If you run a business, you are expected to deduct TDS on many of your payments. The tricky part is knowing when TDS kicks in and at what rate, and several of these limits were raised from 1 April 2025. Here is a plain guide to the payments that come up most often.
The main payments and their limits (from 1 April 2025)
The table below shows when you must start deducting and the usual rate.
| Payment | Section | Deduct above | Rate |
|---|---|---|---|
| Interest (bank, general) | 194A | 50,000 a year (1,00,000 for senior citizens) | 10% |
| Rent of plant or machinery | 194-I(a) | 50,000 a month | 2% |
| Rent of land or building | 194-I(b) | 50,000 a month | 10% |
| Rent by individual or HUF (not under audit) | 194-IB | 50,000 a month | 2% |
| Contractor or works contract | 194C | 30,000 per bill or 1,00,000 a year | 1% or 2% |
| Professional or technical fees | 194J | 50,000 a year | 10% (2% for technical) |
| Commission or brokerage | 194H | 20,000 a year | 2% |
| Payment to a partner (remuneration, interest, bonus) | 194T | 20,000 a year | 10% |
A few things worth knowing
- The rent limit is now 50,000 per month. Earlier it was based on a yearly figure, so this is a real change.
- There is a new section, 194T, from 1 April 2025. If your firm pays remuneration or interest to its partners, TDS now applies above 20,000.
- The old rule that forced higher TDS on people who had not filed returns (206AB) has been removed, which makes deduction simpler.
- If you do not have the payee's PAN, TDS is deducted at a higher rate (usually 20%).
What happens if you do not deduct
Missing TDS is not a small matter. The expense can be partly disallowed, and interest and penalties can apply. If you realise you missed it, there is a way to fix it (through a certificate route), but it is far cheaper to deduct correctly in the first place.
Not sure which section applies to a payment, or whether you deducted the right amount? Get a quote and we will set up your TDS correctly and keep your filings clean.
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