Published Oct 4, 2025 4 Min Read

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If you earn an income in India—whether from salary, interest, rent, or commissions—you’re likely to come across TDS, or Tax Deducted at Source. It’s the government’s way of collecting income tax right at the source of income. In other words, your tax gets deducted before the money even reaches you.

With the Union Budget 2025 rolling out major updates to simplify compliance, it's a good time to brush up on what TDS is, how it works, and what rates apply to you.

Let’s break it down.

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Also Read: What is TDS?

What is TDS and why does it matter?

TDS is a system that ensures tax is collected on time and at the source. It applies to various types of income—from salaries and professional fees to interest, rent, and winnings from games or lotteries.

Every TDS deduction is backed by a specific section under the Income Tax Act. These sections define:

  • Nature of Payment: Salary, rent, commission, etc.
  • Threshold Limit: Minimum amount beyond which TDS is deducted.
  • Applicable TDS Rate: Percentage to be deducted.
  • Payee Type: Resident, Non-Resident (NR), or Foreign Company (FC).

By staying informed about TDS rates, you can better manage your income, avoid shortfalls, and file taxes with ease.

What is TDS and why does it matter?

TDS is a system that ensures tax is collected on time and at the source. It applies to various types of income—from salaries and professional fees to interest, rent, and winnings from games or lotteries.

Every TDS deduction is backed by a specific section under the Income Tax Act. These sections define:

  • Nature of Payment: Salary, rent, commission, etc.
  • Threshold Limit: Minimum amount beyond which TDS is deducted.
  • Applicable TDS Rate: Percentage to be deducted.
  • Payee Type: Resident, Non-Resident (NR), or Foreign Company (FC).

By staying informed about TDS rates, you can better manage your income, avoid shortfalls, and file taxes with ease.


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What’s New in Budget 2025 for TDS?

To ease compliance, especially for middle-income taxpayers and small businesses, Budget 2025 introduced several changes:

  • Raised Threshold Limits across many sections to avoid unnecessary deductions.
  • Reduced TDS Rates for sectors like insurance, brokerage, and rental payments.
  • Removed TDS on certain mutual fund transactions, effective from October 2024.

Here’s a snapshot of major changes:

Section

Nature of Income

Present Threshold (Rs.)

Proposed Threshold (Rs.)

193

Interest on securities

NIL

10,000

194A

Interest other than interest on securities

 

 

 

For senior citizens

50,000

1,00,000

 

For others (when payer is a bank, cooperative society, or post office)

40,000

50,000

 

In other cases

5,000

10,000

194

Dividend income for individual shareholders

5,000

10,000

194K

Income from mutual fund units

5,000

10,000

194B

Winnings from lottery, crossword puzzle, etc.

Aggregate exceeding 10,000 in a financial year

10,000 per transaction

194BB

Winnings from horse race

Aggregate exceeding 10,000 in a financial year

10,000 per transaction

194D

Insurance commission

15,000

20,000

194G

Commission or prize on lottery tickets

15,000

20,000

194H

Commission or brokerage

15,000

20,000

194-I

Rent

2,40,000 per financial year

6,00,000 per financial year

194J

Professional or technical fees

30,000

50,000

194LA

Enhanced compensation income

2,50,000

5,00,000

206C(1G)

Remittance under LRS and overseas tour package

7,00,000

10,00,000


These changes aim to reduce compliance burdens and make TDS deduction thresholds more taxpayer-friendly, ensuring better tax efficiency.

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TDS rate charts for the FY 2023-24 and FY 2024-25

Section

Deductee

Nature of transaction

Threshold limit (Rs.)

TDS rate

192

R, NR

Salary Payment

Basic Exemption Limit

Normal Slab Rates

192A

R, NR

Premature EPF Withdrawal

50,000

10% (20% if no PAN)

193

R

Interest on Securities

Debentures: 5,000, Savings Bonds: 10,000, Others: No Limit

10%

194

R

Dividend Payment

5,000

10%

194A

R

Interest Income (Except Securities)

Senior Citizens: 50,000, Others: 40,000

10%

194A

R

Interest Income (Other Sources)

5,000

10%

194B

R, NR, FC

Winnings from Games, Lotteries

10,000

30%

194BA

R, NR, FC

Online Game Winnings

Nil

30%

194BB

R, NR, FC

Horse Race Winnings

10,000

30%

194C

R

Payments to Contractors/Subcontractors

Single Transaction: 30,000, Aggregate: 100,000

Individuals/HUF: 1% Others: 2%

194D

R

Insurance Commission

Domestic Companies: 15,000, Others: 15,000

Domestic Companies: 10% Others: 5%

194DA

R

Life Insurance Payouts

100,000

5%

194E

NR, FC

Payments to Non-Resident Sportspersons

No Limit

20% + Surcharge + Cess

194EE

R, NR

National Savings Scheme (NSS) Payments

2,500

10%

194F

R, NR

Mutual Fund Unit Repurchase

No Limit

20%

194G

R, NR, FC

Lottery Ticket Commission

15,000

5%

194H

R

Commission or Brokerage

15,000

5%

194-I(a)

R

Rent on Plant & Machinery

240,000

2%

194-I(b)

R

Rent on Land/Building/Furniture/Fittings

240,000

10%

194-IA

R

Transfer of Immovable Property

5,000,000

1%

194-IB

R

Rent Payment (Not Covered by 194-I)

50,000 per month

5%

194-IC

R

Joint Development Agreement Payments

No Limit

10%

194J

R

Professional Fees, Director Remuneration, etc.

30,000

10% (except technical services: 2%)

194K

R

Mutual Fund Unit Income

No Limit

10%

194LA

R

Compensation on Immovable Property Acquisition

250,000

10%

194LB

NR, FC

Interest on Infrastructure Debt Fund

No Limit

5% + Surcharge + Cess

194LC

NR, FC

Interest on Foreign Currency Loan

No Limit

5% (4% for IFSC-listed bonds)

194LD

NR, FC

Interest on Rupee-Denominated Bonds

No Limit

5%

194LBA(1)

R

Business Trust Income Distribution

No Limit

10%

194LBA(2)

NR, FC

Business Trust Interest/Dividend Income

No Limit

5%/10%

194LBA(3)

NR, FC

Business Trust Rental Income

No Limit

30%/40%

194LBB

R, NR, FC

Investment Fund Income

No Limit

10%/30%/40%

194LBC

R, NR, FC

Securitisation Fund Income

No Limit

25%/30%/40%

194M

R

Certain Payments (Not Covered by 194C, 194H, 194J)

5,000,000

5%

194N

R, NR

Cash Withdrawal

Co-operative Societies: 3 Crore, Others: 1 Crore

2%/5% (based on ITR filing)

194O

R

E-commerce Transactions

500,000

1%/5% (no PAN)

194P

R

Payments to Senior Citizens (75+)

Basic Exemption Limit

Normal Slab Rates

194Q

R

Purchase of Goods

5,000,000

0.10%

194R

R

Business/Profession Perquisites

20,000

10%

194S

R

Virtual Digital Asset Transfer

Specified Persons: 50,000, Others: 10,000

1%

195

NR

Income on Investments

No limit

20%

195

NR

Long-Term Capital Gains (LTCG) under Section 115E

No limit

10%

195

NR, FC

LTCG under Section 112(1)(c)(iii)

No limit

10%

195

NR, FC

LTCG under Section 112A

No limit

10%

195

NR, FC

Short-Term Capital Gains (STCG) under Section 111A

No limit

15%

195

NR, FC

Other LTCG

No limit

20%

195

NR, FC

Interest on Foreign Currency Loans

No limit

20%

195

NR, FC

Royalty Income (Copyright, Software)

No limit

20%

195

NR

Royalty Income (Industrial Policy Agreements)

No limit

20%

195

FC

Royalty Income (Industrial Policy Agreements)

No limit

20% or 50% (based on agreement date)

195

NR

Technical Fees (Industrial Policy Agreements)

No limit

20%

195

FC

Technical Fees (Industrial Policy Agreements)

No limit

20% or 50% (based on agreement date)

195

NR

Other Income

No limit

30%

195

FC

Other Income

No limit

40%

196B

NR, FC

Income from Offshore Funds

No limit

10%

196C

NR, FC

Income from Foreign Currency Bonds/GDRs

No limit

10%

196D

NR, FC

Income (excluding dividends and capital gains) from FIIs

No limit

20%

206AB

R

Payments to Non-Filers

No limit

2x Applicable Rate or 5%

206AA

R, NR, FC

TDS for No PAN

No limit

Higher of Applicable Rate or 20%

 

Notes:

This table is for reference only. Please consult tax professionals for accurate and up-to-date information.

 

  • R = Resident, NR = Non-Resident, FC = Foreign Company
  • The standard tax rates for individuals and HUFs under the new tax regime have been revised starting from FY 2023-24.
  • Additionally, the applicable surcharge and health and education cess will be levied on top of the TDS rates for NRI and FC deductees.
  • In the above TDS rate chart, the term 'Resident' payee encompasses domestic companies.
  • All TDS changes introduced in the Budget 2023 have been incorporated into the TDS chart provided above.


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Budget 2024 key updates

TDS Sections

Current TDS Rate

Proposed TDS Rate

Effective from

Section 194D - Payment of insurance commission (non-company)

5.00%

2.00%

1 April 2025

Section 194DA - Payment in respect of life insurance policy

5.00%

2.00%

1 October 2024

Section 194G - Commission on sale of lottery tickets

5.00%

2.00%

1 October 2024

Section 194H - Commission or brokerage payment

5.00%

2.00%

1 October 2024

Section 194-IB - Rent payment by certain individuals or HUF

5.00%

2.00%

1 October 2024

Section 194M - Payment of certain sums by certain individuals or HUFs

5.00%

2.00%

1 October 2024

Section 194-O - Payment to e-commerce participants by e-commerce operator

1.00%

0.1%

1 October 2024

Section 194F - Payment by mutual funds or UTI on account of repurchase of units

Proposed to be removed

  

1 October 2024


These updates reflect significant reductions in TDS rates and a notable removal of TDS for specific sections, which will be effective mostly from October 2024.

 

TDS Rates chart for Indian Residents

Nature of Payment

% of TDS

Payment of salary (Section 192)

As per normal income tax slab rate

Payment of EPF Scheme dues, taxable in employee's hand (Section 192A)

10%

Interest on securities (Section 193)

10%

Dividend (excluding dividends under section 115-O) (Section 194)

10%

Interest income other than on securities (Section 194A)

10%

Winnings from lotteries, crosswords, games, etc. (Section 194B / 194BB)

30%

Payment to contractors/sub-contractors (Section 194C)

2% (non-HUFs/individuals), 1% (HUFs/individuals)

Insurance commission (Section 194D)

5%

Payment for Life insurance policy (Section 194DA)

1%

Rent on plant and machinery (Section 194-I)

2%

Rent on land, furniture, and fittings (Section 194-I)

10%

Payment on transfer of non-agricultural immovable property (Section 194-IA)

1%


This table provides a streamlined view of the TDS rates for various categories of payments to resident Indians, with specific sections of the Income Tax Act noted for clarity.

How TDS impacts you

  • If you're earning: TDS is deducted by the payer and deposited with the government.
  • If you're receiving payments: Always check your Form 26AS or AIS to ensure proper TDS credit.
  • If you’re eligible for lower or no TDS: Submit Form 15G/15H (where applicable) to avoid excess deduction.


COVID-era TDS Relief (FY 2020-21)

As a temporary measure during COVID-19, the government reduced TDS rates by 25% on non-salary payments. While this is no longer in effect, it showcased the role TDS plays in managing macroeconomic situations.


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Conclusion

TDS is not just a tax—it’s a planning tool. Whether you're an individual or business, understanding the TDS chart helps you:

  • Know when and how much tax will be deducted
  • Avoid compliance issues or penalties
  • Stay ahead of any changes made in the Union Budget

And while taxes may be deducted from your income, your savings don’t need to slow down. Consider investing in high-return, low-risk options like a Bajaj Finance Fixed Deposit—an excellent complement to your financial strategy. Invest now!

Frequently asked questions 

What’s the minimum amount to start a Bajaj Finance FD?

You can start a Bajaj Finance FD with as little as Rs. 15,000 and choose from tenures ranging from 12 to 60 months. Open FD. 

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