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TDS threshold limits for different sections in India
Tax Deducted at Source (TDS) is one of the most critical compliance obligations under the Indian Income‑tax Act. For businesses, professionals, and individuals making payments, the first step to correct TDS deduction is knowing when TDS applies and when it does not. That decision begins with understanding threshold limits.
In this article, we walk you through the latest, section‑wise TDS threshold limits applicable for Financial Year 2025–26 (Assessment Year 2026–27). This will help you deduct tax correctly, avoid penalties, prevent excess deductions, and manage your cash flows with confidence.
Note: This reflects revised limits effective 1 April 2025 onwards wherever applicable.
What is a TDS threshold limit?
A TDS threshold limit is the minimum amount of payment up to which no tax is required to be deducted at source under a specific section of the Income‑tax Act. TDS becomes applicable only when the payment crosses the prescribed threshold for that section.
A few important points to remember:
Thresholds vary based on the nature of payment and the section applied.
Some thresholds apply per transaction, while others apply on an annual aggregate basis.
Certain payments have no threshold at all; TDS applies from the first rupee.
Understanding these nuances is essential to applying TDS correctly.
Why understanding TDS thresholds is critical
Knowing the correct threshold limits helps you:
Avoid unnecessary or excess tax deductions
Prevent interest and penalties for short or non‑deduction
Improve vendor and employee experience
Maintain accurate accounting records
File TDS returns smoothly and on time
For growing businesses and accounting teams, manually tracking multiple thresholds across vendors, employees, and service providers can quickly become complex, which is why automation plays a key role.
TDS threshold limits – Section‑wise table (FY 2025–26)
Note: Rates mentioned below are the standard rates under the Income‑tax Act. Surcharge, health & education cess, and DTAA provisions may apply separately in applicable cases.
Section | Nature of payment | Threshold limit (No TDS if payment does not exceed) | TDS rate | Applicability |
192 | Salary | No fixed threshold | As per slab | TDS applicable if total taxable salary exceeds the basic exemption limit |
192A | Premature withdrawal from EPF | ₹50,000 | 10% | If withdrawn before completion of 5 years of continuous service |
193 | Interest on securities | ₹10,000 (annual) | 10% | Applicable to resident payees |
194 | Dividend | ₹10,000 (annual) | 10% | Applicable to resident shareholders |
194A | Interest (other than securities) | ₹50,000 – banks/co‑op banks/post office (₹1,00,000 for senior citizens); ₹10,000 – others | 10% | Threshold varies by payer and payee category |
194B | Winnings from lottery, crossword, game shows | ₹10,000 (per transaction) | 30% | No basic exemption benefit |
194BB | Winnings from horse races | ₹10,000 (per transaction) | 30% | TDS applies per winning ticket, not on aggregate |
194C | Payment to contractors / sub‑contractors | ₹30,000 (single) or ₹1,00,000 (annual aggregate) | 1% (Ind/HUF), 2% (others) | Includes advertising, transport and works contracts |
194D | Insurance commission | ₹20,000 (annual) | 5% | Standard rate applicable to resident payees |
194DA | Life insurance policy payout | ₹1,00,000 | 2% | Excluding amounts exempt under Section 10(10D) |
194E | Payments to non‑resident sportsmen / associations | No threshold | 20% | TDS applicable from first rupee |
194EE | National Savings Scheme payments | ₹2,500 | 10% | Applicable to legacy NSS accounts |
194G | Commission on sale of lottery tickets | ₹20,000 (annual) | 2% | Different from lottery winnings (194B) |
194H | Commission or brokerage | ₹20,000 (annual) | 2% | Excludes insurance commission |
194I (a) | Rent – plant and machinery | ₹50,000 per month | 2% | Applicable to business and professional payers |
194I (b) | Rent – land, building, furniture | ₹50,000 per month | 10% | Applicable to business and professional payers |
194IA | Transfer of immovable property | ₹50,00,000 (property value) | 1% | Buyer responsible for deduction |
194IB | Rent by individual / HUF (not under audit) | ₹50,000 per month | 2% | Applicable to residential and commercial rent |
194IC | Joint development agreements | No threshold | 10% | Applicable to payments to landowners |
194J (technical services, call centre) | Fees for technical services | ₹50,000 (annual) | 2% | Includes technical and call‑centre services |
194J (professional services, royalty, etc.) | Other professional fees | ₹50,000 (annual) | 10% | Legal, medical, consultancy, accounting, royalty |
194K | Income from mutual fund units | ₹10,000 (annual) | 10% | Applicable to resident investors |
194LA | Compensation on acquisition of property | ₹5,00,000 (annual) | 10% | Excludes agricultural land |
194LB | Interest from infrastructure debt fund | No threshold | 5% | Mainly applicable to non‑residents |
194LBA | Income from business trust distributions | No threshold | 10% | Applicable to unit holders (rate varies by income type) |
194LBB | Income from AIFs | No threshold | 10% (residents) | Pass‑through income from investment funds |
194LBC | Income from securitisation trust | No threshold | 10% (residents) | Applicable to securitisation structures |
194LC | Interest on foreign currency loans / bonds | No threshold | 5% (or 4% for specific long-term bonds in an IFSC) | Concessional rate for foreign borrowings |
194LD | Interest to FIIs / QFIs | No threshold | 5% | Subject to notified conditions |
194M | Payments by individual / HUF (not under audit) | ₹50,00,000 (annual) | 5% | Covers contract, professional fees and commission |
194N | Cash withdrawals | ₹1 crore (filers); ₹20 lakh (non‑filers) | 2% / 5% | Higher rate applies beyond prescribed limits |
194O | E‑commerce transactions | ₹5,00,000 (annual) | 0.1% | Applicable to payments to sellers through operators |
194P | Specified senior citizens (75+) | No threshold | As per slab | Bank deducts tax, return filing not required |
194Q | Purchase of goods | ₹50,00,000 (annual) | 0.1% | Buyer turnover must exceed ₹10 crore |
195 | Payments to non‑residents | No threshold | As per Act / DTAA | Rate depends on nature of income and treaty |
196A | Income from units to non‑residents | No threshold | 20% | Includes mutual fund units |
196B | Income from offshore fund units | No threshold | 10% | Includes capital gains |
196C | Foreign currency bonds / GDR income | No threshold | 10% | Applicable to non‑residents |
196D | Income of FIIs | No threshold | 20% | Subject to DTAA provisions |
Key points to remember
Only the amount exceeding the threshold is subject to TDS — not the entire payment.
Thresholds differ across sections, payee categories, and payment types.
Many limits apply on an annual aggregate basis, not per transaction.
Incorrect application can result in:
Interest under Section 201(1A)
Disallowance of expenses
Penalties and scrutiny during assessments
Simplifying TDS compliance with accounting platforms
Tracking multiple thresholds across hundreds of transactions manually is time‑consuming and error‑prone. Modern accounting platforms like Zoho Books simplify this by:
Automatically tracking threshold limits across vendors and employees
Applying the correct section and TDS rate
Generating TDS reports and challans
Reducing manual intervention and compliance risk
With built‑in intelligence and regular regulatory updates, Zoho Books helps accounting teams stay compliant without the stress.
Final thoughts
Understanding TDS threshold limits is fundamental to accurate tax compliance and efficient financial management. Whether you are a business owner, a startup finance team, or a practising CA, staying updated ensures:
Correct tax deduction
Zero penalty exposure
Strong vendor relationships
Clean audit trails
With the right knowledge and the right platform like Zoho Books, TDS compliance can be simple, accurate, and completely hassle‑free.
Try Zoho Books today and simplify your TDS compliance.