TDS Rate Chart 2026 (FY 2025–26): Latest Section-Wise TDS Rates, Limits & Rules Explained

Quick Summary

• TDS (Tax Deducted at Source) is tax deducted before payment is made
• Applicable on salary, interest, rent, commission, property, and more
• Rates vary from 0.1% to 30% depending on section
• If PAN is not provided → TDS = 20% or higher
• Helps reduce tax burden at year-end

What is TDS?

TDS (Tax Deducted at Source) is a system where tax is deducted at the time of making certain payments like salary, interest, rent, commission, or professional fees.

Instead of paying tax at the end of the year, a portion of it is collected in advance.

Simple Example

If your bank gives you ₹10,000 as interest:

• Bank deducts 10% TDS = ₹1,000
• You receive ₹9,000
• ₹1,000 is deposited with the government

Later, while filing your income tax return, this amount is adjusted.

Why TDS is Important for Taxpayers

TDS is not just a deduction—it plays a critical role in the taxation system.

Key Benefits:

• Prevents tax evasion
• Ensures regular revenue for government
• Reduces last-minute tax burden
• Tracks high-value transactions

For individuals, it acts like advance tax already paid.

Latest TDS Rate Chart for FY 2025–26 (AY 2026–27)

Here’s a complete section-wise breakdown of major TDS rates applicable in India.

TDS on Salary & Retirement Income

Important Points:

• Salary TDS is calculated based on total annual income
• Includes deductions, exemptions, and tax regime chosen
• No fixed rate—it follows income tax slabs

TDS on Interest, Dividend & Investments

Key Insight:

TDS is deducted only when income crosses the threshold limit.

TDS on Contractors, Commission & Professional Fees

Who is Covered:

• Freelancers
• Consultants
• Agencies
• Service providers

TDS on Rent & Property Transactions

Important Note:

• Buyer deducts TDS in property transactions
• Mandatory compliance required

TDS on Business & Digital Transactions

Why This Matters:

These sections reflect the growth of:

• Online businesses
• Influencer economy
• Digital transactions

TDS on Special & High-Risk Income

These categories have higher tax due to risk of misuse.

TDS for Non-Residents (NRIs)

TDS rates for non-residents are generally higher:

• Interest income → ~20%
• Capital gains → 10% to 20%
• Other income → up to 30%

However, DTAA agreements can reduce these rates.

What Happens If You Don’t Provide PAN?

This is a critical rule many people ignore.

Without PAN:

• TDS = 20% (minimum)
• Even if normal rate is 1% or 10%

Always provide PAN to avoid unnecessary tax deduction.

Key Updates in Latest TDS Rules

1. Expansion to Digital Economy

New sections now cover:

• E-commerce platforms
• Crypto transactions
• Online earnings

2. Lower Rates for Business Transactions

Some TDS rates have been reduced to improve compliance.

3. Higher Threshold Limits

This reduces unnecessary deductions for small taxpayers.

How to Check Your TDS Online

You can verify deducted TDS using:

• Form 26AS
• AIS (Annual Information Statement)
• Form 16 / Form 16A

Why You Should Check:

• Ensure correct deduction
• Avoid mismatch in ITR
• Claim proper tax credit

TDS vs Income Tax (Clear Difference)

TDS is not extra—it’s part of your total tax.

Real-Life Example (Easy Understanding)

Let’s say:

• Freelance income = ₹1,00,000
• Client deducts 10% TDS = ₹10,000

Now:

• You receive ₹90,000
• ₹10,000 already paid as tax
• While filing ITR → adjust this amount

Common TDS Mistakes to Avoid

• Ignoring threshold limits
• Not linking PAN
• Not checking Form 26AS
• Assuming TDS = final tax
• Missing TDS refund claim

Who is Responsible for Deducting TDS?

• Employers
• Businesses
• Companies
• Individuals (in certain cases like rent/property)

Failure can lead to:

• Penalties
• Interest charges
• Legal notices

Pro Tips to Save Tax on TDS

• Submit Form 15G/15H (if eligible)
• Keep track of deductions regularly
• Choose correct tax regime
• Claim refund while filing ITR

FAQs

What is the TDS rate for FY 2025–26?

TDS rates range from 0.1% to 30%, depending on the type of income and section.

Is TDS refundable?

Yes, if excess tax is deducted, you can claim a refund while filing your return.

What is the TDS limit for bank interest?

₹50,000 for regular individuals and ₹1,00,000 for senior citizens.

Is TDS applicable on salary?

Yes, it is deducted based on your income tax slab.

What happens if TDS is not deducted?

The deductor may face penalties, interest, and legal consequences.

Final Verdict

The TDS rate chart for FY 2025–26 is essential for anyone earning income in India. It ensures tax is collected efficiently while helping taxpayers manage their liability throughout the year.

Key Takeaways:

• TDS applies to multiple income sources
• Different sections have different rates
• PAN is mandatory to avoid higher deduction
• Always verify TDS before filing ITR