TDS & TCS Under Income Tax Act 2025: Complete Guide with Rate Table
Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) are the primary mechanisms through which India collects income tax throughout the year. The Income Tax Act, 2025 retains all TDS provisions with new section numbers. This guide covers all key TDS rates, due dates, certificates, and how to claim credit in your ITR.
What is TDS and how does it work?
TDS is the mechanism by which the payer of certain incomes — employer, bank, tenant, buyer — deducts tax at the source before making the payment. The deducted amount is deposited with the government, and it reflects as a credit in your Form 26AS / AIS against your PAN. When you file your ITR, this TDS credit is offset against your total tax liability.
Key TDS sections with new numbers
| New Sec (2025) | Old Sec (1961) | Nature of Payment | Rate | Threshold |
|---|---|---|---|---|
| Sec 392 | Sec 192 | Salary | Slab rate | Above basic exemption |
| Sec 393 | Sec 193 | Interest on securities | 10% | ₹10,000 |
| Sec 394 | Sec 194 | Dividend | 10% | ₹5,000 |
| Sec 395 | Sec 194A | Interest (bank/NBFCs) | 10% | ₹40,000 (₹50K for seniors) |
| Sec 399 | Sec 194C | Payment to contractors | 1%/2% | ₹30,000 per payment / ₹1L per year |
| Sec 400 | Sec 194D | Insurance commission | 5% | ₹15,000 |
| Sec 402 | Sec 194H | Commission/brokerage | 5% | ₹15,000 |
| Sec 403 | Sec 194I | Rent (land/building) | 10% | ₹50,000 per month |
| Sec 403A | Sec 194IB | Rent by individuals | 5% | ₹50,000 per month |
| Sec 405 | Sec 194J | Professional/technical fees | 10% (2% tech) | ₹30,000 |
| Sec 408 | Sec 194IA | Property purchase | 1% | Property value ≥ ₹50L |
| Sec 409 | Sec 194Q | Purchase of goods | 0.1% | ₹50L per year from same seller |
| Sec 412 | Sec 112A | Long-term capital gains | 10–12.5% | Above ₹1.25L gain on equity |
If you expect your total tax liability to be lower than the TDS being deducted (e.g., because your overall income is below the taxable limit), you can apply for a lower deduction certificate (now under Section 197 of the new Act) from your Assessing Officer. This certificate is then submitted to the payer to reduce TDS.
TDS deposit and return due dates
| Quarter | Period | TDS Deposit (government) | TDS Return filing |
|---|---|---|---|
| Q1 | Apr – Jun | 7th of following month | 31 July |
| Q2 | Jul – Sep | 7th of following month | 31 October |
| Q3 | Oct – Dec | 7th of following month | 31 January |
| Q4 | Jan – Mar | 30 April (for Mar: 30 Apr) | 31 May |
Deductors who miss the deposit deadline face interest at 1.5% per month and those who miss the return filing deadline face a penalty of ₹200 per day (up to the TDS amount).
Form 26AS and AIS: verify your TDS credits
Form 26AS is the tax passbook maintained by the Income Tax Department. The Annual Information Statement (AIS) is a more comprehensive version introduced in 2021. Together, they show:
- All TDS deducted by employers, banks, tenants, and buyers
- Advance tax and self-assessment tax paid
- High-value transactions (property sales, large bank deposits, equity investments)
- Foreign remittances reported under FEMA
- SFT (Statement of Financial Transactions) data from banks and registrars
To access: Login to incometax.gov.in → e-File → Income Tax Returns → View Form 26AS / AIS
If your ITR shows income or deductions that don't match your AIS data, the department's system flags it automatically and can generate a notice under Section 142. Always cross-check your AIS before submitting your return.
What to do if excess TDS is deducted
Excess TDS appears as a credit in your Form 26AS. When you file your ITR, this credit is applied against your total tax liability. If the credit exceeds your liability, the difference is refunded to your bank account. Most refunds for salaried employees are processed within 7–60 days of return processing for straightforward cases.
If your refund is delayed beyond 90 days, you are entitled to interest at 6% per annum on the refund amount (Section 244A of the 2025 Act).
Tax Collected at Source (TCS)
TCS is collected by sellers on certain high-value transactions. Key rates for FY 2025-26:
| Transaction | New Sec | TCS Rate | Threshold |
|---|---|---|---|
| Sale of motor vehicle | Sec 420 | 1% | Value > ₹10L |
| Foreign remittance (Liberalised Remittance Scheme) | Sec 422 | 20% | Above ₹7L per year |
| Overseas tour package | Sec 422 | 20% | Any amount |
| Sale of alcohol, tendu leaves, scrap, etc. | Sec 418 | 1–5% | Various |
| Purchase of foreign currency at airport | Sec 422 | 20% | Above ₹7L |
TCS paid appears in your Form 26AS as a credit and can be set off against your income tax liability when filing your ITR. If it exceeds your liability, you get a refund.
Stay on top of your TDS and tax documents
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TDS on salary (now Section 392, old Section 192) is deducted at the applicable income tax slab rate based on the employee's estimated total income for the year. There is no fixed percentage — your employer calculates the projected annual income, applies deductions (if you have submitted Form 12BB for old regime), and deducts TDS monthly to ensure the full year's liability is recovered by 31 March.
You can check all TDS deductions by logging into the Income Tax portal at incometax.gov.in, going to e-File → Income Tax Returns → View Form 26AS or Annual Information Statement (AIS). Alternatively, you can access Form 26AS through your net banking portal if your bank has integrated with TRACES.
Under Section 422 of the Income Tax Act, 2025 (old Section 206C(1G)), TCS is levied at 20% on foreign remittances under the Liberalised Remittance Scheme (LRS) above ₹7 lakh per year. This applies to overseas money transfers, foreign currency purchases at airports, and overseas tour packages. The TCS is credited to your Form 26AS and can be claimed as a credit when filing your ITR.
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