What is the difference between Section 194C and Section 194J?

Section 194C applies to contractual work (advertising, catering, manufacturing, transport, facility management) at 1% for individuals and 2% for companies. Section 194J applies to professional services (legal, medical, engineering, accountancy, architectural) at 10%, and technical services (IT programming, technical testing) at 2%.

What happens if the vendor does not provide a PAN card?

Under Section 206AA, if the deductee fails to furnish their Permanent Account Number (PAN), the payer must deduct TDS at a penal rate of 20% (or higher applicable section rate), regardless of normal threshold exemptions.

When must TDS be deposited with the government?

TDS deducted during any month must be deposited via Challan ITNS 281 on or before the 7th of the following month (e.g., TDS deducted in October must be deposited by November 7th). For deductions made in March, the due date is extended to April 30th.

What is the interest penalty for late deduction or late deposit of TDS?

Under Section 201(1A), delay in deducting TDS attracts interest at 1% per month from the date tax was deductible to the date of actual deduction. Delay in depositing deducted TDS attracts interest at 1.5% per month from the deduction date to the actual deposit date.

How does a payee claim refund of excess TDS deducted?

When the deductor files their quarterly Form 26Q/24Q return, the deducted TDS reflects in the payee's Form 26AS and AIS. When the payee files their annual ITR, the TDS is adjusted against total tax liability; any surplus is refunded directly to their bank account with interest.

Is TDS deducted on GST amount charged in an invoice?

No! CBDT Circular No. 23/2017 clarified that if GST on services is indicated separately in the invoice, TDS must be deducted ONLY on the base value excluding the GST component.

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AI-PoweredFY 2025-26 RatesUpdated for Latest Income Tax (Budget 2024 / Sec 115BAC) & GST Rules · 100% Free

TDS Calculator

Calculate Tax Deducted at Source for FY 2025-26 (Sec 194C, 194J, 194I, 194H, 194Q, 194O) with PAN validation and Challan 281 dates.

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TDS Rate & Deduction Calculator

FY 2025-26 (AY 2026-27)

Statutory withholding rates, thresholds, and Section 206AA penal checks applicable for Financial Year 2025-26

Challan ITNS 281

Popular Section Presets (FY 2025-26):

Select TDS Section / Nature of Payment (FY 2025-26)

1% for Individuals/HUFs, 2% for Corporate entities. Applies if a single invoice exceeds ₹30,000 or yearly aggregate exceeds ₹1,00,000.✓ Standard rate for FY 2025-26 (AY 2026-27)

Payee / Deductee Status

Does Payee have a Valid PAN?

Current Invoice Amount (₹)

₹

Total Payments to Payee in FY 2025-26 (₹)

₹

194C Calculation Result (FY 2025-26)AY 2026-27

TDS Deductible: ₹500

TDS Rate Applied (FY 2025-26)

Standard statutory rate

TDS to Deposit

₹500

Deposit via Challan ITNS 281 by 7th of next month

Net Payable to Vendor

₹49,500

Net amount to transfer to vendor bank account

Statutory Compliance Deadlines for FY 2025-26 (AY 2026-27):

Deposit Due Date: 7th of following month (30th April for March deductions)
Deposit Challan: Challan ITNS 281 (Major Head 0020 Company / 0021 Non-Company)
Quarterly Return: Form 26Q (due 31st of month following each quarter)
TDS Certificate: Form 16A generated within 15 days of filing return

Need our corporate tax desk to deposit TDS and file Form 24Q / 26Q for FY 2025-26?

Avoid Section 234E late fees of ₹200/day and 1.5% monthly interest under Section 201(1A).

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TDS Auditor (FY 2025-26)

FY 2025-26 TDS & Section 194 Specialist · Digital Bharat Law

Understanding TDS Calculator

Tax Deducted at Source (TDS) is a mechanism introduced by the Income Tax Department to collect direct tax at the point of income generation. For Financial Year 2025-26 (Assessment Year 2026-27), deductors must withhold specified statutory percentages from payee bill amounts and remit them to the Central Government via Challan ITNS 281.

Different expenditure categories are governed by specific sections of Chapter XVII-B of the Income Tax Act, including Section 194C (contractors), Section 194J (technical 2% & professional 10%), Section 194I (rent), Section 194H (commission at 2%), Section 194Q (goods purchase at 0.1%), and Section 194O (e-commerce at 0.1%).

Core Calculation FormulaOfficial Rule

TDS Amount = Payment Amount × Statutory Section Rate | Net Payable = Gross - TDS (FY 2025-26)

Sec 194C (Contractor): 1% for Individuals/HUFs; 2% for Corporate entities (Single invoice >₹30k / Annual aggregate >₹1L)

Sec 194J(a) (Technical / Royalty): 2% concessional rate for fees for technical services (FTS), call centers & royalty (Threshold: ₹30,000 p.a.)

Sec 194J(b) (Professional Fees): 10% for legal, medical, engineering, accountancy & architectural fees (Threshold: ₹30,000 p.a.)

Sec 194I (Rent): 10% for land, building & furniture; 2% for plant, machinery & equipment (Threshold: ₹2,40,000 p.a.)

Sec 194H & 194-IB (Commission & Rent): 2% rationalized rate (Budget 2024) for commission/brokerage (>₹15k) and non-audit rent (>₹50k/month)

Sec 194Q & 194O (Goods & E-Commerce): 0.1% TDS on aggregate purchase of goods (>₹50L) and e-commerce gross sales (>₹5L)

Sec 206AA Penal Rate: Flat 20% penal TDS if payee does not furnish a valid Permanent Account Number (PAN)

* Updated for Financial Year 2025-26 (AY 2026-27). TDS must be deposited by the 7th of the following month (and 30th April for March deductions) via Challan ITNS 281.

Key Regulatory Rules & Thresholds (FY 2025–27)

Essential departmental provisions, tax brackets, and statutory compliance mandates.

FY 2025-26 Rate Rationalization

FY 2025-26 Active

Section 194H (commission/brokerage), Section 194-IB (rent by individuals), and Section 194M remain rationalized at 2% to ease business working capital under Budget 2024 provisions.

Section 206AA Penal TDS Rate

Sec 206AA (20%)

If the deductee fails to furnish a valid PAN, TDS must be deducted at a penal flat rate of 20% (or the applicable statutory rate, whichever is higher).

Section 194Q & 194O Digital Commerce

0.1% Rate

0.1% TDS applies on aggregate purchase of goods exceeding ₹50 Lakhs (buyer turnover > ₹10 Cr) and e-commerce operator sales exceeding ₹5 Lakhs.

Form 26Q & 24Q Quarterly Filing

Quarterly Due

Deductors must file quarterly TDS returns in Form 26Q (non-salary) and 24Q (salary) so deductions appear on payee's AIS/Form 26AS for AY 2026-27.

Frequently Asked Questions

Authoritative answers to common questions verified by our accredited legal & compliance panel.

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