Which payments need TDS, at what rate, from what limit — and what it costs to be late, under the Income-tax Act, 2025.
| Section 393(1) entry | Payment | Rate | Threshold |
|---|---|---|---|
| Sl. 6(i) (old 194C) | Contractor, incl. manpower supply | 1% / 2% | ₹30,000 single, ₹1,00,000 a year |
| Sl. 6(iii) (old 194J) | Professional fees | 10% | ₹50,000 a year |
| Sl. 6(iii) (old 194J) | Technical services | 2% | ₹50,000 a year |
| Sl. 2(ii) (old 194I) | Rent — building | 10% | ₹50,000 a month |
| Sl. 2(ii) (old 194I) | Rent — machinery | 2% | ₹50,000 a month |
| Sl. 1(ii) (old 194H) | Commission | 2% | ₹20,000 a year |
| Sl. 5(ii) (old 194A) | Interest (bank) | 10% | ₹50,000 (₹1,00,000 seniors) |
| Sl. 8(ii) (old 194Q) | Purchase of goods | 0.1% | Above ₹50 lakh a year |
TDS = Payment (excluding GST) × rate once the threshold is crossed. A ₹1,00,000 contract payment to a company: 2% = ₹2,000 TDS, net payment ₹98,000. When a payment makes the year's total cross an annual limit, TDS applies to the whole year's amount.
If the payee has not given a valid PAN, deduct at the highest of the normal rate, the rate in force and 20% — 5% for purchase of goods. "Twice the rate" is the rule for TCS, not TDS.
Deposit TDS by the 7th of the following month (30 April for March deductions) under Rule 218 of the Income-tax Rules, 2026. Quarterly statements — Form 138 (old 24Q) for salary and Form 140 (old 26Q) for other payments — are due 31 July, 31 October, 31 January and 31 May (Rule 219).
Under section 398(3)(a), interest is 1% a month for not deducting and 1.5% a month for deducting but depositing late. Late statements attract ₹200 a day under section 427 (old 234E), capped at the TDS amount, and the expense can be partly disallowed in your own tax computation.
