TDS Rates and Due Dates — FY 2025-26 (AY 2026-27)

TDS is the single most misunderstood compliance for small businesses in India. The rates change with almost every Budget, the sections are scattered across the Act, and the cost of a 10-minute delay (interest, late fee, disallowance under Section 40(a)) is wildly disproportionate to the tax involved. This guide is a working reference — every TDS section commonly hit by businesses and professionals in Ahmedabad, with rates, thresholds and due dates for FY 2025-26.

What TDS actually does

Tax Deducted at Source shifts the burden of tax collection from the recipient to the payer. Every business making certain payments is required to deduct a percentage of the gross amount, deposit it with the government within a fixed window, and report the deduction in a quarterly return. The recipient receives a credit (via Form 26AS / AIS) and pays only the balance through self-assessment.

The compliance burden falls on the payer. Failure to deduct, deduct at the wrong rate, deposit late or miss the return triggers separate penalty regimes — and worse, the expense itself can be disallowed in the deductor's own income tax computation under Section 40(a)(ia).

Complete TDS rate chart — FY 2025-26

Salary — Section 192 (the most common)

Every employer must deduct TDS on salary based on the employee's estimated annual income, the chosen tax regime, and declared investments. Unlike most other sections, Section 192 deducts at slab rates rather than a flat percentage. The employer collects Form 12BB at the start of the year with the employee's regime choice and proof of investments/HRA/rent.

Since AY 2024-25, the new regime is default. If a salaried employee wants old-regime TDS, they must submit Form 10-IEA via the employer or the income tax portal BEFORE the start of the financial year. The employer's TDS continues for 12 months on the basis selected — switching mid-year is not possible at TDS level (the employee adjusts in their ITR).

Section 194T — partner remuneration (new from FY 2024-25)

Introduced by Budget 2024 effective 1 April 2025, Section 194T requires a firm / LLP to deduct TDS at 10% on partner remuneration, interest, bonus or commission paid to a partner — when the aggregate amount in a financial year exceeds ₹20,000.

• Applies to every partnership firm and LLP, regardless of turnover.
• Threshold of ₹20,000 is per partner per financial year — easily breached even in small firms.
• The firm becomes responsible for monthly deposit, quarterly TDS return (Form 26Q) and issuing Form 16A to each partner.
• Failure to deduct disallows the remuneration / interest in the firm's computation under Section 40(a)(ia).

Property purchase — Section 194-IA

Any buyer purchasing immovable property (other than agricultural land) for consideration of ₹50 lakh or more must deduct 1% TDS from the payment to the seller. The deduction is at the time of credit or payment, whichever is earlier. The buyer files Form 26QB online and pays the TDS within 30 days from the end of the month of deduction.

• Threshold is on the consideration, not on each instalment — if total consideration is ≥ ₹50 lakh, every payment attracts 1%.
• Joint buyers: if there are multiple buyers, each buyer deducts 1% on their share of consideration.
• Seller's PAN mandatory — without it, rate jumps to 20%.
• Buyer must issue Form 16B to seller within 15 days of Form 26QB filing.

Payments to non-residents — Section 195

Section 195 governs any payment to a non-resident which is taxable in India — interest, royalty, fees for technical services, capital gains, business income with PE in India. The rate is the lower of the Income Tax Act rate or the rate prescribed in the relevant Double Taxation Avoidance Agreement (DTAA), provided the non-resident furnishes a Tax Residency Certificate (TRC) and Form 10F.

Section 195(2) allows the payer to apply for a NIL or lower deduction certificate when there is genuine doubt about taxability or quantum. For routine remittances, Form 15CA / 15CB is required — 15CB is the CA certificate confirming taxability under the Act and applicable DTAA, 15CA is the payer's declaration to the bank.

Deposit due dates

Interest under Section 201(1A) at 1.5% per month or part thereof for late deposit (1% per month if not deducted at all). The interest is computed from the date the TDS was deductible to the date of actual deposit.

Quarterly TDS returns

Quarterly returns are filed on the TIN-NSDL portal or via authorised intermediaries. Form 16 (salary) is issued to employees by 15 June; Form 16A (non-salary) is issued within 15 days of the quarterly return due date.

When there is no PAN — Section 206AA

Section 206AA mandates a higher TDS rate when the deductee fails to provide PAN — the higher of the prescribed rate, 20%, or the rate in force. For non-residents, the additional Section 206AB layer applies when the deductee has not filed ITR for the preceding year and TDS+TCS exceeds the threshold.

• For Section 194-O (e-commerce) and Section 194-Q (purchase of goods): the no-PAN rate is 5%, not 20%.
• For Section 194-IA (property): the no-PAN rate is 20%.
• For salary TDS (Section 192): no-PAN rate is the highest slab — 30% plus surcharge and cess.
• For non-residents under Section 195: DTAA benefit is denied without PAN, defaulting to Income Tax Act rate.

Penalties for late deposit and late return

Compliance checklist for a business in Ahmedabad

1. Collect PAN, address and bank details of every vendor before raising the first invoice. Maintain a vendor master with TDS section mapping.
2. Cross-check every payment voucher against the TDS rate chart before release — automate this in your accounting software (Tally, Zoho Books, QuickBooks).
3. Deposit TDS by the 7th of the following month — set a calendar reminder for the 5th to allow buffer.
4. Issue Form 16 / 16A on schedule; the deductee uses it to claim credit in their ITR.
5. Reconcile your TDS challans with Form 26AS quarterly — mismatches must be corrected via revision before the next quarter.
6. For any payment to a non-resident, get Form 15CA / 15CB done before remittance; banks will not process without it.
7. Track 194T (partner remuneration) from April 2025 onwards — easy to overlook in a long-running partnership.
8. If you receive a TDS demand notice, respond within 30 days; the department's intimation under Section 200A treats default like a self-assessment if you do not contest.