Last Updated on May 24, 2022 by
Tax Deductible at Source (TDS) is a way of collecting tax from the source of income. Here, income includes salary, rent, commission, fees, interest, and more. The person who is making the payment deducts the amount of tax at the source.
Let us understand how TDS works with an example. Assume that you earn Rs. 1,00,000 as dividend income. If the tax deducted at the source is 10%, you will receive Rs. 90,000 with Rs. 10,000 deducted as tax before you receive the amount.
The benefit of TDS is that it reduces tax evasion. The amount is automatically deducted beforehand to avoid any foul play. Let us understand how different incomes are categorized and taxed at the source.
TDS rate chart for FY 2021-2022
There are different provisions and tax rates for individuals, HUFs, and companies. Moreover, the rates also differ for Indian residents and non-residents. The TDS rate chart given below provides the detailed provisions for TDS as per the Income Tax Act, 1961.
The below-mentioned rates are applicable for FY 2021-2022 (AY 2022-2023).
| SECTION | PARTICULARS | THRESHOLD LIMIT (Rs.) | FOR RESIDENT (%) | FOR NON- RESIDENT (%) |
| 192 | Payment of salary | – | As per tax slab | As per tax slab |
| 192A | Accumulated balance of Provident Fund taxable in the hands of the employee (Premature withdrawal from EPF) | 50,000 | 10 | 10 |
| 193 | Interest on securities: Debentures/securities issued for money on behalf of a local authority or statutory corporation. Debentures listed on a recognized stock exchange are issued by a company. 8% savings (taxable) bonds, 2003 and 7.75% savings (taxable) bonds, 2018. Any other security | 5,000 5,000 10,000 5,000 | 10 10 10 10 | – – – – |
| 194 | Dividend income | 5,000 | 10 | – |
| 194A | Interest other than interest on securities – through banking companies, co-operatives engaged in banking, and post office | 40,000 (50,000 for senior citizens) | 10 | – |
| 194B | Winnings from lotteries, crossword puzzles, card games, and other games | 10,000 | 30 | 30 |
| 194BB | Winnings from horse races | 10,000 | 30 | 30 |
| 194C | Payment to contractor/sub-contractor: Single transaction consolidated payment during the year | 30,000 1,00,000 | 1 2 | – – |
| 194D | Insurance commission a company other than a company | 15,000 | 10 5 | – – |
| 194DA | Payment for pay-out from the life insurance policy | 1,00,000 | 5 | – |
| 194E | Payment to non-resident sportsmen/ sports associations | – | – | 20 |
| 194EE | Deposit under National Savings Scheme | 2,500 | 10 | 10 |
| 194F | Repurchase of units by Mutual Fund or Unit Trust of India | – | 20 | 20 |
| 194G | Commission on sale of lottery tickets | 15,000 | 5 | 5 |
| 194H | Commission or brokerage | 15,000 | 5 | – |
| 194I | Rent:Plant/Machinery/EquipmentLand/Building/Furniture/Fittings | 2,40,000 | 210 | – – |
| 194IA | Transfer of certain immovable property other than agricultural land | 50,00,000 | 1 | – |
| 194IB | Rent paid by individual or HUF not liable to tax audit | 50,000 per mth | 5 | – |
| 194IC | Monetary consideration paid under Joint Development Agreements | – | 10 | – |
| 194J | Fees for professional or technical services: For technical (other than professional) services.For individuals engaged in the business of operation of a call center.For royalty in the nature of consideration for sale, distribution, or exhibition of cinematographic films.Any other case | 30,000 | 2 2 10 10 | – – – – |
| 194K | Income in respect of units payable to a resident person, including units of mutual funds as per section 10(23)D, units from the administrator, and units from the specified company. | 5,000 | 10 | – |
| 194LA | Compensation paid on acquisition of certain immovable property except for agricultural land (exempted if covered under RFCTLARR Act w.e.f. 2017) | 2,50,000 | 10 | – |
| 194LB | Interest income from infrastructure debt fund | – | – | 5 |
| 194LBA (1) | Income from business trust units as interest received or receivable by it from a Special Purpose Vehicle or from renting or leasing or letting out any real estate asset owned directly by it. | – | 10 | 5 |
| 194LBA (2) | Payment as referred to under:Section 10(23FC)(a)Section 10(23FC)(b) | – | – – | 5 10 |
| 194LBB | Investment fund paying an income to a unitholder by a company other than a company | – | 10 10 | 30 40 |
| 194LBC | Income from the investment made in a securitization trust: By individual/HUFBy any other individual a company | – | 25 30 30 | 30 30 40 |
| 194LC | Interest paid by an Indian Company or a business trust: For money borrowed in foreign currency under a loan agreement or by way of issue of long-term bonds (including long-term infrastructure bonds) On rupee-denominated bond or any long-term bonds from outside India, listed on a recognized stock exchange located in International Financial Services Centre (IFSC) | – – | – – | 5 4 |
| 194LD | Interest on government bonds/securities to any FII or QFI | – | – | 5 |
| 194M | Payment of commission (not being insurance commission), brokerage, contractual fee, a professional fee to a resident person by an individual or a HUF who are not liable to deduct TDS under certain sections | 50,00,000 | 5 | – |
| 194N | Cash withdrawal during the previous year from one or more accounts with a banking company, a co-operative society engaged in banking, or a post office, if the amount is: More than Rs. 20 lakh, up to Rs. 1 cr.More than Rs. 1 cr. | – | 2 5 | 2 5 |
| 194O | Payment or credit of amount by the e-commerce operator to e-commerce participant | – | 1 | – |
| 194P | Deduction of tax by specified bank in case of senior citizen (having age of 75 or more) | – | As per rate in force | – |
| 194Q | Payment to a resident for purchase of goods | 50,00,000 | 0.10 | – |
| 195 | Payment of any other sum to NRI: Income in respect of investment made long term capital gain under section 115E/112(1)(c)(iii)/112AShort term capital gain under section 111AAny other income from long term capital gain.RoyaltyTechnical service fee income from interest payable by the government or Indian concern.Any other income by a company other than a company | – | – – — – – – – – | 20 10 15 20 10 10 20 40 30 |
| 196B | Income from units to an offshore fund | – | – | 10 |
| 196C | Income from foreign currency bonds or GDR of an Indian company | – | – | 10 |
| 196D | Income of foreign Institutional Investors from securities (except dividend and capital gain) | – | – | 20 |
In conclusion
It is vital to pay the TDS. Since it is deducted automatically at the source, it becomes much easier for individuals to comply with the provisions. You can also claim a refund on TDS while filing your ITR. All you have to do is ensure that you are aware of the prevailing rates. Consult your CA or financial planner to help you fully understand and plan your taxes and returns.
