 10% of the employee’s salary (14% for central government employees), without any monetary limit.

Tax Exemption Under TDS

Tax exemptions under TDS are subject to specific conditions and requirements laid down by the Income Tax Act and relevant rules and notifications issued by the government. Additionally, taxpayers must meet the eligibility criteria and furnish the necessary documents to avail of these exemptions. TDS exemption rates are applied based on the following criteria:

Exemption of TDS On Insurance

Premiums paid for insurance policies are not taxable income, but you may have to pay TDS on a claim if the policy matures.

House Rental Earnings

A paid employee who lives in rented accommodation can use the House Rent Allowance or HRA. This might be completely or partially exempt from income tax.

Claim For TDS Refund

If you pay more than necessary based on your income, you can apply for a TDS refund claim online.

Mobile Bills

The cost of a taxpayer’s mobile phone and home phone may be deducted. An employee can request a tax-free reimbursement for expenses incurred under income tax laws. A request for compensation of either the exact amount paid on their bill or the amount included in their salary package (whichever is smaller) can be raised.

Conclusion

TDS plays a vital role in the nation’s revenue collection. It makes sure that taxes are deducted at the source of income, making the tax compliance process more efficient and transparent. It is always a good idea to keep an eye on the new TDS rate chart information in order to stay up to date on the newest guidelines, tax percentages, and even deadlines. Remember, taxation is not just a legal obligation but a responsible contribution toward building a stronger and prosperous nation. The more you educate yourselves about TDS and other tax-related matters, the better you can contribute to your country’s growth and development.

FAQs on TDS Rate Chart