Easy Guide to Tax Deduction at Source

Understanding Tax Deducted at Source (TDS) is important for both compliance and smart financial planning. The government updates these rates every year to make tax collection smooth and fair.

Key Changes in TDS for FY 2025-26

• Interest Income for Senior Citizens (Section 194A): The exemption limit has doubled — from ₹50,000 to ₹1,00,000.
• Rental Income (Section 194I): The annual threshold for deducting TDS on rent has gone up from ₹2.4 lakh to ₹6 lakh.
• Insurance Commission (Section 194D): The TDS rate has been cut from 5% to 2% (for payees other than companies).

TDS Rate Chart for Residents (FY 2025-26)

Note: If PAN is not provided, TDS will be deducted at 20% or the higher rate. Also, surcharge and cess apply as per rules.

TDS on Salary (Section 192)

For salaries, employers deduct TDS based on the employee’s total estimated income for the year.

With the New Tax Regime (Section 115BAC) now the default, TDS is calculated using the new slab rates.

Employees can still choose the Old Regime, but they must inform their employer.

Compliance Tips

• PAN Requirement: Always provide a valid PAN. Without it, TDS is deducted at 20%.
• Form 15G/15H: Submit these forms (if eligible) to avoid TDS on interest income. Form 15H is for senior citizens.
• Due Dates: TDS must be deposited by the 7th of the next month (except March, which is due by 30th April). Quarterly returns (Form 24Q, 26Q, etc.) must also be filed on time.

Final Note

This guide is for general understanding. For exact compliance, always check the latest notifications from the Income Tax Department or consult a tax professional.

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