Understanding the Key Changes in TDS Rates for AY 2025–2026
This blog offers a thorough analysis of the revised Tax Deducted at Source (TDS) rates for the Assessment Year (AY) 2025–2026, emphasizing the main changes and how they affect enterprises, professionals, and salaried persons. Changes in TDS rates for a range of payments, including dividends, interest on stocks, professional fees, and cryptocurrency transactions, are highlighted in the article. It also discusses the implementation of new sections, such as Section 206AB for non-filers of income tax returns (ITR) and Section 194S for cryptocurrency transactions. The blog also covers significant changes, such as lower TDS rates for new businesses and modifications to cash withdrawal limits. The article highlights the significance of compliance and offers advice on how people and companies may guarantee correct TDS deduction in order to avoid fines.
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Overview
In India's tax system, Tax Deducted at Source (TDS) is an essential method that guarantees tax collection at the source of income. To improve revenue collection and expedite tax compliance, the government frequently modifies TDS rates. A number of modifications have been made to the TDS rules for Assessment Year (AY) 2025–2026 that affect professionals, enterprises, and salaried persons.
The revised TDS rates for AY 2025–2026, sector-specific adjustments, and significant taxpayer considerations will all be covered in this extensive handbook.
Important TDS Changes for AY 2025–2026
- Updated professional fees, dividends, and salary TDS rates
- Modifications to the thresholds for certain payments
- Addition of new parts and changes to current clauses
- Enhanced emphasis on adherence and sanctions for non-deduction
Updated TDS Rates for Various Payments (As per Budget 2025)
| Nature of Payment | Section | Old Threshold (₹) | New Threshold (₹) | Old TDS Rate (%) | New TDS Rate (%) | If No PAN or Invalid PAN (%) |
|---|---|---|---|---|---|---|
| Interest on securities | 193 | Nil | 10,000 | 10 | 10 | 20 |
| Interest (Bank, Cooperative, Post Office) | 194A | 50,000 (Senior Citizen), 40,000 (Others), 5,000 (Other Cases) | 1,00,000 (Senior Citizen), 50,000 (Others), 10,000 (Other Cases) | 10 | 10 | 20 |
| Dividend | 194 | 5,000 | 10,000 | 10 | 10 | 20 |
| Income from mutual funds | 194K | 5,000 | 10,000 | 10 | 10 | 20 |
| Lottery Winnings | 194B | 10,000 (Aggregate) | 10,000 (Single Transaction) | 30 | 30 | 30 |
| Winnings from Horse Race | 194BB | 10,000 (Aggregate) | 10,000 (Single Transaction) | 30 | 30 | 30 |
| Insurance Commission | 194D | 15,000 | 20,000 | 5 | 2 | 20 |
| Brokerage or Commission | 194H | 15,000 | 20,000 | 5 | 2 | 20 |
| Rent (Land/Building) | 194I | 2,40,000 | 6,00,000 | 10 | 10 | 20 |
| Professional/Technical Fees | 194J | 30,000 | 50,000 | 10 | 10 | 20 |
| Enhanced Compensation | 194LA | 2,50,000 | 5,00,000 | 10 | 10 | 20 |
Notable Modifications and Adjustments
- Section 194S: TDS on Crypto Transactions - The transfer of digital assets will be subject to a 1% TDS.
- Increased TDS for ITR Non-Filers (Section 206AB): A higher TDS rate will be imposed on those who failed to file an ITR during the preceding two assessment years.
- Decreased TDS on Startup Payments: For startup capital and angel investments, the government has loosened the TDS.
- Modifications to Cash Withdrawal TDS (Section 194N): 2% TDS will be applied on withdrawals over ₹1 crore.
Effects on Businesses and Taxpayers
- Salaried Workers: To prevent excessive TDS deductions, make sure your income and investments are properly declared.
- Companies and contractors must abide by the current prices and limitations in order to avoid fines.
- Traders and investors are required to account for TDS on cryptocurrency transactions, interest, and dividends.
- MSMEs and startups should take advantage of the new incentives and exemptions.
How to Guarantee TDS Compliance
- Check the PAN information: To prevent larger TDS deductions, make sure your PAN is submitted correctly.
- Monitor TDS Deductions: Verify the correctness of Form 26AS on a regular basis.
- Avoid increased TDS rates under Section 206AB by filing your ITR on time.
- Use Deductions & Exemptions: When submitting your taxes, make use of the deductions that are available to you.
In Conclusion
The updated TDS regulations for AY 2025–2026 provide a strong emphasis on efficiency, compliance, and openness in tax collection. Businesses and individuals may reduce their tax obligations and stay out of trouble by keeping up with these developments.
Visit the official Income Tax Department website or speak with a tax professional for the most recent information.
Questions and Answers (FAQs)
- Has the salary TDS rate changed? No, TDS on salary is still calculated according to the relevant tax bracket.
- What is the FD interest TDS rate? If interest surpasses ₹40,000 (₹50,000 for elderly folks), the rate will be 10%.
- Does TDS apply to transactions using cryptocurrencies? Yes, Section 194S applies to 1% TDS.
- Can I get my money back for the extra TDS that was taken out? When submitting your income tax return, you can, in fact, request a refund.
- What occurs if TDS isn't subtracted? The payer can be subject to fines, interest, and cost disallowance.
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Note-All the aforementioned information in the article is taken from authentic resources and has been published after moderation. Any change in the information other than fact must be believed as a human error. For queries mail us at marketing@myitronline.com
Krishna Gopal Varshney
An editor at apnokacaKrishna Gopal Varshney, Founder & CEO of Myitronline Global Services Private Limited at Delhi. A dedicated and tireless Expert Service Provider for the clients seeking tax filing assistance and all other essential requirements associated with Business/Professional establishment. Connect to us and let us give the Best Support to make you a Success. Visit our website for latest Business News and IT Updates.
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Krishna Gopal Varshney
An editor at Myitronline
Krishna Gopal Varshney, Founder & CEO of Myitronline Global Services Private Limited at Delhi. A dedicated and tireless Expert Service Provider for the clients seeking tax filing assistance and all other essential requirements associated with Business/Professional establishment. Connect to us and let us give the Best Support to make you a Success. Visit our website for latest Business News and IT Updates.
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