Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) are vital components of the Indian tax framework, designed to enable advance tax collection and improve compliance. Every year, the government notifies the applicable rate of TDS and TCS for different types of payments and transactions.
In general terms, TDS means the tax deducted by the payer for the payments made to the receiver when the amount exceeds the specified limit and TCS means the tax collected by the sellers from the buyers during specified transactions.
In this article, we will know in detail the section number and which TDS or TCS is required to be deducted, the threshold limit as per the Income Tax Act, the rate which TDS is to be deducted and TCS to be collected. The rates and threshold limits mentioned in this article is applicable with effect from 01-04-2025
TDS Rates for A.Y 2026-27
| Section | Nature of Payment | Threshold Limit | Rate of TDS |
|---|---|---|---|
| 192 | Salary | Basic exemption limit [3,00,000 (in case assessee pays tax under default tax regime u/s 115BAC),2,50,000/ 3,00,000/ 5,00,000, as the case may be, if the assessee has exercised the option of shifting out of the default tax regime providing u/s 115BAC] | Average rate of income-tax |
| 192A | Premature withdrawal from EPF | Payment or aggregate payment ≥ ₹ 50,000 | 10% on premature taxable withdrawal |
| 193 | Interest on securities | ♦ > ₹ 10,000 in a F.Y. in case of interest on 8% Savings (Taxable) Bonds, 2003/ 7.75% Savings (Taxable) Bonds, 2018. With effect from 01.10.2024, Floating Rate Savings Bonds, 2020 (taxable) or any other notified security of Central Government or State Government shall also be included for the purpose of tax deduction u/s 193 if such interest payable > ₹ 10,000 during the F.Y. ♦ > ₹ 5,000 in a F.Y., in case of interest on debentures issued by a Co. in which the public are substantially interested, paid or credited to a resident individual or HUF by an account payee cheque | 10% |
| 194 | Dividend | Payment or aggregate payment ≥ ₹ 10,000 | 10% |
| 194A | Interest other than “Interest on securities” | ♦ Amount or aggregate amount ₹ 50,000 in a F.Y., in case of interest credited or paid by (i) a banking company; (ii) a co-operative society engaged in banking business; and (iii) a post office on any deposit under a notified Scheme. In all the above cases, if payee is a resident senior citizen, tax deduction limit is > ₹1,00,000. ♦ ₹10,000 in a F.Y., in other cases | 10% |
| 194B | Winnings from lottery or crossword puzzle | > ₹10,000 | 30% |
| 194BA | Winnings from online games | No limit | 30% |
| 194BB | Winnings from horse race | > ₹10,000 | 30% |
| 194C | Payment to Contractors / sub-contractors | ♦ Single sum credited or paid > ₹30,000 (or) ♦The aggregate of sums credited or paid to a contractor during the F.Y. > ₹1,00,000 | ♦ Individual or a Hindu undivided family – 1% ♦ Other than Individual or a Hindu undivided family – 2% |
| 194D | Insurance Commission | Amount or aggregate amount ₹20,000 in a F.Y | 2% |
| 194DA | Any sum under a Life Insurance Policy not fulfilling the conditions specified u/s 10(10D) | ₹ 1,00,000 | 2% |
| 194EE | Payment of deposit under National Saving Scheme | Amount or aggregate amount ≥ ₹2,500 | 10% |
| 194G | Commission on sale of lottery tickets | > ₹ 20,000 | 2% |
| 194H | Commission or brokerage | > ₹ 20,000 | 2% |
| 194I | Rent | > ₹ 50,000 (per month or part of a month) Note: No deduction shall be made under this section where the income by way of rent is credited or paid to a business trust, being a real estate investment trust, in respect of any real estate asset, referred to in clause (23FCA) of section 10, owned directly by such business trust. | (a) Plant & Machinery or equipment – 2% (b) Land or building (including factory building) or land appurtenant to a building (including factory building) or furniture or fittings – 10% |
| 194-IA | Payment on transfer of certain immovable property other than agricultural land | > ₹ 50 lakhs | 1% |
| 194-IB | Payment of rent by certain individuals or Hindu undivided family | > ₹ 50,000 (per month or part of a month) | 2% |
| 194-IC | Payment under specified agreement referred to in section 45(5A) | No limit | 10% |
| 194J | Fees for professional or technical services | > ₹ 50,000 | ♦ Fees for technical services (not being a professional services), or royalty where such royalty is in the nature of consideration for sale, distribution or exhibition of cinematographic films – 2% ♦ In other cases – 10% |
| 194K | Income in respect of units | > ₹ 10,000 | 10% |
| 194LA | Payment of compensation on acquisition of certain immovable property | ₹ 5 lakhs | 10% |
| 194LB | Income by way of interest from infrastructure debt fund | No limit | 5% |
| 194LBA | Distribution of interest income, received or receivable by a business trust from a SPV, to its unit holders | No limit | ♦ Resident unit holders – 10% ♦ Unit holders, being NCNR or foreign companies – 5% |
| 194LBA | Distribution of dividend income, received or receivable by a business trust from a SPV exercising option to pay tax u/s 115BAA, to its unit holders. However, if the SPV has not exercised the option to pay tax u/s 115BAA, dividend income would be exempt in the hands of unit holders and tax would not be deductible at source. | No limit | ♦ Resident unit holders – 10% ♦ Unit holders, being NCNR or foreign companies – 10% |
| 194LBA | Distribution of income received from renting or leasing or letting out any real estate asset directly owned by the business trust, to its unit holders | No limit | ♦ Resident unit holders – 10% ♦ Unit holders, being NCNR or foreign companies – At the rates in force |
| 194LBB | Income in respect of units of investment fund | No limit | ♦ Resident unit holders – 10% ♦ Unit holders, being NCNR or foreign companies – At the rates in force |
| 194LBC | Income in respect of investment in securitization trust | No limit | ♦ Resident unit holders – 10% ♦ Unit holders, being NCNR or foreign companies – At the rates in force |
| 194M | Payment of certain sums by certain individuals or Hindu undivided family | > ₹ 50 lakhs | 2% |
| 194N | Cash withdrawals | ♦ ₹ 3 crore if the recipient is a co-operative society ♦ ₹ 1 crore in case of others | 2% In case the recipient has not filed ROI for all the 3 immediately preceding P.Y.s, for which time limit u/s 139(1) has expired, such sum shall be the amount or aggregate of amounts, in cash > 20 lakh during the P.Y., TDS ♦ 2% of the sum, where cash withdrawal 20 lakhs but ≤ 1 crore/3 crore in case the recipient is a co-operative society ♦ 5% of the sum, where cash withdrawal 1 crore/3 crore in case the recipient is a co-operative society |
| 194-O | Payment of certain sums by e-commerce operator to e-commerce participant | ♦ ₹ 5 lakhs, being gross amount of sales or service or both in a F.Y. to an e-commerce participant, being individual or HUF and such e-commerce participant has furnished PAN or Aadhar number to the e-commerce operator ♦ No threshold in other cases | 0.1% of the gross amount of such sales or services or both [In case of failure to furnish PAN, Maximum TDS@5%] |
| 194P | Deduction of tax in case of specified senior citizen ]Pension (along with interest on bank account)] | Basic exemption limit [₹ 3,00,000 (in case specified senior citizen pays tax under default tax regime u/s 115BAC), ₹3,00,000/ ₹5,00,000, as the case may be, if specified senior citizen has exercised the option of shifting out of the default tax regime providing u/s 115BAC] [i.e., Total Income after giving effect to the deduction allowable under Chapter VI-A, if any allowable, should exceed the basic exemption limit. Further, in case the individual is entitled to rebate u/s 87A from tax payable, then the same should be given effect to] | Rates in force, where the individual has exercised the option of shifting out of the default tax regime. Rates specified in section 115BAC, where the individual pays tax under the default tax regime. |
| 194Q | Deduction of tax at source on payment of certain sum for purchase of goods | > ₹ 50 lakhs | 0.1% of sum exceeding ₹ 50 lakhs |
| 194R | Deduction of tax on benefit or perquisite in respect of business or profession. [Any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession. The provisions would apply to any benefit or perquisite, whether in cash or in kind or partly in cash and partly in kind] | > ₹ 20,000 | 10% of the value or aggregate of value of such benefit or perquisite |
| 194S | Payment on transfer of virtual digital asset | ♦ Consideration is payable by a specified person – ₹ 50,000 ♦ Consideration is payable by any person other than a specified person – ₹ 10,000 | 1% of such sum |
| 194T | Payments to partners of firms | > ₹ 20,000 | 10% |
| 196B | Income from units of a mutual fund or UTI purchased in foreign currency (including LTCG on transfer of such unit) | No limit | 10% in respect of ♦ Income from units or ♦ long term capital gain on transfer of such units which took place before 23.7.2024 ♣ 12.5% in respect of long term capital gain on transfer of such units which took place on or after 23.7.2024 |
| 196D | Income from securities (not being capital gain arising from such securities) to a Foreign Institutional Investor | No limit | 20% |
| 196D | Where a DTAA applies to the payee and if the payee has furnished a Tax Recovery Certificate | No limit | 20% or at the rate or rates of income tax provided in such agreement for such income, whichever is lower. |
| 196D | Income from securities [not being capital gain arising from such securities or income exempt u/s 10(4D)] | No limit | 10% |
TDS Rates for A.Y 2026-27 applicable to Non-Residents/ Foreign Company
| Section | Nature of Payment | Rate of TDS |
|---|---|---|
| 194E | Income referred to in section 115BBA (i.e non-resident sportsman (including an athlete) or an entertainer who is not a citizen of India or a non-resident sports association or institution | 20% |
| 194LC | Interest payable ♦ in respect of monies borrowed in foreign currency from sources outside India ♣ under a loan agreement between 1.7.2012 and 30.6.2023 or ♣by way of issue of long-term infrastructure bonds during the period between 1.7.2012 and 30.9.2014 or ♣ by way of issue of long-term bonds including long term infrastructure bonds between 1.10.2014 and 30.6.2023 as approved by the Central Govt. or ♦ in respect of monies borrowed from sources outside India by way of RDB (Rupee Denominated Bonds) on or before 30.6.2023 | 5% |
| 194LC | Interest payable in respect of monies borrowed from a source outside India by way of issue of any long term bond or RDB between 1.4.2020 and 30.6.2023, which is listed only on a Recognised Stock Exchange located in any IFSC | 4% |
| 194LC | Interest payable in respect of money borrowed from a source outside India by way of issue of any long term bond or RDB on or after 1.7.2023, which is listed only on a Recognised Stock Exchange located in any IFSC | 9% |
| 194LD | Income by way of interest on certain bonds and Government securities [applicable to Foreign Institutional Investors (FIIs) & Qualified Foreign Investors (QFIs)] | 5% |
| 195 | Any sum payable to a non-resident which is chargeable to tax other than interest referred to in section 194LB or 194LC or salaries | At the rates in force |
| 196A | Income on units of a mutual fund specified u/s 10(23D) or from the specified company referred to in 10(35) | 20% |
| 196A | Where a DTAA applies to the payee and if the payee has furnished a tax residency certificate | 20% or at the rate or rates of income tax provided in such agreement for such income, whichever is lower. |
| 196C | ♦ Interest or dividend on (i) bonds of an Indian company or public sector company sold by the Govt and purchased by non-resident in foreign currency; or (ii) GDRs ♦ LTCG on transfer of such bonds or GDRs | ♦10% in respect of ♣ Interest or dividend from bonds or GDRs or ♣ long term capital gain on transfer of such bonds or GDRs which took place before 23.7.2024 ♦ 12.5% in respect of long term capital gain on transfer of such bonds or GDRs which took place on or after 23.7.2024 |
TCS Rates for A.Y 2026-27
| Section | Nature of Transaction | Threshold limit | Rate of TCS |
|---|---|---|---|
| 206C(1) | Sale of alcoholic liquor for human consumption | No limit | 1% |
| 206C(1) | Sale of Tendu leaves | No limit | 5% |
| 206C(1) | Sale of Timber [or any other forest produce (not being tendu leaves)] obtained under a forest lease | No limit | 2% |
| 206C(1) | Sale of Timber obtained by any mode other than under a forest lease | No limit | 2% |
| 206C(1) | Sale of Scrap | No limit | 1% |
| 206C(1) | Sale of Minerals, being coal or lignite or iron ore | No limit | 1% |
| 206C(1C) | Leasing or licensing of parking lot, toll plaza, mining/quarrying | No limit | 2% |
| 206C(1F) | Sale of motor vehicle | ₹ 10 laksh | 1% |
| 206C(1G) | Remittance under Liberalised Remittance Scheme (LRS) for education or medical (funded by loan from financial institution) by an Authorised Dealer | No limit | No TCS |
| 206C(1G) | LRS for education/medical (not funded by loan) by an Authorised Dealer | Aggregate remittance > ₹10 lakh | 5% (on amount exceeding ₹10 lakh) Note : PAN/Aadhaar must be furnished |
| 206C(1G) | LRS for any other purpose (travel, gifts, investments, etc.) by an Authorised Dealer | Aggregate remittance > ₹10 lakh | 20% (on amount exceeding ₹10 lakh) |
| 206C(1G) | Purchase of overseas tour program package by Seller of Overseas Tour Package | Aggregate > ₹10 lakh in FY | 20% (on amount exceeding ₹10 lakh) |
Note :
Section 206C(1H) has been removed from 1st April 2025.
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