WHAT IS TDS (TAX DEDUCTED AT SOURCE)?
TDS refers to a system where a certain percentage of tax is deducted at the source of income, such as salary, interest, or payments for services. It is a way for governments to collect taxes in advance. TDS has to be deducted at the rates prescribed by the income tax department.
TDS RATE CHART
| SECTION OF IT ACT | NATURE OF PAYMENT | RATE OF TDS | THRESHOLD(INR) |
| 192 | Salary payment | As per the applicable income tax slab rate of the individual. | Taxable income that is liable to tax. |
| 192A | Premature withdrawal from EPF | 10% | ₹ 50000 |
| 193 | Interest on securities | 10% | No TDS if interest is payable on securities like government bonds and debentures of a public sector company, below ₹ 10000 |
| 194 | Payment of Dividend | 10% | ₹ 5000 |
| 194A | Interest other than on securities | 10% | ₹ 40000 for individuals(₹ 50000 for senior citizens) from bank deposits, post office etc. |
| 194B | Winning from lotteries | 30% | ₹ 10000 |
| 194BA | Winning from online games | 30% | Nil |
| 194BB | Winning from horse race | 30% | 10000 |
| 194C | Payment to contractors | Individual or HUF – 1% Others – 2% | ₹ 30000 for a single contract or ₹ 100000 in aggregate during the F.Y. |
| 194D | Insurance Commission | Individual or HUF -5% Others -10% | ₹ 15000 |
| 194DA | Payment received – life insurance policy | 5% | ₹ 100000 |
| 194EE | Payment received- national saving schemes (NSS) | 10% | ₹ 2500 |
| 194F | Repurchase units by MFs | 20% | NIL |
| 194G | Commission – lottery | 5% | ₹ 15000 |
| 194H | Commission or brokerage | 5% | ₹ 15000 |
| 194I(a) | Rent for plant and machinery | 2% | ₹ 240000 |
| 194I(b) | Rent for land, building & furniture | 10% | ₹ 240000 |
| 194IA | Transfer of immovable property | 1% | ₹ 5000000 |
| 194IB | Rent payment by individual/HUF not covered under u/s 194I | 5% | 50000 P.M. |
| 194IC | Payment under specified joint development agreement(JDA) | 10% | NIL |
| 194J | Fees for all other professional services, remuneration, commission etc. | 10% | 30000 |
| 194J | Technical services, royalty, distribution/exhibition of cinematographic films ,call center etc. | 2% | 30000 |
| 194K | Dividend payment by mutual fund | 10% | 5000 |
| 194LA | Payment in respect of compensation on acquiring immovable property | 10% | 250000 |
| 194LB | Payment of interest on infrastructure debt fund (NR) | 5% | NIL |
| 194LBA | Certain income distributed by a business trust | 10% | NIL |
| 194LBB | Income in respect of investment of investment fund | 10% for residents,30% for non-residents Others- 10% for residents,40% for non-residents | NIL |
| 194LBC | Income in respect of investment in securitization trust | Individual/HUF-25% , 30% for domestic company, 40% for foreign company | NIL |
| 194LD | Interest on certain bonds and government securities | 5% | NIL |
| 194M | Payment by individual/HUF not liable to deduct TDS(section 194C,194H,194J) | 5% | ₹ 5000000 |
| 194N | Cash withdrawal in excess of 1 crore during previous year from 1 or more account with bank or co-operative society | 2% | ₹3 crore for co-operative societies, ₹1 crore for others |
| 2%(20 lakh- 1 crore) 5%( above 1 crore) | ₹20 lakhs(if ITR not filed for previous 3 years) | ||
| 194O | TDS on e-commerce operator through its digital or electronic facility or platform | 1% | 500000 |
| 194P | Payment of pension or interest to senior citizen of age 75 years or more( ITR not required) | Slab rate | NIL |
| 194Q | Payment for the purchase of goods exceeding ₹50 lakhs | 0.1% | In excess of ₹50 lakhs |
| 194R | Benefit or perquisites of business or profession | 10% | 20000 |
| 194S | TDS on the transfer of virtual digital assets | 1% | ₹ 10000 ( by persons other than specified person) ₹ 50000(specified persons) |
TDS RATE CHART(FOREIGN)FY: 2024-2025
| Section | Nature of payment | TDS rate | Threshold(INR) |
| 192A | Payment against EPF scheme | 10% | ₹30000 |
| 194E | Non-resident sportsman | 20% | NIL |
| 194LB | Payment of interest on infrastructure debt fund (NR) | 5% | NIL |
| 194LBA | Certain income distributed by a business trust | 5% | NIL |
| 194LBA(a) | Income referred to in section 10(23FC)(a)from units of business trust | 5% | NIL |
| 194LBA(b) | Income referred to in section 10(23FC)(b)from units of a business trust | 10% | NIL |
| 194LBA(c) | Income referred to in section 10(23FCA)from unit of a business trust | 30% | NIL |
| 194LBB | Income on units of investment fund | 30% – individual/HUF 40% – others | NIL |
| 194LBC | Income in respect of investment in securitization trust | 30% – individual/HUF 40% – others | NIL |
| 194LD | Interest on certain bonds and government securities | 5% | NIL |
| 194N | Payment of certain amount In cash | 2% | NIL |
| 194NF | Payment of certain amounts in cash to non-filers | 1% | NIL |
| 195 | Payment of sum to any other non-residents | ||
| (a) | Income in respect of investment made by a non-resident Indian citizen | 20% | NIL |
| (b) | Income by way of long-term capital gains referred to in section 115E in case of a non-resident Indian citizen | 10% | NIL |
| (C) | Income by way of long term capital gains referred to in sub-clause(iii)of clause (c) of sub section(1) of section 112 | 10% | NIL |
| (d) | Income by way of long-term capital gains as referred to in section 112A | 10% | NIL |
| (e) | Income by way of short-term capital gains referred to in section 111A | 15% | NIL |
| (f) | Any other income by way of long-term capital gains | 20% | NIL |
| (g) | Income by way of interest payable by government or an Indian concern on money borrowed or debt incurred by government or the Indian concern in the foreign currency | 20% | NIL |
| (h) | Income by way of royalty payable by government or an Indian concern in pursuance of an agreement made by it with the government or the Indian concern where such royalty is in consideration for the transfer of all or any rights in respect of copyright in any book on a subject referred to in the first provision to sub section (1A) of sec 115A of the income tax act, to the Indian concern , or in respect of any computer software referred to in the second provision to sub section(1A) of section 115A of the income-tax act, to a person resident in India | 20% | NIL |
| (i) | Income by way of royalty payable by government or an Indian concern in pursuance of an agreement made by it with the government of an Indian concern and where such agreement is with an Indian concern, the agreement is approved by the central government | 20% | NIL |
| (j) | Income by way of fees for technical services payable by government or an Indian concern in pursuance of an agreement made by it with the government | 20% | NIL |
| (k) | Any other income | 30% | NIL |
| 196A | Unit holder foreign company in mutual fund | 20% | NIL |
| 196B | Units by off shore fund | 10% | NIL |
| 196C | Income from foreign bonds | 10% | NIL |
| 196D | Income of foreign institutional investors on securities | 20% | NIL |
| 196DA | Income of specified fund from securities | 10% | NIL |
Note: Rate of TDS without PAN – 20% flat (if TDS is lower than 20%)
In conclusion, TDS under Income Tax Act, 1961, is a provision that mandates the deduction of tax at source (TDS) on payments made. Understanding and adhering to the provisions of TDS is crucial for both payers and payees to ensure compliance with tax laws and avoid any penalties or interest levied by the tax authorities.
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