TDS is tax that the person paying you must deduct and deposit with the government. If you pay a contractor, a consultant or a landlord, you may have to deduct it. If you receive such payments, it shows up as credit in your tax return.
Common TDS rates
| Payment | Familiar section | Rate | Threshold |
|---|---|---|---|
| Contractor, individual or HUF payee | 194C | 1% | Rs 30,000 per payment or Rs 1,00,000 a year |
| Contractor, other payee | 194C | 2% | Same |
| Professional fees | 194J | 10% | Rs 50,000 a year |
| Technical services | 194J | 2% | Rs 50,000 a year |
| Commission or brokerage | 194H | 2% | Rs 20,000 a year |
| Rent of land, building or furniture | 194I | 10% | Rs 6,00,000 a year |
| Rent of plant and machinery | 194I | 2% | Rs 6,00,000 a year |
| Bank interest | 194A | 10% | Rs 50,000 (Rs 1,00,000 for seniors) |
| Dividend | 194 | 10% | Rs 10,000 |
| Business benefits | 194R | 10% | Rs 20,000 |
Check the current figures on the income tax website, because limits are revised in the Budget.
If the payee has no PAN
The rate becomes the higher of the normal rate and 20%. For purchases of goods (194Q) and e-commerce payments (194O) the higher rate is limited to 5%. Always collect a PAN before you pay.
New section numbers
The Income-tax Act 2025 applies from 1 April 2026 and renumbered the sections. TDS on salary is now section 392 and most other payments are in section 393. Returns and challans should quote the new clause, even though the familiar numbers above are still how most people search.
Salary TDS
For salary, the employer estimates your tax for the year and deducts it in equal monthly parts. Submit your investment proof on time so they do not over-deduct, and pick the regime that suits you.
Work it out
Use the TDS calculator to see the TDS on a payment, with the threshold and the no-PAN rule applied, or the monthly TDS on a salary.