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
Section |
Nature of Payment |
Threshold Limit for deduction tax |
Rate of TDS applicable for the period on Individuals, Company, and others |
|||
Individual |
Company |
If No Pan or Invalid PAN (Rate in %) |
||||
192 |
For Salary |
No changes made |
Slab Rates (in %) |
Slab Rates (in %) |
30 |
|
192A |
For Prematurely withdrawing EPF Fund |
Rs. 50000 |
10 |
NA |
20 |
|
193 |
For Interest on securities |
Rs. 2500 |
10 |
10 |
20 |
|
194 |
For paying dividend other than dividend(refer to Section 115-O |
Rs. 5000 |
10 |
10 |
20 |
|
194A |
For interest on Banks Deposit, Recurring Deposit, and Deposit with Co-op Banks |
·For Senior Citizen Rs. 50000
For Others Rs. 40000 |
10 |
– |
20 |
|
194B |
For Income earned by winning the lottery |
Rs. 10000 |
30 |
30 |
30 |
|
194BB |
For Income earned from winning horse races |
Rs. 10000 |
30 |
30 |
30 |
|
194 C |
For Payment made to Contractors |
· One payment: Rs. 30,000 · Overall payment: Rs. 1,00,000 |
1 |
2 |
20 |
|
194C |
For Contracts which are referred under 44AE |
· One payment: Rs. 30,000 · Overall payment: Rs. 75000 |
1 |
2 |
20 |
|
194 – D |
For Insurance commission |
Rs. 15000 |
5 |
10 |
20 |
|
194 -DA |
For Payment made for the life insurance policy, it shall be deducted on the basis of the amount of income comprised |
Rs. 100000 |
5 |
5 |
20 |
|
194 – E |
For Payment made to sportsmen or associations who are non-residents |
20 |
20 |
20 |
||
194 -EE |
For Payment which is made under the National Savings scheme |
Rs. 2500 |
10 |
10 |
20 |
|
194 -EE |
For Payment made for repurchasing unit of Mutual Fund or Unit Trust of India |
20 |
20 |
20 |
||
194 – G |
For Commission paid on the sale of lottery tickets |
Rs. 15000 |
5 |
5 |
20 |
|
194 – H |
For payment of Commission or brokerage |
Rs. 15000 |
5 |
5 |
20 |
|
194 – I |
For paying rent on: |
NA |
NA |
NA |
NA |
|
Plant & Machinery |
Rs. 240000 |
2 |
2 |
20 |
||
Land or building or furniture or fitting |
Rs. 240000 |
10 |
10 |
20 |
||
194 -IA |
For Transfer of immovable property except for agricultural land |
Rs. 50,00,000 |
1 |
1 |
20 |
|
194 -IB |
For Payment of Rent made by Individuals and HUF which is not liable for Tax Audit |
Rs. 6,00,000 annually |
5 |
– |
20 |
|
194 -IC |
For Payment under Joint Development Agreements |
– |
10 |
10 |
20 |
|
194 -J |
For payment of Fees for rendering professional or technical services: |
If the hirer is engaged in the business of call centre |
Rs. 30000 |
2 |
2 |
20 |
In all other cases |
Rs. 30000 |
10 |
10 |
20 |
||
194 – K |
For Payment in respect of Units of Mutual fund or Units of the administrator or from any specified company which generates income |
– |
10 |
10 |
20 |
|
194 -LA |
TDS applicable on compensation for compulsory acquisition of immovable Property |
Rs. 2,50,000 |
10 |
10 |
20 |
|
194 – LBA(1) |
TDS applicable on distribution of any interest received or receivable from a Special Purpose Vehicle or any income generated from renting or leasing or letting out any to its unitholders |
– |
10 |
10 |
20 |
|
194 – LBA(2) |
For Distribution of any interest received or receivable from Special Purpose Vehicle by the Business trust |
– |
10 |
10 |
20 |
|
194 – LBA(3) |
For Distribution of, any income received from renting or leasing or letting out any real estate asset owned directly by the Business trust |
– |
10 |
10 |
20 |
|
194 -LB |
For Paying interest on infrastructure debt fund to Non Resident |
– |
5 |
5 |
20 |
|
194 -LBB |
For Investment fund paying an income to a unitholder |
10 |
10 |
30 |
||
194 -LBC |
For Income in respect of investment made in a securitization trust |
25 |
10 |
30 |
||
194 – M |
For Payment of the commission, brokerage, contractual fee, the professional fee to a resident person by an individual or a HUF who is not liable to deduct TDS under section 194C, 194H, or 194J. |
Rs. 50,00,000 |
5 |
5 |
20 |
|
194 – N |
For Cash withdrawal |
NA |
NA |
NA |
20 |
|
194 – O |
For using E-Commerce for sale of goods |
Rs.5,00,000 |
1 |
1 |
20 |
|
194 – Q |
For purchase of goods ( will be applied from 01.07.2021) |
Rs 50,00,000 |
0.10 |
0.10 |
NA |
|
195 |
For Payment made to any Non -resident |
TDS of 20.80% of the income on the investment made and 10.40% on long-term capital gains. |
NA |
NA |
NA |
|
194 – P |
TDS on Senior Citizens above 75 Years |
Relaxation for Senior citizens above the age of 75 |
NA |
NA |
NA |
|
206 -AB |
TDS on non -filers of ITR |
Non-filers need to pay double the TDS in force. |
NA |
NA |
NA |
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:
- Regular deduction and payment of taxes ensures a continuous flow of income to the government.
- 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