Tax Deducted at Source or commonly known as TDS is implied on various types of income and collected in accordance with provisions mentioned in the yearly union budget. The tax slabs and rates are decided on the nature of the heads under which the income is booked. Likewise, the
Other indirect taxes such as service tax, TDS are also collected prior release of a payment. The TDS rates and collection is regulated by CBTD (Central Board for Direct Taxes).
TDS is basically like a spot tax, deducted from the actual source of income. The same is described in the indirect tax section of Income tax Act 1961. It is implied on receiving income from various financial products. TDS is charged on various incomes generated in the form of incentives, commissions, payment & dividends earned for a variety of sale, services, rent or purchase of a property, interest earned on term deposits, etc.
The rates at which TDS is applied may vary as per the nature of income which could be between 1% – 30%. The onus to collect TDS and deposit the same lies on the service provider or the seller.
There are few cases when the TDS is exempted. TDS is not levied on payments in favor of RBI, or towards any other recompense to the central government. Apart from this, TDS is exempted from the payment of interest from the following:
Apart from the above, TDS might not be pertinent on various other avenues as well. For example interest earned on the compensation granted from Motor Vehicles Claims Tribunal.
TDS is basically a spot tax, deducted from the actual source of income. The same is described in the indirect tax section of Income tax Act 1961. It is implied on the income received from financial products like interest received on fixed deposits, incentives from the employer, commission’s payments, dividends on bonds, sale/purchase or rent of any immovable property and money earned as lottery or awards. The TDS rate applicable under different sections & subsection of is between 1%- 30%.
|S. No.||IT Section||Threshold Limit*||TDS Rate|
|1||Section 192||As per prevailing income slab||As per prevailing income slab|
|2||Section 193||₹ 5000 w.r.t debenture payment||10% of the interests earned on security investments.|
|3||Section 194||₹ 2500||10% of proceeds from any deemed dividends|
|4||Section 194A||₹ 10,000||10% of proceeds from interests earned on investments other than securities|
|5||Section 194B||₹ 10,000||30% of prize money on lottery or gaming related winnings|
|6||Section 194BB||₹ 10,000||30% of prize money from horse racing|
|7||Section 194C||₹ 30,000
which is for each contract, whereas ₹ 100,000 is for p.a
|Proceeds from any contracts / sub contracts
• Individuals or HUF @ 1%
• Non Individual/corporate @ 2%
|8||Section 194D||₹ 15,000||5% of earning as insurance commissions|
|9||Section 194EE||₹ 2,500||20% of expense in NSS deposits|
|10||Section 194F||NIL||20% of investment in MF or UTI units|
|11||Section 194G||₹ 15,000||5% of the commission money from lottery ticket selling.|
|12||Section 194H||₹ 15,000||5% of the brokerage earnings|
|13||Section 194I||₹ 1,80,000||2% on rental amount of plant & machinery/
10% on the rent of land & building
|14||Section 194J||₹ 30,000 p.a||10% on the technical/professional services|
|15||Section 194LA||₹ 2,50,000||10% on the transfer money paid to any resident while acquiring an immovable property|
TDS is applicable on the withdrawal of EPF in case an employee withdraws PF amount ₹ 50,000 & above with less than five years of continuous service at a rate mentioned below:
The TDS calculation rates as applicable to the fiscal year 2018 -19 are given below.
|S. No||Nature of payment||TDS Rate||Applicable Section|
|1||Salary Payment||Regular slab rate||Section 192|
|2||Interest earned on securities||@ 10%||Section 193|
|3||Dividend accrued (apart from the dividend as mentioned in the section 115-O||@ 10% (20%, in case of invalid/no PAN)||Section 194|
|4||Income earned other than securities||@ 10%||Section 194A|
|5||Income earned on the prize money of lotteries, game or crosswords||@ 30%||Section 194B|
|6||Commission payment for Insurance agents|| @ 5% (20%, in case of invalid /no PAN) (in case Form 15G/15H is filled)*
*effective from 1st June 2017.
|7||Premium paid for any life insurance policy||@ 1%||Section 194DA|
|8||Rental income||For plant and machinery @2%
Land, furniture, fitting and furniture @10%
|9||Payment is done for transfer of any immovable property exclusive of the agricultural land||@ 1%||Section 194IA|
|S. no||Nature of Payment||% of TDS||Applicable Section|
|1||Salary Payment||Normal slab rate||Section 192|
|2||Payment of accrued provident fund balance||@ 10%||Section 192A|
|3||Income from prize money on lotteries, card games, crossword puzzles or games within the ambit of Indian Law||@ 30%||Section 194B|
|4||Income due to prize money in horse racing||@ 30%||Section 194BB|
|5||Deposit made under the National Savings scheme||@ 10%||Section- 194EE|
|6||Investment in any Mutual Fund or UTI bonds||@ 20%||Section 194F|
|7||Commission money earned for selling lottery tickets||@5%||Section 194G|
|S.No||Taxable Income||TDS Rate||Applicable section|
|1||Up to ₹ 2.5 lakhs||Nil||Section 192|
|2||₹ 2.5 lakhs to ₹ 5 lakhs||@ 5%||Section 192|
|3||₹ 5 lakhs to ₹ 10 lakhs||@ 20%||Section 192|
|4||Above ₹ 10 lakhs||@ 30%||Section 192|
The TDS rates are different for the senior citizens (aged 60 -80 years) and super senior citizens (80 years and above).
|S. No||Income Slabs||TDS Rate|
|1||Up to ₹ 3 Lakhs||Nil|
|2||₹ 3 Lakhs – ₹ 5 Lakhs||@ 5%|
|3||₹ 5 Lakhs – ₹ 10 Lakhs||@ 20%|
|4||Above ₹ 10 Lakhs||@ 30%|
|S. No||Income Slabs||TDS Rate|
|1||Up to ₹ 5 lakhs||Nil|
|2||₹ 5 lakhs – ₹ 10 lakhs||@ 20%|
|3||Above ₹ 10 lakhs||@ 30%|
Under section 192, employer is eligible to deduct TDS from the estimated income of the employee. No tax will be deducted if the employee hasn’t exceeded the minimum tax slab in the given financial year. TDS will not be deducted if the employee’s total income is less than INR 2,50,000. The TDS on salary is required to be deducted on the basis of average rate of income tax of the taxpayer in the financial year. However, exceeding above the minimum limit, TDS will be charged at the rate of 20%, if PAN is not possessed by the employee.
With effect from June 2016, the exemption limit for TDS on Insurance commission is INR 15,000, earlier it was 20,000. Section 194D deals with the provisions and responsibilities of any person who is authorised to pay any income by way of remuneration or reward to the resident. Any resident who has possessed PAN card is charged at the rate of 5%, otherwise 20% if PAN is not furnished.
There are also other forms of commissions charged at different rates mentioned below:
Under section 194J, any person is liable to deduct TDS in for the following payment made to resident person except individual or HUF:
In cases where the payee possesses PAN Card, he/she will be charged at the rate of 10% (excluding education cess and SHEC). However, in cases where the payee does not furnishes PAN card, is liable to pay higher of the following rates:
For Fixed deposits, TDS is only applicable on the payee when he/she exceeds the interest earning on FD by INR 10,000 in a financial year. Most of the banks follow the same TDS rates on FD. Payee furnishing PAN are liable to pay 10% on the interest earned through fixed deposits, else they need to pay 20% if PAN is not possessed. For Senior Citizens (60 years or older) are exempted to a limit of INR 50,000, earlier it was INR 10,000.
Section 194C is applicable when any payment is made to contractor/sub-contractor for any work which includes-
The rate of TDS applicable on contracts under section 194C is 1% for Residential Individuals and HUF. However, for resident other than individual or HUF are liable to pay 2%. Payee not possessing PAN card will be liable to pay at the rate of 20%.
Section 194A deals with the provisions relating to TDS on interest other than securities. Every payer who is liable to pay interest to a resident, other than individual or a HUF is liable to pay TDS. The payer or deductor can only deduct TDS when the amount of interest paid during the previous year exceeds more than INR 10,000 in case of banks and INR 5,000 in other cases.
For all financial requirments of yours we are ready to offer you all the solutions which will suit you best.
Connect with us through social media and get to know us more