TDS Rate Chart For FY 2021-22

Tax Deducted at Source (TDS) is a concept that was introduced by the Central Government to collect tax from the very source of income. When a person makes a payment to someone, they deduct a certain amount from the total payment, which is then paid to the Central Government by that person. 

Generally, TDS is deducted by a person when paying salary, rent, commission, etc. to the payee(receiver). The person who deducts the TDS is liable to pay the tax to the government. 

Tax Deducted at Source Rate Chart

Various slabs have been set by the Government to collect tax in the form of TDS. The rate of TDS varies depending upon the nature of payment, resident or non-resident, senior citizen, and many more categories. 

Following is the TDS Chart for the financial year 2021-22

Also Read: Income Tax Slabs

Tax Deducted at Source on Service

As per GST law, Mr. Anil deducts the TDS while paying to the suppliers for supplying goods and raw materials. He must deduct TDS at the rate of 2% for payment made to suppliers, if the amount exceeds Rs 2, 50,000.

Following are the authorities who are liable to deduct TDS under the GST Law:

• Central Government and State government
• Local Authority
• Governmental Agencies
• Persons notified by the Government

The TDS deducted is to be paid to the government accordingly. In the case of IGST and CGST, TDS is to be paid to the Central Government. And in the case of SGST, TDS is to be paid to the State Government.

Tax Deducted at Source on Company (Salary)

In the case of a company, the employer deducts TDS from its employee’s salary at an Average Rate. This rate is calculated in the following method: 

Average Income Tax Rate =            Income tax payable        

                                                 Employee’s Estimated Income

The rate of TDS ranges from 10% to 30% depending upon the salary earned by the employee and the income tax slab rate they fall under.

This tax is paid by the company to the government while filing the income tax return. This helps in reducing the burden of the employee as tax is paid by the company on their behalf. 

This is also beneficial from the point of view of the Government as the Company is collecting the tax from its employees and paying the same to the government while filing their Income Tax Return. It helps the government in the following ways:

1. Regular deduction and payment of taxes ensures a continuous flow of income to the government.
2. It helps the government in minimising tax evasion by the taxpayers.

Also Read: UAN‌ ‌Status,‌ ‌Passbook‌ ‌And‌ ‌Account‌ ‌Balance‌

Tax Deducted at Source for Company

Following rates are applicable to the TDS collected in the case of Domestic Companies:

• Commission and Brokerage: 5%
• Rent: 
  • Plant and machinery - 2%, 
  • Land and Building – 10%
• Transfer of immovable property: 10%
• Interest on Securities: 10%
• Income from the lottery: 30%
• Income from winning horse race: 30%
• Payment made to Contractor: 2%
• Insurance commission: 10%
• Payment to non-resident sportsmen: 20%
• Deposit under The National Savings Scheme: 10%
• Commission on sale of a lottery ticket: 5%
• Payment of monetary consideration: 10%
• Professional and Technical Services: 2%
• Other services: 10%
• Investment fund: 10%
• Income in respect of investment: 10%
• E-commerce operation: 1%
• Purchase of goods: 0.10%

Tax Deducted at Source for Individuals

Following rates are applicable to the TDS collected in the case of individuals:

• Premature withdrawal from EPF Fund: 10%
• Interest on securities: 10%
• Income by way of the lottery: 30%
• Income by winning horse race: 30%
• Payment to contractors: 1%
• Insurance commission: 5%
• Payment to Non-resident sportsmen: 20%
• Payment on account of repurchase of Mutual Fund: 20% 

Also Read: Challan 280 : How To Pay Your Income Tax Online With Challan 280

FAQs 

1. What do you mean by TDS?

TDS is the amount of tax that is deducted by the payer from the payee while paying them for providing a service. After the deducting, the amount is paid to the Government when the payer files their income tax return.

2. When is TDS deducted?

When a person renders a service and is paid for the service, then the payer can deduct the amount of TDS from the payee accordingly and pay the same to the government.

3. Why is TDS Deducted?

TDS is deducted because it helps in reducing the burden of the payee. The payer along with the tax pays the TDS to the Government. This helps the government in receiving a regular source of income. It also helps the government in minimising tax evasion by the taxpayers

4. What is the TDS rate on Salary?

TDS is applicable on salary. The rate of TDS depends upon the different income slabs. This rate ranges from 10% to 30%. This is deducted by the employer and pays it to the government on the employee’s behalf.

5. Is there any minimum amount up to which tax is not deducted?

The Income Tax Act has prescribed various threshold limits and TDS is deducted if the threshold limit is crossed. 

6. Can the payee request the payer not to deduct TDS?

Yes, the payee can request the payer not to deduct TDS. The payer and the payee need to give a declaration in Form 15G or 15H. The form will declare that the total estimated income of the year after concluding that the taxable income is Nil.

7. What is the duty of the deductor?

A deductor is the one who deducts TDS from the payee and deposits the same to the Government. The duty of the deductor is to collect tax in the form of TDS and make sure that tax is collected from every possible income and at the end of the financial year, the deductor deposits the money to the government.

8. At what rate the payer will deduct tax if someone does not furnish PAN Number to him?

If the deductor is not provided with the PAN number, he shall deduct TDS as specified in the provision, which is at the rate of 20%.