TDS rates vary depending on what type of payment you’re making or receiving. The Income Tax Department has set different rates for salary, rent, professional fees, and other transactions to ensure smooth tax collection throughout the year.
- TDS Rates for Salary and Employment Income
- TDS Rates on Interest and Investment Income
- TDS Rates on Winnings and Lottery
- TDS Rates on Professional and Business Services
- TDS Rates on Rent and Property Transactions
- TDS Rates on Digital Transactions
- Other Income
- Higher TDS When PAN Not Provided
- Special TDS Rates for Non-Residents
- Frequently Asked Questions
Understanding these rates helps you comply with tax laws and avoid unnecessary penalties. Whether you’re an employer, business owner, or individual taxpayer, knowing the correct TDS rate for each transaction is essential.
TDS Rates for Salary and Employment Income
Your employer deducts TDS based on your projected annual income and declared investments. There’s no minimum threshold for salary TDS—if your total income exceeds the basic exemption limit of ₹2.5 lakh, TDS applies.
| Section | Payment Type | Threshold | Individual Rate | Non-Individual Rate | Notes |
|---|---|---|---|---|---|
| 192 | Salary Income | No limit | As per tax slab | As per tax slab | Employer deducts monthly based on Form 12BB |
| 192A | EPF Premature Withdrawal | ₹50,000 | 10% | 10% | Employee withdrawal before maturity |
Example: Rajesh earns ₹8 lakh annually. His employer calculates TDS monthly based on this projection. After considering his ₹1.5 lakh 80C investment, the taxable income becomes ₹6.5 lakh, and TDS is deducted accordingly each month.
TDS Rates on Interest and Investment Income
Banks and financial institutions deduct TDS when your interest earnings cross specified limits. Senior citizens enjoy higher thresholds compared to regular taxpayers.
| Section | Payment Type | Threshold | Individual Rate | Non-Individual Rate | Notes |
|---|---|---|---|---|---|
| 193 | Interest on Securities | ₹10,000 | 10% | 10% | Government bonds, debentures |
| 194 | Dividend Income | ₹10,000 | 10% | 10% | Share dividends, mutual funds |
| 194A | Bank/Post Office Interest | ₹50,000 | 10% | 10% | Savings, FD, RD interest |
| 194A | Senior Citizens (60+ yrs) | ₹1,00,000 | 10% | 10% | Higher threshold for seniors |
| 194A | Interest from Others | ₹10,000 | 10% | 10% | Moneylenders, private loans |
| 194K | Mutual Fund Dividend | ₹10,000 | 10% | 10% | MF dividend distribution |
If your total income is below taxable limits, submit Form 15G (below 60 years) or Form 15H (senior citizens) to avoid TDS deduction.
TDS Rates on Winnings and Lottery
The government taxes winnings heavily to discourage gambling while generating revenue. These rates are among the highest in the TDS structure.
| Section | Payment Type | Threshold | Individual Rate | Non-Individual Rate | Notes |
|---|---|---|---|---|---|
| 194B | Lottery Winnings | ₹10,000 | 30% | 30% | Government & private lotteries |
| 194BA | Online Games | No limit | 30% | 30% | Gaming, fantasy sports winning |
| 194BB | Horse Racing | ₹10,000 | 30% | 30% | Horse race betting winnings |
| 194G | Lottery Agent Commission | ₹20,000 | 2% | 2% | Commission paid to agents |
Example: Anita won ₹50,000 in an online game. The platform deducted ₹15,000 (30% TDS) before releasing ₹35,000 to her account. She claimed this TDS credit while filing her ITR.
TDS Rates on Professional and Business Services
Different rates apply depending on whether you’re hiring a contractor or a professional consultant. The distinction matters significantly for tax calculations.
| Section | Payment Type | Threshold | Individual Rate | Non-Individual Rate | Notes |
|---|---|---|---|---|---|
| 194C | Contractor Payment (Single) | ₹30,000 | 1% | 2% | Single transaction ≥₹30,000 |
| 194C | Contractor Payment (Annual) | ₹1,00,000 | 1% | 2% | Cumulative annual payments |
| 194D | Insurance Commission | ₹20,000 | 2% | 10% | Commission to agents/brokers |
| 194H | Commission/Brokerage | ₹20,000 | 2% | 2% | General commission payments |
| 194J(a) | Technical Services/Royalty | ₹50,000 | 2% | 2% | Patents, technology, royalties |
| 194J(b) | Professional Fees | ₹50,000 | 10% | 10% | Doctor, lawyer, architect fees |
| 194R | Business Perquisites | ₹20,000 | 10% | 10% | Free perks, benefits to staff |
| 194T | Partnership Remuneration | ₹20,000 | 10% | 10% | Payments to partners (NEW 2025) |
Section 194T is newly introduced from FY 2025-26, requiring TDS on payments exceeding ₹20,000 made by partnership firms to their partners.
TDS Rates on Rent and Property Transactions
Landlords and property buyers must understand these rates to ensure correct tax deduction. The type of asset rented determines the applicable rate.
| Section | Payment Type | Threshold | Individual Rate | Non-Individual Rate | Notes |
|---|---|---|---|---|---|
| 194I(a) | Machinery/Equipment Rent | ₹50,000/month | 2% | 2% | Monthly rental above threshold |
| 194I(b) | Property/Building Rent | ₹50,000/month | 10% | 10% | Residential/commercial rent |
| 194IB | Individual/HUF as Landlord | ₹50,000/month | 2% | 2% | Rent paid by individuals/HUF |
| 194IA | Property Sale | ₹50,00,000 | 1% | 1% | Real estate transaction ≥₹50L |
| 194IC | Joint Development Agreement | No limit | 10% | 10% | Developer arrangements |
| 194LA | Land Compensation | ₹5,00,000 | 10% | 10% | Government compensation |
Example: Vikram pays ₹60,000 monthly rent for his office. He must deduct 10% TDS (₹6,000) and pay ₹54,000 to the landlord. He deposits the ₹6,000 TDS by the 7th of the following month.
TDS Rates on Digital Transactions
Recent sections target the digital economy, including e-commerce sellers and cryptocurrency traders. These rates are lower to encourage compliance without burdening digital entrepreneurs.
| Section | Payment Type | Threshold | Individual Rate | Non-Individual Rate | Notes |
|---|---|---|---|---|---|
| 194O | E-commerce Operations | ₹5,00,000 | 0.1% | 0.1% | Online sellers, marketplaces |
| 194Q | Purchase of Goods | ₹50,00,000 | 0.1% | 0.1% | Bulk goods purchase |
| 194S | Virtual Digital Assets | ₹10,000/₹50,000 | 1% | 1% | Crypto, NFT sales (NEW) |
| 194N | Cash Withdrawal ₹20L-₹1Cr | ₹20,00,000 | 2% | 2% | Large cash withdrawals |
| 194N | Cash Withdrawal >₹1Cr | ₹1,00,00,000 | 5% | 5% | Very large withdrawals |
Example: Priya sells handmade jewelry on Amazon. Her annual sales reached ₹8 lakh. Amazon deducts 0.1% TDS (₹800) before settling her payments. She claims this credit in her tax return.
Other Income
| Section | Payment Type | Threshold | Individual Rate | Non-Individual Rate | Notes |
|---|---|---|---|---|---|
| 194DA | Life Insurance Payment | ₹1,00,000 | 2% | 2% | Insurance claim/maturity |
| 194M | Contract/Prof. Fees (Individual) | ₹50,00,000 | 2% | 2% | High-value contracts |
Higher TDS When PAN Not Provided
If the payee doesn’t share their PAN, TDS increases significantly. This provision ensures taxpayers provide proper identification for all transactions.
| Scenario | Normal Rate | Rate Without PAN | Example |
|---|---|---|---|
| Professional Fees | 10% | 20% | ₹50,000 fee = ₹10,000 TDS |
| Rent Payment | 10% | 20% | ₹1,00,000 rent = ₹20,000 TDS |
| Commission | 2% | 20% | ₹30,000 = ₹6,000 TDS |
| Section 194O/194Q | 0.1% | 5% | Lower exception rate |
Always provide your PAN for legitimate transactions to avoid double or triple TDS deduction.
Special TDS Rates for Non-Residents
Foreign payments attract different rates under Section 195. Tax treaties between countries can modify these rates, so check applicable Double Taxation Avoidance Agreements (DTAA).
| Payment to Non-Resident | Standard TDS Rate | Treaty Rate (varies) |
|---|---|---|
| Interest Income | 20% | 10-15% (country-specific) |
| Royalty/Technical Fees | 10% | 10% (most treaties) |
| Professional Fees | 10% | 10% (most treaties) |
Frequently Asked Questions
What happens if I apply the wrong TDS rate?
You’ll need to file a correction statement with the correct rate. Applying incorrect rates can lead to penalties under Section 271H and matching issues in Form 26AS.
Do TDS rates change every year?
Not necessarily. Rates remain stable unless changed through the Union Budget. However, thresholds and new sections can be introduced annually.
Can TDS rates be lower than the chart?
Yes, if you obtain a Lower Deduction Certificate from the Income Tax Department. Apply online through the tax portal by providing justification for lower TDS.
