Monday, March 31, 2025

Guide to TDS & TCS Rates Effective from April 1, 2025

The concept of TDS ensures tax collection at the very source of income. A deductor making specified payments to a deductee must deduct tax and deposit it with the government. The deductee can claim credit for TDS based on Form 26AS or the TDS certificate.

TDS Rates for FY 2025-26

SectionParticularsThreshold (₹)TDS Rate (%)
192Salary IncomeAs per slabSlab rates (Old/New Regime)
192AEPF – Premature withdrawal50,00010% (30% if no PAN)
193Interest on Securities10,00010%
193Interest on Debentures5,00010%
194Dividend10,00010%
194AInterest from banks/post office50,000 (100,000 for seniors)10%
194AInterest from others10,00010%
194BWinnings from Lottery/Games10,000 (Single transaction)30%
194BBWinnings from Horse Races10,000 (Single transaction)30%
194CContractor Payments30,000 (Single)/100,000 (Aggregate)1% (Ind./HUF), 2% (Others)
194DInsurance Commission20,0005% (Ind.), 10% (Companies)
194DALife Insurance Proceeds100,0005%
194EPayments to Non-resident SportspersonsNA20%
194EENSS Withdrawal2,50010%
194GLottery Commission20,0005%
194HCommission/Brokerage20,0005%
194IRent (Land/Building/Furniture)600,00010%
194IRent (Plant & Machinery)600,0002%
194IBRental Payments by Individuals (Non-Tax Audit)50,000 per month5%
194IAProperty Sale (except Agriculture Land)5,000,0001%
194ICJoint Development Agreement PaymentsNA10%
194JProfessional/Technical Fees50,0002% (Technical), 10% (Others)
194LACompensation for Immovable Property Acquisition500,00010%
194LBInterest on Infrastructure Bonds to NRIsNA5%
194LDInterest on Bonds/Govt. SecuritiesNA5%
194NCash Withdrawal > ₹1 Crore10,000,0002%
194QPurchase of Goods5,000,0000.1%
194TRemuneration, Interest, Commission to Partners20,00010%
206ABTDS for Non-filers of ITRNA5% or Twice the rate in force
194PTDS for Senior Citizens (75+ with No ITR)NASlab rates

Tax Collected at Source (TCS) Rates

Certain transactions require sellers to collect tax at source while receiving payments.

TCS Rates for FY 2025-26

SectionGoods/Services Liable for TCSThreshold (₹)TCS Rate (%)
206C(1)Alcoholic Liquor for Human ConsumptionNA1%
206C(1)Timber (Forest Lease)NA2.5%
206C(1)Timber (Other Sources)NA2.5%
206C(1)Other Forest Produce (excluding Timber/Tendu)NA2.5%
206C(1)ScrapNA1%
206C(1)Tendu LeavesNA5%
206C(1)Minerals (Coal/Lignite/Iron Ore)NA1%
206C(1C)Parking Lot, Toll Plaza, Mining & QuarryingNA2%
206C(1F)Sale of Motor Vehicles (>₹10 lakh)1,000,0001%
206C(1G)Overseas Tour Packages1,000,0005% (10% if no PAN)
206C(1G)Education Loan Remittance (LRS)700,000Nil
206C(1H)Sale of Goods5,000,0000.1%

Key Compliance Considerations:

  1. Higher TDS/TCS Rates for Non-filers: Non-compliant taxpayers face a higher TDS rate of 5% or twice the standard rate.

  2. Senior Citizens (75+): Section 194P allows automatic TDS deduction, exempting them from ITR filing.

  3. Lottery & Winnings: Flat 30% TDS applies on winnings from lotteries, games, and horse races.

  4. Rental Payments: Individuals (non-tax audit cases) must deduct 5% TDS if monthly rent exceeds ₹50,000.

  5. TCS on Overseas Tour Packages: Sellers must collect 5% TCS on tour packages above ₹10 lakh, increasing to 10% if PAN/Aadhaar is not provided.

Adhering to the revised TDS and TCS rates is crucial for tax compliance and avoiding penalties.