TDS Rate Chart For FY 2024-25 (AY 2025-26): Comprehensive Guide

Tax Deducted at Source (TDS) is a system under which tax is deducted at the point of payment for certain specified transactions. The TDS rates are different for different types of payment, residential status, and whether the recipient has furnished a PAN. Being an employee, freelancer, house owner, or entrepreneur, knowing the TDS rate chart for FY 2024-25 will save you an unwelcome surprise at tax time.

This post has the full TDS rate chart for FY 2024-25 and other TDS deduction rules under the Income Tax Act of 1961.

What is TDS, and Why is it Deducted?

Ever wondered why, when you get your salary, some part of it is already deducted? That deduction is TDS (Tax Deducted at Source). TDS is a means of collecting tax by the Income Tax Department of India. The concept was introduced to collect tax from the source of income itself. It is valid for all types of income, such as:

• Salary
• Fixed deposit (FD) interest
• Commission payments
• Lottery winnings
• Rent paid for the property
• Dividends from stocks and mutual funds

The one who deducts the tax is a Deductor, and the one who receives his income after TDS is a Deductee. If too much TDS was deducted, you can claim a refund when you submit your income tax return.

How TDS Works in Real Life?

To understand how does TDS work, see this example. Let’s say, you won Rs. 2,00,000 in a lottery. The tax deducted at source (TDS) for lottery/race games is 30%, so Rs.60,000 will be deducted at source, and you will only get Rs.1,40,000. This Rs.60,000 deducted is then deposited with the government on your behalf.

This way, everything is evened out throughout the year, so the taxpayer doesn't get taxed a large amount at the end of the year.

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

1. TDS Rate Chart FY 2024-25 (AY 2025-26) for Salary and Retirement-Related Payments

2. TDS Rate Chart FY 2024-25 (AY 2025-26) for Interest from Banks, Debentures, and Bonds

3. TDS Rate Chart FY 2024-25 (AY 2025-26) for Lottery, Gambling, and Gaming Winnings

4. TDS Rate Chart FY 2024-25 (AY 2025-26) for Contractor and Subcontractor Payments

5. TDS Rate Chart FY 2024-25 (AY 2025-26) for Professional Services and Royalties

6. TDS Rate Chart FY 2024-25 (AY 2025-26) for Rent Payments

TDS Rate Chart FY 2024-25 (AY 2025-26) for Non-Residents and Foreign Companies

1. TDS Rate Chart FY 2024-25 (AY 2025-26) for Interest Payments to NRIs and Foreign Companies

2. TDS Rate Chart FY 2024-25 (AY 2025-26) for Capital Gains for Non-Residents

3. TDS Rate Chart FY 2024-25 (AY 2025-26) for Royalty and Technical Service Fees for Non-Residents

New TDS Provision for FY 2024-2025

Section 194T – Tax Deduction on Payments to Firm Partners

A new TDS provision will be applicable on payments made by firms to partners effective April 1st, 2025. A firm shall deduct TDS @ 10% from salary, commission, bonus, or interest exceeding Rs. 20,000 paid to a partner in a financial year under section 194. The deduction occurs when credit is first applied to the partner's account (or when actual payment is made, whichever is first). Therefore, partners must be smarter about their withdrawals under this new provision to minimise cash flow issues and tax liability.

TDS Rate Chart FY 2024-25 (AY 2025-26) for Domestic Residents and Domestic Companies

Key Takeaways

• Section 194T introduces 10% TDS on firm-to-partner payments exceeding Rs.20,000.
• Higher TDS for non-filers under 206AB ensures tax compliance.
• New digital economy rules affect e-commerce transactions and virtual asset transfers.

TDS Rate Chart FY 2024-25 (AY 2025-26) for Non-Resident Indians (Other than a Company)

Key Notes on TDS for NRI

1. Surcharge & Cess:
   
   • If the total income of the NRI exceeds Rs.50 lakh, surcharge rates will apply.
   • Health and Education Cess of 4% is applicable on the total tax amount.
2. Lower/Nil TDS Application:
   NRIs can file Form 13 under Section 197 to request lower or nil TDS deduction.
3. Double Taxation Avoidance Agreement (DTAA):
   If an NRI is a resident of a country with which India has a DTAA, the lower TDS rate specified in the DTAA will be applicable.
4. TDS Refund:
   If an NRI has paid excess TDS, they can claim a refund while filing their Income Tax Return (ITR).

TDS Rate Chart for Domestic Companies (FY 2024-25)

TDS Rate Chart FY 2024-25 (AY 2025-26) for Non-Domestic Companies FY 2024-2026

Key Notes on TDS for Foreign Companies

1. Surcharge & Cess:
   • If the total income of the foreign company exceeds Rs.1 crore, surcharge rates apply:
     • 2% for income between Rs.1 crore – Rs.10 crore
     • 5% for income above Rs.10 crore
     • Health & Education Cess of 4% is applicable on the total tax amount.
2. Lower/Nil TDS Application:
   • Foreign companies can file Form 13 under Section 197 to request a lower or nil TDS deduction.
3. Double Taxation Avoidance Agreement (DTAA):
   • If a foreign company is a resident of a country with which India has a DTAA, the lower TDS rate specified in the DTAA will apply.
4. Special TDS Rates for Certain Interest Payments:
   • Long-term bonds listed in IFSC stock exchanges enjoy a lower 4% TDS rate.
   • Interest on external commercial borrowings (ECBs) and rupee-denominated bonds is taxed at 5%.
5. TDS Refund:
   • If a foreign company has paid excess TDS, it can claim a refund by filing an Income Tax Return (ITR) in India.

TDS Exemptions and Exceptions

The following are exempted from the TDS deduction rules:

• Payments made to RBI, central government, or state governments.
• Interest on savings accounts, NSC (National Savings Certificate), and KVP (Kisan Vikas Patra).
• Interest earned on tax refunds.
• Payments made to cooperative banks and some other financial institutions.

TDS on Fixed Deposits

• No TDS on interest on FDs up to Rs.40,000 a year for all citizens (Rs.50,000 for senior citizens).
• TDS rate on interest income exceeding the threshold: 10%.
• If PAN is not furnished, TDS is 20%.

TDS on Property Sales & Rentals

• If you purchase a property of more than Rs.50 lakh, you would have to deduct the TDS at 1% before paying the seller.
• In case the seller is an NRI, the TDS will be deducted at the capital gains tax rates, which could be as high as 30% for short-term gains.
• TDS would be deducted at 10% for rent payments by landlords receiving more than Rs.2.4 lakh per annum.

TDS on Salary & How to Check TDS Deduction

TDS on salary for salaried employees is applicable as per the income tax slab rates applicable under either the old or new tax regime. The employer deducts TDS before the salary is credited every month, and that is deposited with the government.

How is TDS on Salary Calculated?

To determine an employee's total taxable income for the financial year, employers need to make reasonable estimates taking into account the following:

• Basic salary
• Dearness allowance
• Other allowances
• Bonus
• Incentives
• Perquisites
• Deductions under Section 80C
• HRA exemptions, if applicable
• Standard deduction of Rs.50,000

The employer, on the basis of the above, applies the relevant income tax slab rate and deducts TDS proportionately every month. You can also use an income tax calculator to calculate this yourself!

Form 16 & Salary TDS Details Explained

Form 16 is the form that the employer issues to employees annually, generally in May or June. The form comprises:

• Part A: TDS details deducted and deposited with the IT department
• Part B: Break-up of salary components, deductions, exemptions, and taxable income

You can utilise Form 16 while Income Tax E-filing to check if proper TDS has been deducted.

How to Check Your TDS Deduction Online?

You can view your TDS deduction history online through the Income Tax portal. Here are the steps:

1. Go to the Income Tax E-filing portal.
2. Log in using your PAN and password (register if you haven't already).
3. Go to 'My Account' → 'View Form 26AS'.
4. Download Form 26AS.
5. Cross-verify the TDS amount with your salary slip and Form 16 for correctness.

If you find any discrepancies (like wrong TDS deduction or missing deposits, etc.), bring it to your employer's notice promptly.

What If TDS is Deducted but Not Deposited?

If your employer has deducted the TDS but has not deposited it, then you may encounter problems while filing your ITR. In that scenario:

• Ask your employer to deposit the missing TDS.
• Complain to the IT department, if required
• Use Form 26AS as evidence while seeking a solution.

Tips to Reduce TDS Deduction

Want to maximize your take-home salary and reduce TDS deductions? Here's how you can do it:

1. Submit Form 15G or 15H (For Fixed Deposit Holders)

If your total annual income is below the taxable limit, you can avoid TDS on interest income from FDs, RDs, and other savings instruments by submitting Form 15G (for individuals) or Form 15H (for senior citizens) to the bank.

2. Invest in Tax-Saving Instruments

Investment in tax-saving schemes reduces your taxable income, thereby reducing your TDS deduction. Some of the popular tax-saving investments are:

• Public Provident Fund (PPF) – Tax-free savings with a deduction of up to Rs.1.5 lakh under Section 80C.
• Employee Provident Fund (EPF) – Mandatory deduction for salaried employees; tax benefits under Section 80C.
• Equity Linked Savings Scheme (ELSS) – Mutual funds that are high return and tax efficient.
• National Pension System (NPS) – Additional deduction of Rs.50,000 under Section 80CCD(1B).
• Health Insurance Premiums (Under Section 80D) –Deduction up to Rs.25,000 (Rs.50,000 for senior citizens) for medical insurance.
• Interest on Education Loan (Section 80E) – There is no upper limit to the interest deduction on loans for higher education.

3. Maximise HRA Exemption

If you live in a rented house, then you are eligible to claim the exemption on HRA, which will reduce your taxable income. To do so:

• Submit rent receipts and PAN of the landlord (if rent is more than Rs.1 lakh per annum).
• Apply the HRA exemption formula:
• HRA exemption = Least of the following
• Actual HRA received
• 50% of salary (metro cities) or 40% (non-metro cities)
• Actual rent paid – 10% of basic salary

4. Lower TDS on Salary with Effective Tax Planning

Salaried individuals can lower TDS on salary by:

• Declaring investments & expenses at the beginning of the financial year.
• Providing proof of tax-saving investments on time.
• Deciding between the new or old tax regime based on the tax liability.

5. Apply for a Lower/NIL TDS Certificate (Section 197)

If you expect your total tax liability for the year to be lower than the TDS being deducted, then you can apply for a Lower/ NIL TDS Certificate under section 197. This is useful for:

• Freelancers & consultants whose annual tax liability is lower than standard TDS rates.
• Those with a high one-time income, such as property sales or commission payments.

How to Apply for a Lower TDS Certificate?

• Log in to the Income Tax portal and file Form 13.
• Provide details of expected income, deductions, and tax liability.
• If accepted, provide the certificate to the deductor to deduct TDS at a lower rate.

6. Claim TDS Refund While Filing ITR

If too much TDS has been deducted, you can also get a refund at the time of filing ITR. It is credited directly to your bank account once the process is approved by the Income Tax Department.

Here's how to check the status of TDS refund:

• Log in to the e-filing portal of Income Tax.
• Go to 'My Account' → 'Refund/Demand Status.'
• Provide your assessment year and view the refund amount.

7. Divide Your Income Judiciously (For Business Owners & Self Employed)

If you are a business owner or consultant, you can reduce your TDS sections and rates by:

• Distribution of income amongst family members—spouse or parents
• Claiming business expenses such as rent, travel, phone bills, etc.
• Registering your business as an LLP or Private Limited Company for maximisation of tax benefits.

Conclusion

The TDS rate chart for FY 2024-25 helps you stay compliant with the taxes and avoid penalties. Be it a salaried individual, a business owner, or an investor, knowledge of the TDS section list, the TDS deduction chart, and new TDS rates are indispensable for better financial planning. Planning your taxes wisely? Protect your future with PNB MetLife’s customised insurance solutions. Secure your financial well-being today!

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