TDS for Small Businesses in FY 2025-26 (Income-tax Act 1961): Thresholds, Rates, Due Dates and Penalties

Looking for the current year? This page covers payments made up to 31 March 2026 under the Income-tax Act 1961. For payments from 1 April 2026, read TDS for small businesses in tax year 2026-27.

In FY 2025-26 a small business deducted TDS under Chapter XVII-B of the Income-tax Act 1961: for example 1% or 2% on contractor bills above ₹30,000 (₹1 lakh a year) under section 194C, 10% on professional fees above ₹50,000 under section 194J and 2% or 10% on rent above ₹50,000 a month under section 194-I. The Finance Act 2025 raised most thresholds from 1 April 2025. Tax was deposited by the 7th of the next month (March by 30 April) and reported each quarter in Form 26Q (24Q for salary).

Sources checked: 20 October 2026

Facts checked on 20 October 2026 against the Income Tax Department's TDS pages on incometaxindia.gov.in and the e-filing portal's form manuals.

Key facts

Item	FY 2025-26 (Income-tax Act 1961)
Payments covered	Credited or paid from 1 April 2025 to 31 March 2026
Deposit	By the 7th of the next month; March deductions by 30 April 2026
Quarterly statements	Form 26Q (non-salary), 24Q (salary), 27Q (non-residents)
Statement due dates	31 July 2025, 31 October 2025, 31 January 2026, 31 May 2026
Late fee	₹200 a day, capped at the TDS amount (section 234E)
Disallowance	30% of the expense (section 40(a)(ia))
From 1 April 2026	Income-tax Act 2025, sections 392 and 393

Who had to deduct TDS in FY 2025-26?

Companies, firms and LLPs deducted on every payment covered below; individuals and HUFs did so only if their business turnover exceeded ₹1 crore, or professional receipts exceeded ₹50 lakh, in FY 2024-25.

Below that limit an individual or HUF still deducted in three cases: 2% on rent above ₹50,000 a month (section 194-IB), 2% on contract, professional or commission payments above ₹50 lakh in the year (section 194M) and 1% on buying immovable property of ₹50 lakh or more (section 194-IA). None of the three needed a TAN. Everyone else needed a TAN (Form 49B) before deducting.

What were the TDS rates and thresholds for FY 2025-26?

Section	Payment	Threshold (FY 2025-26)	Rate
194C	Contractors, sub-contractors, job work, transporters	₹30,000 per contract / ₹1,00,000 aggregate in the year	1% (individual/HUF payee), 2% (others)
194H	Commission or brokerage	₹20,000 in the year	2%
194-I	Rent	₹50,000 for a month or part of a month	2% plant and machinery; 10% land, building, furniture
194J	Professional fees / technical fees	₹50,000 in the year	10% professional; 2% technical, call centre
194A	Interest other than on securities	₹10,000 (₹50,000 from banks/co-operative banks/post office; ₹1,00,000 for senior citizens)	10%
194Q	Purchase of goods, if your turnover exceeded ₹10 crore last year	₹50 lakh per seller in the year	0.1% on the excess over ₹50 lakh
194M	Individuals/HUFs not liable to audit paying contractors, professionals or commission	₹50 lakh in the year	2%
194-IB	Individuals/HUFs not liable to audit paying rent	₹50,000 a month	2%
194-IA	Purchase of immovable property	₹50 lakh	1%
192	Salary	Tax on estimated salary above the exemption limit	Slab rates

Transporters owning ten or fewer goods carriages who gave a declaration with their PAN were exempt from 194C deduction.

No PAN, higher rate: a payee without a PAN suffered deduction at 20% (5% under 194Q) under section 206AA. Section 206AB, the higher rate for non-filers, was omitted from 1 April 2025.

When were TDS deposit and statements due?

Deposit was due by the 7th of the following month, and March deductions by 30 April 2026. The quarterly statements:

Quarter of FY 2025-26	Due date
April–June 2025	31 July 2025
July–September 2025	31 October 2025
October–December 2025	31 January 2026
January–March 2026	31 May 2026

TDS certificates were Form 16 (salary, by 15 June) and Form 16A (within 15 days of the quarterly statement due date).

What did a TDS default cost?

• Interest (section 201(1A)): 1% a month from the date tax was deductible to the date deducted; 1.5% a month from deduction to deposit. Part of a month counts as a full month.
• Late fee (section 234E): ₹200 a day until the statement is filed, capped at the TDS amount, paid before filing.
• Penalty (section 271H): ₹10,000 to ₹1,00,000 for not filing the statement. It is not levied if the tax, fee and interest are paid and the statement is filed within one month of the due date.
• Disallowance (section 40(a)(ia)): 30% of the expense on which TDS was not deducted, or not deposited by the return due date, is added back; it is allowed in the year the tax is finally deducted and paid.
• Prosecution: possible for not depositing tax already deducted, unless it is paid by the due date of the quarterly statement (the department's Tax Deductor guide, from 1 October 2024).

Correcting a FY 2025-26 statement now

A correction statement for FY 2025-26 can still be filed: the Income-tax Act 2025 allows corrections within two years from the end of the year in which the statement was due, including statements due under section 200 of the 1961 Act (section 397(3)(f) of the 2025 Act). Reconcile Form 26Q with your ledger before you correct it, because mismatches surface as demands.

Practical controls that still apply

1. Tag every vendor with its TDS section (or, from April 2026, its Table serial) when you create the ledger.
2. Deduct at the earlier of booking the expense or paying it.
3. Collect the PAN before the first payment.
4. Check your own tax credit statement on the e-filing portal each quarter to see that customers deposited what they deducted from you.

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