CA. Bhavik P. Chudasama
Tax Deducted at Source (TDS) is a mechanism of collecting income tax at the source of income itself. TDS is applicable to various types of payments such as salary, interest, commission, rent, etc. The TDS rates vary depending on the type of payment and the status of the recipient. In this article, we will discuss the most commonly used TDS rates applicable to various types of payments.
MOST COMMONLY USED TDS SECTIONS WITH TAX RATES AND THRESHOLD LIMIT |
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| Section | Nature of Payment made to RESIDENTS | TDS RATE | Single Payment/Credit Limit (Rs) | Threshold Limit (Rs) | ||
| Individual/HUF | Other than Individual/HUF | if No/Invalid PAN | ||||
| 194A | Interest other than Interest on Securities | 10% | 10% | 20% | - | 5,000 |
| 194C | Payment to Contractors (Below are few Examples) | 1% | 2% | 20% | 30,000 | 1,00,000 |
| 1. Advertising | ||||||
| 2. Broadcasting and telecasting (including the production of programmes) | ||||||
| 3. Carriage of goods and passengers using any mode of transport (but not railways) Except - payment is made to a goods transport agency (in the business of plying, hiring or leasing goods) which owns 10 or fewer carriages at any time during the previous year. Also, the contractor has to submit a declaration of above along with PAN. | ||||||
| 4. Catering | ||||||
| 5. Manufacturing or supply of a product as per the specification of a customer by using the material purchased from him/her. But does not include manufacturing or supplying a product according to the specification of a customer by using material purchased from other than such customer | ||||||
| 194H | Commission/Brokerage | 5% | 5% | 20% | - | 15,000 |
| 194 I (a) | Payment for Rent of Plant/Machinery/Equipment | 2% | 2% | 20% | - | 2,40,000 |
| 194 I (b) | Payment for Rent of Land/Building/Furniture & Fittings | 10% | 10% | 20% | - | 2,40,000 |
| 194J | Fees for Technical Services, Royalty for Sale, Distribution or Exhibition of cinematographic Films and Call Centre | 2% | 2% | 20% | - | 30,000 |
| Fees for Professional Services (Accounting/Auditing/Legal Fees Etc) | 10% | 10% | 20% | - | 30,000 | |
SECTIONS APPLICABLE IF PREVIOUS YEAR TURNOVER EXCEEDS RS. 10 CRORES |
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| Section | Nature of Payment made to RESIDENTS | TDS RATE | Threshold Limit (Rs) | |||
| Individual/HUF | Other than Individual/HUF | if No/Invalid PAN | ||||
| 194Q | TDS on Purchase of Goods | 0.1% | 0.1% | 5.0% | 50,00,000/- | |
| 206C(1H) | TCS on Sale of Goods | 0.1% | 0.1% | 5.0% | 50,00,000/- | |
In conclusion, TDS is a crucial aspect of income tax compliance, and the TDS rates vary depending on the type of payment and the status of the recipient. It is essential to understand the applicable TDS rates and comply with the TDS provisions to avoid any penalties and interest charges.
We request readers to seek professional advice before arriving at any decision/conclusion after reading.We are not responsible for any loss arising to anyone after referring andrelying on this article. Above views are based on our understanding of the provisions
The author can be reached at office.bhavikco@gmail.com
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