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What is TDS

Tax Deducted at Source (TDS) is a system introduced by Income Tax Department, where the person responsible for making specified payments such as salary, commission, professional fees, interest, rent, etc. is liable to deduct a certain percentage of tax before making payment in full to the receiver of the payment.

When should TDS be deducted and by whom?

Any person making payments specified in the Income Tax Act, is required to deduct tax at the time of making such payment. However, TDS shouldn't be deducted if the person making the payment is an individual or HUF, whose books aren't required to be audited.

Deductor: The company or person who makes the payment and deducts tax on the same is called a TDS deductor. The deductor is then supposed to deposit the tax collected with the government.

Deductee: The company or person who receives the payment, net of tax is called a deductee.

TDS Rate Chart: What are the applicable TDS rates for FY 2021-22

The following rates are after considering cess @4% and shall be increased by applicable surcharge.

APPLICABLE TDS SECTION TDS RATES (For AY 2022-23)
IN THE CASE OF A PERSON OTHER THAN A COMPANY IN THE CASE OF A COMPANY
Where the person is a resident of India Where the person is not a resident of India Where the company is a domestic company Where the company is not a domestic company
Section 192: Payment of Salary Normal Slab Rate (or) New Tax Regime Slab Rate as opted by employee Normal Slab Rate (or) New Tax Regime Slab Rate as opted by employee NA NA
Section 192A: Payment of accumulated balance of provident fund which is taxable in the hands of an employee Threshold Limit – Rs.50,000 10% 10.40% NA NA
Section 193: Interest on Securities
  1. any debentures or securities for money issued by or on behalf of any local authority or a corporation established by a Central, State or Provincial Act
  2. any debentures issued by a company where such debentures are listed on a recognised stock exchange
  3. any security of the government
  4. interest on any other security
Threshold Limit – Rs.2,500
10% 10% 10% 10% NA 10% 10% 10% 10% NA
Section 194: Dividend Threshold Limit – Rs. 5,000 TDS on dividend shall not apply to dividend income credited or paid to a business trust by a special purpose vehicle(SPV) or payment of dividend to any other person as may be notified. This means that no TDS needs to be deducted to AIF Category III also. NA NA 10% NA
Section 194A: Interest Income on bank deposits, post office deposit,banking co-operative society deposit (other than "Interest on securities") Threshold Limit for Senior Citizens – Rs.50,000 Other than senior citizens – Rs.40,000 Interest other than “Interest on securities” (Other Than Bank Deposit/Post Office Deposit/Banking Co-Society Deposit) Threshold Limit – Rs.5,000 10% NA 10% NA
Section 194B: Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort Threshold Limit – Rs.10,000 30% 31.20% 30% 31.20%
Section 194BB: Income by way of winnings from horse races Threshold Limit – Rs.10,000 30% 31.20% 30% 31.20%
Section 194C: Payment to contractor/sub-contractor by:
  1. HUF/Individuals
  2. Others
Single Transaction to be taken as Rs. 30,000 & Aggregate of Transactions as Rs. 1,00,000
1% 2% NA 1% 2% NA
Section 194D: Insurance commission Threshold Limit for Individuals and Companies both – Rs.15,000 5% NA 10% NA
Section 194DA: Payment w.r.t life insurance policy Threshold Limit – Rs.1,00,000 5% NA 5% NA
Section 194E: Payment to non-resident sportsmen/sports association NA 20.80% NA 20.80%
Section 194EE: Payment in respect of deposit under National Savings scheme Threshold Limit – Rs.2,500 10% 10.40% 10% NA
Section 194F: Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India 20% 20.80% 20% NA
Section 194G: Commission, etc., on sale of lottery tickets Threshold Limit – Rs.15,000 5% 5.20% 5% 5.20%
Section 194H: Commission or brokerage Threshold Limit – Rs.15,000 5% NA 5% NA
Section 194-I: Rent
  1. Plant & Machinery
  2. Land, Building, Furniture and Fittings
Threshold Limit – Rs.2,40,000
2% 10% NA 2% 10% NA
Section 194-IA: Payment on transfer of certain immovable property other than agricultural land Threshold Limit – Rs.50,00,000 1% NA 1% NA
Section 194-IB: Payment of rent by individual or HUF not liable to tax audit Threshold Limit – Rs.50,000 per month 5% NA NA NA
Section 194-IC: Payment of monetary consideration under Joint Development Agreements 10% NA 10% NA
Section 194J: Any sum paid by way of
  1. Cases, wherein, the payee is engaged in the business of the operation of Call Centre only
  2. Fee for technical services
  3. Professional royalty where such royalty is in the nature of consideration for sale, distribution or exhibition of cinematographic film
  4. In case of fees for any other professional services
  5. In case the payee fails to furnish PAN Threshold Limit – Rs.30,000
2% 2% 10% 10% 20% NA 2% 2% 10% 10% 20% NA
Section 194K: Payment of any income in respect of
  1. Units of a Mutual Fund as per Section 10(23D)
  2. Units from the administrator
  3. Units from specified company
10% NA 10% NA
Section 194LA: Payment of compensation on acquisition of certain immovable property Threshold Limit – Rs.2,50,000 10% NA 10% NA
Section 194LB: Payment of interest on infrastructure debt fund NA 5.20% NA 5.20%
Section 194LBA(1): Business trust shall deduct tax while distributing, any interest received or receivable by it from a SPV or any income received from renting or leasing or letting out any real estate asset owned directly by it, to its unit holders. 10% NA 10% NA
Section 194LBA(2): Business trust shall deduct tax while distributing any interest income received or receivable by it from a SPV to its unit holders. NA 5.20% NA 5.20%
Section 194LBA(3): Business trust shall deduct tax while distributing any income received from renting or leasing or letting out any real estate asset owned directly by it to its unit holders. NA 31.20% NA 41.60%
Section 194LBB: Investment fund paying an income to a unit holder 10% 31.20% 10% 41.60%
Section 194LBC: Income in respect of investment made in a securitisation trust
  1. In case of Individual/HUF
  2. Others
25% 30% 31.20% 10% 41.60%
Section 194M: Payment of commission, brokerage, contractual fee, professional fee to a resident person by an Individual or a HUF who are not liable to deduct TDS under section 194C, 194H, or 194J. Threshold Limit – Rs.50,00,000 5% NA 5% NA
Section 194N:
  1. Filed the returns of income for all of the three assessment years relevant to the three previous years and cash withdrawals exceeding 1 crore
  2. Not Filed the returns of income for all of the three assessment years relevant to the three previous years: (This provision is applicable w.e.f. 01 July, 2020)
● Cash withdrawals from 20 Lakhs to 1 crore ● Cash withdrawals exceeding 1 crore
2% 2% 2% till 30 June, 2020 and 5% from 01 July, 2020 NA 2% 2% 2% till 30 June, 2020 and 5% from 01 July, 2020 NA
Section 194O: Applicable for E-Commerce operator for sale of goods or provision of service facilitated by it through its digital or electronic facility or platform. Threshold Limit – Rs.5,00,000 1% NA 1% NA
Section 194Q : Purchase of goods Threshold Limit – Rs.50,00,000 Applicable when total sales or gross receipts or turnover from the business carried on exceeds Rs. 10 Crores during the financial year immediately preceding the financial year in which the purchase of goods is carried out. 0.10% NA 0.10% NA
Section 195: Payment of any other sum to a Non-resident
  1. Income in respect of investment made by a Non-resident Indian Citizen
  2. Income by way of long-term capital gains referred to in Section 115E in case of a Non-resident Indian Citizen
  3. Income by way of long-term capital gains
  4. Income by way of long-term capital gains as referred to in Section 112A
  5. Income by way of short-term capital gains referred to in Section 111A
  6. Any other income by way of long-term capital gains [not being long-term capital gains referred to in clauses 10(33), 10(36) and 112A
  7. Income by way of interest payable by Government or an Indian concern on moneys borrowed or debt incurred by Government or the Indian concern in foreign currency
A. Where the agreement is made after the 31st day of March, 1961 but before the 1st day of April, 1976 B. Where the agreement is made after the 31st day of March, 1976
  1. Income by way of royalty payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern where such royalty is in consideration for the transfer of all or any rights
A. Where the agreement is made after the 29th day of February, 1964 but before the 1st day of April, 1976 B. Where the agreement is made after the 31st day of March, 1976
  1. Income by way of royalty [not being royalty of the nature referred to point g) above E] payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern
  2. Income by way of fees for technical services payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian
  3. Any other income
NA 20.80% 10.40% 10.40% 10.40% 15.60% 20.80% 20.80% 10.40% 10.40% 10.40% 31.20% NA 10.40% 10.40% 15.60% 20.80% 20.80% 10.40% 52% 10.40% 52% 10.40% NA NA 41.60%
Section 206AB: TDS on non-filers of ITR at higher rates This section shall not apply where the tax is required to be deducted under sections 192, 192A, 194B, 194BB, 194LBC or 194N of the Act. 1)twice the rate specified in the relevant provision of the Act; or 2)twice the rate or rates in force; or 3)the rate of 5% NA NA

To download the TDS Rate Chart for FY 2021-22, Click here


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Category Income Tax, Other Articles by - CA Sapna Ghelani 



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