Understanding the New TDS Rates: Key Highlights from Union Budget 2025-26

Illustration depicting tax deduction at source (TDS) changes in the Union Budget 2025-26. The image features financial documents, a calculator, and a magnifying glass highlighting the term 'TDS'. In the background, a government building symbolizes the budget announcement. The color scheme is blue and gold, representing finance and authority.
Understanding the New TDS Rates: Key Highlights from Union Budget 2025-26


The Union Budget 2025-26 has introduced significant changes to Tax Deducted at Source (TDS) provisions, aimed at easing compliance, benefiting senior citizens, and boosting economic growth. Here’s a detailed look at the updated TDS rates and their implications.

Major TDS Updates in Budget 2025-26

1. Higher TDS Threshold for Senior Citizens

To provide relief to senior citizens, the government has increased the TDS exemption limit on interest income from ₹50,000 to ₹1,00,000. This will allow senior citizens to earn higher interest income without TDS deductions.

2. Increased TDS Threshold on Rent

The threshold limit for TDS on rent payments has been raised from ₹2.4 lakh to ₹6 lakh per annum. This change will benefit landlords and tenants by reducing the number of people required to deduct TDS on rental payments.

3. Reduction in TDS Rates on Commission & Life Insurance

  • The TDS rate on commission or brokerage (Section 194H) has been reduced from 5% to 2%, effective from October 1, 2024.
  • Similarly, payments from life insurance policies (Section 194DA) will now attract a lower TDS rate of 2% instead of 5%.
  • The commission on the sale of lottery tickets (Section 194G) will also be taxed at a reduced TDS rate of 2%.

4. TDS on Virtual Digital Assets (VDA)

A 1% TDS continues to apply on payments for the transfer of Virtual Digital Assets (cryptocurrency, NFTs). However, the threshold for TDS deductions has been increased to ₹50,000 for specified persons, bringing clarity and ease to crypto investors.

TDS Rate Chart for FY 2025-26 (AY 2026-27)

Section

Nature of Payment

New Threshold Limit (₹)

TDS Rate (%)

192

Salaries

As per Slab Rates

As per Slab Rates

192A

Premature withdrawal from EPF

50,000

10

193

Interest on securities

10,000

10

194

Dividends

10,000

10

194A

Interest (Banks)

50,000

10

194A

Interest - Senior Citizens (Banks)

1,00,000

10

194I

Rent (Land/Building)

6,00,000

10

194I

Rent (Plant & Machinery)

6,00,000

2

194H

Commission/Brokerage

15,000

2

194D

Insurance Commission

15,000

5

194DA

Life Insurance Payouts

1,00,000

2

194G

Lottery Ticket Commission

15,000

2

194S

Virtual Digital Assets (Crypto, NFTs)

10,000 (50,000 for specified persons)

1


Implications of the New TDS Amendments

  1. More Savings for Senior Citizens – With a higher threshold on interest income, senior citizens can now earn more tax-free interest.
  2. Relief for Landlords and Tenants – Increasing the rent threshold to ₹6 lakh reduces compliance burdens for many taxpayers.
  3. Ease of Doing Business – Lower TDS rates on commissions and life insurance payouts will benefit small businesses and agents.
  4. Clarity on Crypto Taxation – Adjusting the TDS threshold on digital assets ensures smoother trading and investment in virtual currencies.

Conclusion

The Budget 2025-26 has made strategic changes to TDS regulations, making tax compliance easier for individuals and businesses. With higher exemptions and lower rates on certain categories, taxpayers can now plan their finances better while contributing to India’s economic growth.

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