TDS Rate Chart Changes 2025: Updated Rates Explained

Revised TDS rates have been announced for the financial year 2024-25, and taxpayers, businesses, and professionals need to understand these changes. Tax Deducted at Source (TDS) is one of the key tools used by the government to collect tax at the source of income.Whenever a payment is made, such as salary, rent, or professional fees, the payer is required to deduct tax at the specified TDS percentage and deposit it with the government.

To help you understand better, we have prepared a detailed guide with the TDS rate chart for FY 2024-25, along with explanations of the new TDS rules, TDS changes in Budget 2024, and the current TDS rate applicable for different categories.

What is TDS?

Tax Deducted at Source (TDS) is a system introduced by the government to ensure tax is collected directly from income at the time of payment. Instead of waiting for the receiver of income to pay taxes later, TDS makes sure that a small percentage of tax is deducted before the payment is made.

For example:

• If you pay professional fees of ₹50,000, you may be required to deduct TDS at 10% (₹5,000) and pay the balance ₹45,000.
• The deducted amount is then deposited with the government on behalf of the recipient.

It ensures steady tax collection and reduces the chances of tax evasion.

Why Should Small and Micro Businesses Understand TDS?

For small and micro-sized businesses, TDS compliance is very important. Non-compliance may lead to:

• Heavy penalties and interest charges.
• Disallowance of expenses while filing income tax returns.
• Legal consequences for non-payment.

Understanding the TDS section chart and keeping track of new TDS rates ensures that businesses remain compliant, avoid penalties, and manage their cash flow better.

TDS Changes in Budget 2024

The TDS changes in Budget 2024 introduced some revisions in deduction rates and compliance rules. The government reviewed several provisions to simplify processes and increase tax compliance.

Key highlights include:

• Minor adjustments in the TDS percentage for certain payments.
• Stricter timelines for depositing deducted TDS.
• Updated provisions for TDS on professional services, contracts, and interest payments.

These changes are now reflected in the TDS rate chart for FY 2024-25.

Revised TDS Rates for FY 2024-25

Here is the complete TDS rate chart for FY 2024-25 across different sections:

The above table will help businesses quickly identify the applicable current TDS rate as per the law.

Current TDS Rate Highlights

Here are some quick highlights of the current TDS rate applicable for FY 2024-25:

• 10% standard deduction on professional services, interest, and dividends (above threshold).
• 1%-2% deduction for contractors, depending on the entity type.
• 0.1% deduction on goods purchases beyond ₹50 lakh.
• 2% deduction on cash withdrawals above ₹1 crore.

It makes it easier for businesses to identify applicable deductions as per the TDS chart for FY 2024-25.

TDS Percentage for Non-Residents

The TDS rates in India are different for non-residents.

• Interest on securities: 20%
• Dividend income: 20%
• Royalty or technical fees: 10% to 20% depending on the agreement and DTAA (Double Taxation Avoidance Agreement) provisions
• Any other income: 30% unless specified

It is important to verify the TDS sheet before making payments to non-residents to avoid under-deduction.

New TDS Rules for 2025

Apart from the updated TDS section chart, the government has also introduced new TDS rules:

• Deduction at higher rates if PAN is not provided (20%).
• Mandatory e-filing of TDS returns for businesses above a certain turnover.
• Faster refund adjustments through updated online systems.

These rules are meant to reduce paperwork, improve transparency, and make compliance smoother for businesses.

Penalties and Consequences for Late or Incorrect TDS Filing

While knowing the revised TDS rates and following the TDS rate chart for FY 2024-25 is important, timely filing is equally critical. Failing to deduct, deposit, or file TDS returns correctly can attract strict penalties from the Income Tax Department.

Key consequences include:

• Late deduction or deposit: Interest of 1% per month for delay in deduction and 1.5% per month for delay in deposit.
• Failure to file TDS return on time: Late filing fee of ₹200 per day under Section 234E, up to the total amount of TDS.
• Penalty for incorrect filing: Penalty between ₹10,000 and ₹1,00,000 under Section 271H.
• Disallowance of expenses: Expenses on which TDS was not deducted or deposited may be disallowed while calculating taxable income.

For small and micro-sized businesses, these penalties can directly impact cash flow and profitability. Staying updated with the TDS section chart and filing returns on time ensures smooth operations and avoids unnecessary costs.

Importance of the TDS Section Chart

The TDS section chart helps businesses, accountants, and individuals know the exact TDS percentage for different types of payments. Using the chart:

• Businesses can plan expenses better.
• Avoid penalties for non-compliance.
• File TDS returns correctly.
• Ensure accurate deductions as per the law.

How GimBooks Helps Businesses Manage TDS

Managing TDS can be a challenge for small and micro-sized businesses. And this is where GimBooks can help. GimBooks offers:

• Automated TDS sheet generation for every transaction.
• Easy tracking of invoices and deductions.
• GST-compliant invoicing and accounting.
• Simple dashboard for business owners to stay updated.

With GimBooks, small businesses can stay compliant with the revised TDS rates, file accurate returns, and save time spent on manual bookkeeping.

Conclusion

The revised TDS rates for FY 2024-25 bring important updates that every business should know. With the updated TDS rate chart, small and micro-sized businesses can ensure they comply with the law while managing their cash flow effectively.

Using smart tools like GimBooks can simplify compliance, reduce errors, and help businesses focus more on growth rather than tax-related stress.

To know more, explore Gimbook’s professional blog section!

Frequently Asked Questions on TDS Rate Chart FY 2024-25

1. What are the revised TDS rates for FY 2024-25?

The revised TDS rates depend on the type of payment. For example, professional fees attract 10%, contract payments 1% or 2%, and rent payments 2% or 10%.

2. What is the TDS rate chart for FY 2024-25?

The TDS rate chart for FY 2024-25 lists deduction percentages for different categories like salary, rent, interest, professional services, and purchase of goods.

3. What is the current TDS rate on professional fees?

The current TDS rate on professional fees is 10% if the annual payment exceeds ₹30,000.

4. What are the new TDS rules for FY 2024-25?

The new TDS rules include higher deductions for non-PAN cases, e-filing of returns, and strict timelines for TDS deposit.

5. How can small businesses manage TDS easily?

Small businesses can use tools like GimBooks to automate deductions, generate TDS reports, and stay compliant with the TDS section chart.