TDS Rate Chart For Fy 2025-26 (Ay 2026-27)

Tax Deduction at Source (TDS) is an important aspect of tax compliance. TDS applies to any payment that is changing hands as income for the receiving party. The payor must deduct TDS from any such payment if it exceeds the threshold limit specified for that kind of transaction.

CBDT and the Ministry of Finance have specified the rates for such TDS deductions. The rates and threshold limits vary based on the purpose of the transaction or type of income.

Also, any TDS deductions must be submitted to the central government account

A taxpayer (deductor) who makes a payment of a specified nature to the deductee, is responsible for deducting tax at source and submitting the same into the account of the Central Government.

Here is the TDS rate chart for a person other than a company AY 2021-22, i.e., FY 2020-21:

TDS Slab Rates for Salaried Professionals

TDS deduction for you will happen at the slab rates if you are salaried. Starting FY 2020-21, you have the option of sticking with the old income tax slabs or go for the New Tax Regime.

Here are the TDS slab rates for salaried under the new regime:

* Tax rebate u/s 87a is available

However, under the new tax regime section 87A is the only tax rebate available. All other modes of tax saving and set-off and carry forward of losses will not apply from the old regime.

Thus, if you have been following the tax saving investments to reduce your tax liability, you should continue with the old regime of TDS slab rates.

Sunset Period for Lower TDS Rates due to COVID-19

Due to the COVID-19 pandemic, the Government has specified Lower TDS rates.

The TDS rates for the specified non-salaried payments made to the residents have been reduced by 25% of the applicable rates. This is for the period from 14th May 2020 to 31st March 2021.

These shall be the concessional rates of TDS that will be applicable only till 31st March 2021. Hence, old TDS rates shall apply with effect from 1st April 2021.

Detailed Explanations of Changes to TDS in Budget 2021

The changes in the TDS rules in the Union Budget 2021 are explained below:

• TDS Rate Change: The new section 194Q has been introduced to provide for TDS deduction @ 0.1% by a buyer for paying any sum to a resident for the purchase of goods.
• Tax Deductor: TDS u/s 194Q is to be deducted only by the buyer whose total sales or gross receipts / turnover from the business carried on by him is above Rs 10 Crores during the previous financial year.
• Threshold: The TDS deduction by the buyer, if the purchase of goods by him from the seller is of the value or aggregate of such value exceeding Rs. 50 Lakhs in the previous year.
• Where is TDS Not Applicable: The provisions for TDS Deduction under this section shall not apply to:
  • Transaction on which TDS is deductible under any provision of the Act; and
  • Transaction, on which TDS is collectible u/s 206C
• TDS Exemption: Central Government may exempt a person from obligation of TDS under this section on fulfillment of conditions as may be specified in that notification. The Board with the approval of the Central Government has been empowered to issue guidelines for removing difficulty in giving effect to the provisions of this section.
• TCS Exemption: In case of a transaction where TDS or TCS is to be deducted under any other provision, TDS u/s 194Q shall not apply.
• Higher TDS rate due to PAN not available: If PAN is not provided, TDS is required to be deducted at the rate of 5%.
• TDS/ TCS on non-filers of ITR at higher rate: If income-tax return is not filed, TDS deduction shall be at higher rate of the following:
  • At twice the rate specified in the relevant provision of the Act; or
  • At twice the rate or rates in force; or
  • At the rate of 5%

The only way to save tax is to increase your tax-free income. You can do so by investing your savings into life insurance plans, which give you both investment growth and tax saving.