The Finance Act 2025 has significantly overhauled Tax Deducted at Source (TDS) rates and thresholds to simplify compliance for small taxpayers while tightening the net on high-value transactions.
Key Rate Changes for 2025–26:
E-commerce & VDA: TDS on e-commerce participants (Section 194O) remains at 0.1%, while Virtual Digital Assets (VDA) continue at 1% to track high-frequency digital trades.
New Section 194T: As of April 1, 2025, partnership firms must now deduct 10% TDS on remuneration, interest, or commissions paid to partners if the total exceeds ₹20,000 per year.
Standardised Lower Rates: To reduce disputes, several sections like 194J(a) (Technical Services/Royalty) and 194H (Commission) have seen their rates adjusted to a more uniform 2% to avoid classification conflicts.