INDEX
- What is TDS?
- TDS Rates in india
- Key Changes in TDS Rates Under Budget 2024
- TDS Return Forms
- Due Dates For Filing Returns
TDS Tax Rate
What is TDS?
TDS (Tax Deducted at Source) is a mechanism introduced by the Indian government to collect tax at the point of income generation rather than at the time of tax filing. It is a way of ensuring that taxes are collected regularly and in advance, rather than waiting until the end of the financial year.
Under TDS, the payer (such as an employer, company, or financial institution) deducts a certain percentage of tax at the time of making a specified payment to the payee (such as an employee, contractor, or vendor). The amount deducted is then remitted to the government on behalf of the payee. The payee can claim credit for the tax deducted while filing their income tax return.
TDS Rates in India
The following tables illustrate the various TDS rates applicable to resident and non-resident payments, as well as to domestic and foreign companies in India. Any individual or entity responsible for making payments is required to deduct tax at source and remit the deducted amount to the government by the stipulated due date.
TDS Rate Chart for FY 2024-25 (AY 2025-26)
| Section | Nature of Transaction | Threshold Limit (Rs) | Resident (R) | Non-Resident (NR) | Foreign Company (FC) |
| 192 | Payment of Salary | Basic exemption limit | Normal Slab Rates | Normal Slab Rates | Normal Slab Rates |
| 192A | Premature withdrawal from EPF | 50,000 | 10% | 10% | 10% |
| 193 | Interest on Securities | Debentures: 5,000 | 10% | – | – |
| Savings Bonds: 10,000 | 10% | – | – | ||
| 194 | Payment of Dividend | 5,000 | 10% | 10% | 10% |
| 194A | Interest from other than securities (e.g., banks, post office, co-operative societies) | Senior Citizens: 50,000 | 10% | 10% | 10% |
| Others: 40,000 | 10% | 10% | 10% | ||
| 194B | Income from lottery, card games, crossword puzzles | 10,000 (aggregate) | 30% | 30% | 30% |
| 194BA | Income from Online Gaming | Nil | 30% | 30% | 30% |
| 194BB | Income from horse race winnings | 10,000 (aggregate) | 30% | 30% | 30% |
| 194C | Payment to Contractors/Sub-Contractors | Single: 30,000 | 1% | 2% | 2%HUF) |
| 194D | Insurance Commission | 15,000 | 10% | 5% | 5% |
| 194DA | Insurance Pay-out (Life Insurance Policy) | 1,00,000 | 5% (before Oct 1, 2024), 2% (from Oct 1, 2024) | – | – |
| 194E | Payments to Non-Resident Sportsmen/Sports Associations | No limit | 20% | 20% | 20% |
| 194EE | Payments from NSS (National Savings Scheme) | 2,500 | 10% | 10% | 10% |
| 194F | Repurchase of units by UTI/Mutual Fund | No limit | 20% | 20% | 20% |
| 194G | Sale of Lottery Tickets | 15,000 | 5% (before Oct 1, 2024), 2% (from Oct 1, 2024) | 5% | 5% |
| 194H | Commission or Brokerage | 15,000 | 5% (before Oct 1, 2024), 2% (from Oct 1, 2024) | 5% | 5% |
| 194-I | Rent (Plant, Machinery, Land, Building, Furniture, Fittings) | 2,40,000 | 2% (Plant & Machinery), 10% (Land/Building/Furniture/Fittings) | 2% (Plant & Machinery), 10% (Land/Building/Furniture/Fittings) | 2% (Plant & Machinery), 10% (Land/Building/ Furniture/Fittings) |
| 194-IA | Transfer of Immovable Property (Other than Agricultural Land) | 50,00,000 | 1% | 1% | 1% |
| 194-IB | Rent by Individual/HUF not covered under Section 194-I | 50,000 per month | 5% (before Oct 1, 2024), 2% (from Oct 1, 2024) | 5% | 5% |
| 194J | Fees for Professional Services, Fees to Directors, Technical Services, Royalties, etc. | 30,000 | 10% | 2% (for Technical Services) | 2% (for Technical Services) |
| 194K | Mutual Fund Income (e.g., Dividends) | No limit | 10% | 10% | 10% |
| 194LA | Compensation on Acquisition of Immovable Property | 2,50,000 | 10% | 10% | 10% |
| 194LB | Interest on Infrastructure Debt Fund | No limit | 5% | 5% | 5% |
| 194LC | Interest on Loans in Foreign Currency by Indian Companies | No limit | 5% | 5% | 5% |
| 194LD | Interest on Rupee-Denominated Bonds to FII/QFI | No limit | 5% | 5% | 5% |
| 194M | Payments by Individual/HUF (not liable under Sections 194C, 194H, 194J) | 50,00,000 | 5% (before Oct 1, 2024), 2% (from Oct 1, 2024) | – | – |
| 194N | Cash Withdrawals (Exceeding Certain Limits) | Co-op Society: 3 Crore, Others: 1 Crore | 2% | 2% | 2% |
| 194O | E-commerce Transactions | 5,00,000 | 1% (before Oct 1, 2024), 0.1% (from Oct 1, 2024) | 1% (before Oct 1, 2024), 0.1% (from Oct 1, 2024) | 1% (before Oct 1, 2024), 0.1% (from Oct 1, 2024) |
| 194P | Payments to Senior Citizens (Age 75 or above) | Basic Exemption Limit | Normal Slab Rates | Normal Slab Rates | Normal Slab Rates |
| 194Q | Payments for Purchase of Goods | 50,00,000 | 0.10% | 0.10% | 0.10% |
| 194R | Perquisites or Benefits to Business or Profession | 20,000 | 10% | 10% | 10% |
| 194S | Transfer of Virtual Digital Assets | Specified Persons: 50,000 | 1% | 10% | 10% |
| 195 | Income on Investments by NRI, Income by way of LTCG, STCG, Royalty, etc. | No limit | 20% | 20% | 20% |
Notes:
- The normal tax slab rates from FY 2023-24 for individuals and HUF have been revised under the new tax regime.
- Surcharge and Health and Education Cess, if applicable, shall be deducted in addition to the TDS rates for non-resident and foreign company deductees.
- The term “Resident” in the chart includes domestic companies.
- All TDS amendments introduced in Budget 2023 have been incorporated in this chart.
This table has been designed for clarity and ease of reference, with the TDS rates for various categories clearly segregated under Resident (R), Non-Resident (NR), and Foreign Company (FC).
Key Changes in TDS Rates Under Budget 2024:
1. Reduced TDS on Interest Income for Senior Citizens
One of the significant changes in the Budget 2024 is the reduction in the TDS rate on interest income for senior citizens. The Finance Minister proposed lowering the TDS rate on interest income for senior citizens from 10% to 7.5% for those earning up to a certain threshold. This change aims to provide tax relief to senior citizens, who often rely on interest income for their livelihood.
2. TDS on Digital and E-Commerce Transactions
With the rise of digital payments and e-commerce platforms, the government introduced TDS provisions on certain digital transactions. The Budget 2024 includes measures to strengthen tax collection from the digital economy. This includes increasing scrutiny and imposing TDS on specific e-commerce transactions, particularly on payments made to online service providers and platforms.
3. TDS on Payments to Foreign Entities
The Budget 2024 also addresses TDS on payments made to foreign entities. The government has proposed a tighter regime for deducting TDS on payments for certain services and royalties to non-resident entities. These changes will impact businesses involved in cross-border transactions.
4. TDS on Rent Payments
The Budget 2024 proposes increasing the threshold for TDS on rent payments. This will relieve landlords and businesses from the obligation to deduct TDS if their rental payments fall below the specified threshold. This aims to reduce compliance costs for small taxpayers.
5. TDS on Other Specified Payments
The Budget also proposes adjustments to TDS rates on a range of other specified payments, such as professional fees, contract payments, and commission. While the exact percentage rates on these items have largely remained the same, certain exemptions or reductions have been introduced, especially in cases involving small taxpayers.
6. Simplification of TDS on Salary
The government has also proposed measures to make TDS on salary more efficient and transparent. While there has been no major overhaul in the rate itself, the process of TDS deduction and filing for salaried employees is expected to become more streamlined and user-friendly in the coming financial year.
TDS Return Forms
The following table provides a summary of different TDS return forms and their respective purposes:
S.No. | Type of Form | Purpose |
1 | 24Q | Statement of tax deducted at source on salaries. |
2 | 26Q | Statement of tax deducted at source on non-salaried income. |
3 | 26QB | Statement of tax deducted against the payment for immovable property. |
4 | 27Q | Certificate of tax deducted at source on interest, dividends payable to NRIs and foreign companies. |
5 | 27EQ | Statement of Tax Collected at Source (TCS). |
Each form serves a specific purpose, depending on the nature of income or transaction. It is essential for businesses and individuals to file the correct form based on the type of income and TDS or TCS involved.
Due Dates for Filing TDS Returns
The due dates for filing TDS returns are as follows:
Quarter | Due Date |
Quarter 1 | 31st July |
Quarter 2 | 31st October |
Quarter 3 | 31st January |
Quarter 4 | 31st May |