What is meant by the TDS rate on salary?

TDS on salary is the tax that employers deduct from employees' salaries when the income threshold is taxable. Employers deduct the TDS while paying the salary and not when the salary is accrued.

What TDS rate is applicable on salary payment?

TDS on salary applies based on the normal tax slab rates and the exemption limit of employees. Thus, the TDS rate might vary between employees based on their income and tax slab.

What TDS rate applies to the amount received from a life insurance policy?

A 2% TDS rate applies to the amount received from a life insurance policy. This is as per Section 194DA of the Income Tax Act, 1961.

Complete TDS Rate Chart for the Financial Year 2024-25 (Assessment Year 2025-26)

TDS (Tax Deducted at Source) involves the payer deducting tax from specified income before making payments to the payee. This deduction occurs when income, such as salary, rent or interest, is credited or paid out. The withheld tax is then deposited with the government on the payee’s behalf. Introduced to reduce tax evasion, TDS ensures taxes are collected at the source.

The rates for TDS are set by the Government of India and the deducted amount counts as a prepayment towards the payee's total tax liability. In this blog, we will walk you through the TDS rate chart for the Financial Year 2024-25 (Assessment Year 2025-26), highlighting all the TDS provisions of the Income Tax Act.

Key TDS Highlights of Budget 2025

The Union Budget 2025 proposed the following changes in terms of TDS chart:

Section	Present (₹)	Proposed (₹)
193 - Interest on securities	NIL	10,000
194A - Interest other than interest on securities	50,000/- for senior citizen	1,00,000/- for senior citizen
	40,000/- in case of others when banks, cooperative societies and post office pays TDS	50,000/- in case of others when banks, cooperative societies and post office pays TDS
	5,000/- in other cases	10,000/- in other cases
194 – Dividend for an individual shareholder	5,000	10,000
194K - Income in respect of mutual fund units	5,000	10,000
194B - Winnings from lottery, crossword puzzle and	Aggregate of amounts exceeding 10,000/- during the financial year	10,000/- in respect of a single transaction
194BB - Winnings from horse race		10,000/- in respect of a single transaction
194D - Insurance commission	15,000	20,000
194G - Income by way of commission, prize on lottery tickets	15,000	20,000
194H - Commission or brokerage	15,000	20,000
194-I - Rent	2,40,000 (during a financial year)	6,00,000 (during a financial year)
194J - Fee for professional or technical services	30,000	50,000
194LA - Income by way of enhanced compensation	2,50,000	5,00,000
206C(1G) – Remittance under LRS and overseas tour program package	7,00,000	10,00,000

Notably, higher TDS rates will be applicable if a taxpayer fails to provide PAN card details. The above TDS rate chart highlights the applicable TDS if PAN details are available.

TDS Rate Chart for FY 2024-25 (AY 2025-26)

The table below illustrates the TDS percentage chart for different types of payments:

Section	Nature of Payment	TDS Rate
192	Income from Salary	As per the slab rates
192A	Premature EPF withdrawal	10% (30% in case PAN is unavailable)
193	Interest on securities	10%
194	Dividend	10%
194A	Interest earned other than securities	10%
194A	Interest that is earned apart from post office/bank securities	10%
194B	Income earned from card games, lotteries, and/or other games	30%
194BB	Earnings from horse races	30%
194D	Insurance commission	5%
194DA	Life insurance policy payments	2%
194E	If payments are made to sportsmen who are non-residents	20%
194EE	In case NSS deposits are sold	10%
194F	Payment towards repurchase of units by Unit Trust of India or Mutual Funds	20% (Excluded with effect from 1st Oct 2024)
194G	Any commission received from the sale of lottery tickets	2%
194H	Brokerage or Commission	2%
194I	Plant & Machinery (Rent)	2%
194I	Furniture, Building or Land (Rent)	10%
194IA	Transfer of Immovable Property (excluding agricultural land)	1%
194IB	Rent paid by HUF/Individual not required to conduct tax audit	2%
194IC	In case monetary compensation is paid (Joint Development Agreements)	10%
194J	Fee paid for technical services	2%
194J	Fee paid for professional services	10%
194LA	Compensation paid in case of immovable property purchase	10%
194LB	Interest that is earned from an Infrastructure Bond (NRI)	4%/5%/9%
194LBB	Investment fund paying income to the unit holder (except for incomes that are exempt under Section 10 (23FBB))	10%
194LBC	Income generated from investments in securitisation trust (as per Section 115TCA)	25%/30%
194LD	Interest in certain government securities and bonds	5%
194N	Any cash withdrawal done from more than one account or more than the previous year by a corporate society that is in the banking business, a post office, or an individual who has a banking company	2%
194Q	Goods purchased	0.10%
194P	For senior citizens who are above 75 years	As per the slab rates
194S	Virtual Digital Assets payment	1%
206AA	In case PAN is not available	20% of the rate in force or double the rate as per the act, whichever is higher
206AB	In case ITR is not filed at higher rates	Double the rate (as per the act) or 5% (whichever is higher) of the rate in force

TDS Rate Chart for Non-Resident Indians

Here is the TDS section chart for NRIs (Non-resident Indians):

Nature of Payment	Section	TDS Percentage
Salary payment	Section 192	Normal slab rate
Payment of accumulated balance of provident fund	Section 192A	10%
Income received from winning lotteries, crossword puzzles, card games and other games	Section 194B	30%
Income received from winning horse races	Section 194BB	30%
Payment to a non-resident sportsman (including an athlete), an entertainer (not a citizen of India) or a non-resident sports association	Section 194E	20%
Payment under the National Savings Scheme	Section- 194EE	10%
Payment on repurchase of Mutual Fund or Unit Trust of India	Section 194F	20%
Commission on the sale of lottery tickets	Section 194G	5%
Infrastructure debt fund interest	Section 194LB	5%
Interest income distribution by a Business Trust	Section 194LBA(3)	30%
Distribution of income by an Investment Fund other than income which is exempt under Section 10(23FBB)	Section 194LBB	30%
Distribution of income by a Securitisation Trust under Section 115TCA of the Income Tax Act, 1961	Section 194LBC	30%
Interest income from Indian company on funds borrowed in international currency	Section 194LC	4%/5%/9%
Interest income on certain government securities and rupee-denominated bonds	Section 194LD	5%

TDS Rate Chart for Domestic Company

Here is the TDS deduction chart for domestic companies:

Particulars	TDS Rate
Section 193: Interest on securities (Any security of the State or Central Government; Securities or debentures for money issued by any local authority established by a State, Central, or Provincial Act; Any debenture issued by a company; Interest charged on any other security)	10%
Section 194: Dividend payment	10%
Section 194A: Income by way of interest other than Interest on Securities	10%
Section 194B: Income received from winning card games, lottery or crossword puzzles	30%
Section 194BB: Income received by winning horse race	30%
Section 194C: Payment made to contractor/ subcontractor/ HUF (Hindu Undivided Family)/ Individuals/ Others	1% to 2%
Section 194D: Insurance Commission	10%
Section 194DA: Payment of any amount in respect of a life insurance policy with effect from 1^st September 2019, the insurer will deduct tax on the income portion compromised in the insurance payout	5%
Section 194EE: Payment of funds in a person's National Savings Scheme (NSS)	10%
Section 194F: Amount payable for a Unit Trust of India (UTI) or Mutual Fund to repurchase a unit	20%
Section 194G: Payment like commissions on sale of lottery tickets	5%
Section 194H: Brokerage or Commission	2%
Section 194-IA: Transfer of certain movable property, excluding agricultural land, in exchange for payment	1%
Section 194-IC: Payment under Joint Development Agreements (JDA) to HUF/ Individual	10%
Section 194J: Any sum paid by way of fees for professional or technical services	2% or 10%
Section 194K: Income in respect of units payable to resident person	10%
Section 194LA: Payment of compensation on acquisition of certain immovable property	10%
Section 194LBA(1): A business trust may transfer certain income to its unitholder.	10%
Section 194LBB: A certain amount of income given to an unitholder in relation to their investment fund units.	10%
Section 194 LBC: Income from investment from securitisation of funds	10%
Section 194M: Payment of commission (not being insurance commission), brokerage, contractual fee, professional fee to a resident person by an Individual or a HUF who is not liable to deduct TDS under sections 194C, 194H, or 194J. Tax shall be deducted under Section 194M with effect from 1/09/2019 when the aggregate sum credited or paid during a financial year exceeds ₹50 lakh.	2%
Section 194N: Cash withdrawal during the previous year from one or more accounts maintained by a person with a banking company, cooperative society engaged in the business of banking or a post office	2% or 5%
Section 194O: Payment or credit of amount by the e-commerce operator to e-commerce participant	0.1%
Section 194Q: Payment to a resident for purchase of goods of the aggregate value exceeding ₹50 lakh	0.1%

TDS Rate Chart for Foreign Company

Here is the TDS rate chart for other than domestic companies:

Particulars	TDS Rate
Section 194B: Income for winning lottery, card games, crossword puzzles, and others	30%
Section 194BB: Income received from horse race-winning	30%
Section 194E: Payment to a non-resident Indian sports association, sportsperson, performer, or entertainer	20%
Section 194G: Payments of commission on the sale of lottery tickets	2%
Section 194LB: Payment of interest on infrastructure debt fund	5%
Section 194LBA(2): Payment of the nature referred to in Section 10(23FC)(a) and	5%
Section 194LBA(2): Payment of the nature referred to in Section 10(23FC)(b)	10%
Section 194LBA(3): Business trust shall deduct tax while distributing any income received from renting or leasing or letting out any real estate asset owned directly by it to its unit holders.	40%
Section 194LBB: Investment fund paying an income to a unit holder [other than income which is exempt under Section 10(23FBB)	40%
Section 194LBC: Income in respect of investment made in a securitisation trust (specified in Explanation of section 115TCA)	40%
Section 194LC: Loan interest payment, borrowed in foreign currency by an Indian company or business trust against a loan agreement or the issue of long-term bonds. If interest is payable against long-term bonds listed in recognised stock exchange in IFSC	5% 4%
Section 194LD: Payment of interest by an Indian Company or a business trust in respect of money borrowed in foreign currency under a loan agreement or by way of the issue of long-term bonds (including long-term infrastructure bonds)	4%/5%/9%
Section 195: Payment of any other amount	10% or 12.5%

Final Word

The TDS rate chart is an essential guide to understanding tax deductions on different income types, such as salary and interest income. It helps ensure you follow tax rules correctly by clearly showing the applicable rates and limits. By using this updated chart, both individuals and businesses can plan their taxes better. Staying informed about the latest TDS rates helps avoid penalties and keeps your finances in order.