Tax Deducted at Source (TDS) is a mechanism by which the payer deducts income tax at source before making a payment to the recipient. The Income Tax Act 2025 consolidates and updates all TDS provisions. This guide covers every major TDS section, applicable rates, thresholds, and compliance requirements.
Concept of TDS
TDS ensures advance collection of tax and reduces evasion. The deductor deducts tax, deposits it with the government within prescribed timelines, and issues a TDS certificate to the deductee. The deductee claims credit for TDS in their ITR.
Key TDS Sections and Rates Under ITA 2025
| Section | Nature of Payment | Rate | Threshold |
|---|---|---|---|
| 192 | Salary | Applicable slab rate | Basic exemption |
| 193 | Interest on securities | 10% | Rs. 5,000 |
| 194 | Dividend | 10% | Rs. 5,000 |
| 194A | Interest (non-securities) | 10% | Rs. 50,000 (senior citizen FD) / Rs. 10,000 |
| 194B | Lottery/crossword winnings | 30% | Rs. 10,000 |
| 194C | Contractor payment | 1% (individual/HUF) / 2% (others) | Single Rs. 30,000 / Year Rs. 1,00,000 |
| 194D | Insurance commission | 5% | Rs. 15,000 |
| 194H | Commission/brokerage | 5% | Rs. 15,000 |
| 194I | Rent | 10% (land/building) / 2% (P&M) | Rs. 2,40,000 per year |
| 194J | Professional/technical fees | 10% (professional) / 2% (technical) | Rs. 30,000 |
| 194LA | Compulsory acquisition | 10% | Rs. 2,50,000 |
| 194M | Contract/professional (individual) | 5% | Rs. 50,00,000 |
| 194N | Cash withdrawal | 2%/5% | Rs. 1 crore / Rs. 20 lakh |
| 194Q | Purchase of goods | 0.1% | Rs. 50 lakh |
| 194S / 206AB(VDA) | VDA transfer | 1% | Rs. 10,000 / Rs. 50,000 |
TDS Deposit Timelines
- For government deductors: same day
- For non-government deductors: 7th of the next month
- For March deductions: 30 April
TDS Return Filing
- Form 24Q: TDS on salary — quarterly
- Form 26Q: TDS on non-salary payments to residents — quarterly
- Form 27Q: TDS on payments to non-residents — quarterly
- Due dates: Q1 (July 31), Q2 (Oct 31), Q3 (Jan 31), Q4 (May 31)
Lower Deduction / Nil Deduction Certificate
Taxpayers expecting total income to be below taxable threshold can apply for lower/nil deduction certificate in Form 13 to the Assessing Officer. Once granted, the deductor deducts at the certificated rate.
Consequences of Non-Compliance
- Interest for non-deduction: 1% per month from due date of deduction to actual deduction date
- Interest for non-deposit: 1.5% per month from deduction date to deposit date
- Penalty: Equal to amount of TDS not deducted/deposited
- Disallowance: 30% of expenses where TDS not deducted
- Prosecution: Imprisonment up to 7 years for willful non-payment to government
Form 26AS and AIS
All TDS deducted and deposited appears in the deductee's Form 26AS (Annual Tax Statement) and AIS (Annual Information Statement). Taxpayers must reconcile these with their TDS certificates before filing ITR to ensure accurate credit claims.
Need Expert Help?
TaxClue's team of Chartered Accountants and legal experts can assist you with compliance, filing, and advisory. Contact us today or explore our services for end-to-end support.
Need Help with Compliance?
Our CA experts guide you through the entire process — registration to filing.
Was this article helpful?
- ITR Filing
- TDS Return Filing
- Tax Planning