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TDS or Tax Deducted at Source means tax collection that applies to the income earned from salaries, asset sales, rent and so on. The payer collects the income tax due on this income when paying or crediting the amount to the recipient of the income (the payee). This amount is then remitted by the payer to the Central Government, and hence, the payee does not need to do so.
Under TDS, the payer is known as the deductor who is liable to make the payments and deduct tax at the source of the income, and the payee is the deductee from whose income the tax is deducted when the payment is being made. A deductee can, however, file their tax returns with a 26AS or TDS certificate that the deductor must issue to them.
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TDS is deducted before the payment is credited and is an advance payment to the government. The person making the deductions on the payments and then depositing the same to the government is known as the deductor, while the person from whose payment the TDS is deducted is the deductee. The following persons can deduct TDS and deposit it to the government on behalf of the deductee for salary payment, interest on securities, dividend payments and others:
An Individual or a H.U.F. (Hindu Undivided Family) cannot be liable for deducting TDS on any of the above payments unless an individual or the H.U.F. is conducting a business/profession and the payment accounts are subject to audits under Section 44AB, in the upcoming financial year.
Companies and partnership firms are other categories of deductors who are liable to deduct TDS.
TDS Rate Charts for the FY 2022-23 (for Resident)
Section |
Deductee |
Type of Transaction |
Threshold Limit |
TDS Rate |
192 |
Resident, Non-Resident |
Salary Payment |
Basic exemption limit of payee |
As per normal slab rates |
192A |
Resident, Non-Resident |
Premature withdrawal from Employee Provident Fund |
₹50,000 |
10% |
193 |
Resident |
Interest earned on securities such as equity instruments, debt bonds, savings bonds and others. |
Debentures- ₹5,000 8% Savings (Taxable) Bonds 2003 or 7.75% Savings (Taxable) Bonds 2018 - ₹10,000 Other - NIL |
10% |
194 |
Resident |
Dividend payment |
₹5,000 |
10% |
194A |
Resident |
Interest from other sources (not securities) - post office/bank/co-operative society deposits |
Senior Citizens- ₹50,000 Others - ₹40,000 |
10% |
194A |
Resident |
Interest from sources apart from interest on securities under Section 193 and interest from banks/post office/co-operative society. |
₹5,000 |
10% |
194B |
Resident, Non-Resident, Foreign Company |
Earnings from crossword puzzles, lotteries, card games and such. |
₹10,000 |
30% |
194BB |
Resident, Non-Resident, Foreign Company |
Earnings from equestrian races |
₹10,000 |
30% |
194C |
Resident |
Payment made to contractor/sub-contractor: Individuals/Hindu Undivided Family |
Single transaction- ₹30,000 Net transactions- ₹1 Lakh |
1% |
194C |
Resident |
Payment made to contractor/sub-contractor: Individuals/Hindu Undivided Family |
Single transaction- ₹30,000 Net transactions- ₹1 Lakh |
2% |
194D |
Resident |
Insurance commission payable to domestic companies |
₹15,000 |
10% |
194D |
Resident |
Insurance commission payable but not to companies |
₹15,000 |
5% |
194DA |
Resident |
Income for the insurance benefit payout, during payment of the sum under a life insurance policy. |
₹1 Lakh |
5% |
194E |
Non-Resident, Foreign Company |
Payment to non-resident sportsmen/sports association |
NIL |
20% |
194EE |
Resident, Non-Resident |
Payment to a National Savings Scheme (NSS) account holder. |
₹2,500 |
10% |
194F |
Resident, Non-Resident |
Payment for unit repurchase by Unit Trust of India (UTI) or a Mutual Fund |
NIL |
20% |
194G |
Resident, Foreign Company, Non-Resident |
Payments, commission, etc., on the sale of lottery tickets |
₹15,000 |
5% |
194H |
Resident |
Commission/brokerage |
₹15,000 |
5% |
194-I |
Resident |
Rent on plant/machinery |
₹2,40,000 |
2% |
194-I |
Resident |
Rent on land/building/furniture/fitting |
₹2,40,000 |
10% |
194-IA |
Resident |
Payment for transferring certain immovable property (not agricultural land) |
₹50 Lakh |
1% |
194-IB |
Resident |
Rent paid by an individual or HUF not covered under Section 194-I |
₹50,000 p. a |
5% |
194-IC |
Resident |
Payment under Joint Development Agreements (JDA) to Individual/HUF |
NIL |
10% |
194-J |
Resident |
Any amount paid as professional services fees |
₹30,000 |
10% |
194-J |
Resident |
Amount paid for a director’s remuneration/fee/commission |
₹30,000 |
10% |
194-J |
Resident |
Any sum paid for not carrying out any activity concerning any business; |
₹30,000 |
10% |
194-J |
Resident |
Any sum paid for not sharing any know-how, patent, copyright, etc. |
₹30,000 |
10% |
194-J |
Resident |
Any sum paid as a fee for technical services |
₹30,000 |
2% |
194-J |
Resident |
Amount paid as royalty towards the sale/distribution/exhibition of cinematographic films |
₹30,000 |
2% |
194-J |
Resident |
Any sum paid as technical services fees, but the payee is engaged in the business of operation of the call centre. |
₹30,000 |
2% |
194K |
Resident |
Amount paid for units of a mutual fund, for example, dividend |
NIL |
10% |
194LA |
Resident |
Amount paid to compensate the acquisition of certain immovable property |
₹2.5 Lakh |
10% |
194LB |
Non-Resident, Foreign Company |
Interest payment on infrastructure debt fund to Non-Resident |
NIL |
5% |
194LC |
Foreign Company/Non-Resident |
Interest paid for the loan borrowed in foreign currency by an Indian company/business trust against loan agreement or long-term bonds |
NIL |
5% |
194LC |
Non-Resident, Foreign Company |
Interest paid for the loan borrowed in foreign currency by an Indian company/business trust against long-term bonds under IFSC |
NIL |
4% |
194LD |
Non-Resident, Foreign Company |
Interest payment on rupee-denominated bond to Foreign Institutional Investor or a Qualified Foreign Investor |
NIL |
5% |
194LBA – 1 |
Resident |
Certain income distributed to a unitholder by a business trust |
NIL |
10% |
194LBA – 2 |
Foreign Company/Non-Resident |
Business trust’s interest income from special purpose vehicle distribution to unitholders |
NIL |
5% |
194LBA – 2 |
Non-Resident, Foreign Company |
A business trust’s dividend income distributed to a unitholder from a special purpose vehicle, in which the business holds the share capital (not the government capital) |
NIL |
10% |
194LBA – 3 |
Non-Resident Indian |
Rental income payment of assets owned by the business trust to the unitholders. |
NIL |
30% |
194LBA – 3 |
Foreign Company |
Rental income payment of assets owned by the business trust to the unitholders. |
NIL |
40% |
194LBB |
Resident, Non-Resident Indian |
Certain income paid to a unitholder as investment fund units. |
NIL |
10% |
194LBB |
Foreign Company |
Certain income paid to a unitholder as investment fund units. |
NIL |
40% |
194LBC |
Resident |
Income from investment in securitisation fund received to an individual and HUF |
NIL |
25% |
194LBC |
Resident |
Income from investment in securitisation fund received to a domestic company |
NIL |
10% |
194LBC |
Foreign Company |
Income from investment in securitisation fund received to a foreign company |
NIL |
40% |
194LBC |
Non-Resident Indian |
Income from investment in securitisation fund received to NRI |
NIL |
10% |
194M |
Resident |
Certain payments by Individual/HUF not liable to deduct TDS under Section 194C, 194H, and 194J |
₹50 Lakh |
5% |
194N |
Resident, Non-Resident |
Cash withdrawal exceeding a certain amount |
₹1 crore |
2% |
194N |
Resident, Non-Resident |
Cash withdrawal in case person not filing ITR for last three years and the original ITR filing due date expired |
₹20 Lakh – ₹1 crore
₹1 crore |
2%
5% |
194O |
Resident |
Payment for the sale of goods/provision of services by the e-commerce operator through its digital or electronic facility or platform. |
₹50 Lakh |
1% |
194P |
Resident |
Payment of pension or interest to specified senior citizens aged 75 years and above |
Basic exemption limit for senior citizens/super senior citizens |
Normal tax slab rates |
194Q |
Resident |
Payments for the purchase of goods |
₹50 Lakh |
0.10% |
194R |
Resident |
Perquisite or benefit to a business or profession |
₹20,000 |
10% |
194S |
Resident |
TDS on transferring of virtual digital assets |
Specified Persons - ₹50,000
Others - ₹10,000 |
1% |
195 |
Non-Resident |
Income on investments made by NRI citizen |
NIL |
20% |
195 |
Non-Resident |
Income from LTCG referred to in Section 115E in the case of a Non-Resident |
NIL |
10% |
195 |
Non-Resident, Foreign Company |
Income from LTCG under Section 112(1)(c)(iii) |
NIL |
10% |
195 |
Non-Resident, Foreign Company |
LTCG income under section 112A |
NIL |
10% |
195 |
Non-Resident, Foreign Company |
STCG income under section 111A |
NIL |
15% |
195 |
Non-Resident, Foreign Company |
Any other income earned from LTCG |
NIL |
20% |
195 |
Non-Resident, Foreign Company |
Interest payable on money borrowed by the government or Indian concern in foreign currency |
NIL |
20% |
195 |
Non-Resident, Foreign Company |
Royalty income payable by the Indian concern/government, for the copyright in a subject referred in the first proviso of section 115A or computer software as per the second proviso of section 115A |
NIL |
10% |
195 |
Non-Resident |
Royalty income payable by government or Indian concern as per an agreement on matters included in the industrial policy |
NIL |
10% |
195 |
Foreign Company |
Royalty income payable by government/Indian concern under an agreement on matters included in the industrial policy, if the payment agreement was made 31st March 1961 and 1st April 1976 |
NIL |
50% |
195 |
Foreign Company |
Royalty income payable by government/Indian concern as per an agreement on matters included in the industrial policy, if the payment agreement is entered after 31st March 1976 |
NIL |
10% |
195 |
Foreign Company |
Income from technical services remuneration payable by government or Indian concern under an agreement on matters related to industrial policy |
NIL |
10% |
195 |
Non-Resident |
Income from technical services remuneration payable by government or Indian concern as per an agreement on matters related to industrial policy, if the payment agreement was made between 29th February 1964 and 1st April 1976 |
NIL |
50% |
195 |
Foreign Company |
Income from technical services fees paid by government or Indian concern as per agreement (payment agreement made after 31st March 1976) on industrial policy |
NIL |
10% |
195 |
Non-Resident |
Other income sources |
NIL |
30% |
195 |
Foreign Company |
Other income sources |
NIL |
40% |
196B |
Non-Resident, Foreign Company |
Income (including LTCG) from units of an offshore fund |
NIL |
10% |
196C |
Non-Resident, Foreign Company |
Income (including LTCG) from global depositary receipt of an Indian firm or foreign currency bonds |
NIL |
10% |
196D |
Foreign Company/Non-Resident |
Income (not capital gain or dividend) from Foreign Institutional Investors. |
NIL |
20% |
TDS Rate Charts for the FY 2020-21, FY 2021-22 (for Resident)
Section |
FY2020-21 |
FY 2021-22 |
TDS Rate |
|
TDS rates 01/04/20-13/05/20 |
TDS rates 14/05/20-31/03/21 |
TDS Rate |
|
|
Section 192: Salary Payment Section 192A: Premature withdrawal from Employee Provident Fund |
Normal slab rate 10% |
Normal slab rate 10% |
Normal slab rate 10% |
Normal Slab Rate 10 |
Section 193: Interest earned on securities. a) any State/Central Government security b) securities/debentures for money issued by local authority/corporation established by a Provincial, State or Central Act; c) debentures (listed on a recognised stock exchange) issued by a company where the debentures are present; d) interest earned on other securities |
10% |
7.5% |
10% 10%
10%
10% |
10% |
Section 194: Dividend Payment |
10% |
7.5% |
10% |
10% |
Section 194A: Income in the form of interest (other than interest on securities). |
10% |
7.5% |
10% |
10% |
Section 194B: Earnings from lottery, card games, crossword puzzles, and other such games |
30% |
30% |
30% |
30% |
Section 194BB: Earnings from equestrian races |
30% |
30% |
30% |
30% |
Section 194C: Payment to contractor/subcontractor. a) Individuals/HUF b) Others |
1% 2% |
0.75% 1.5% |
1% 2% |
1% 2% |
Section 194D: Insurance commission |
5% |
3.75% |
5% |
5% |
Section 194DA: Payment of any sum under a life insurance policy, effective 1st September 2019, the insurer deducts TDS on the income portion in the payout. |
5% |
3.75% |
5% |
5% |
Section 194EE: Payment of amount standing to the credit of a person under National Savings Scheme (NSS) |
10% |
7.5% |
10% |
10% |
Section 194F: Payment for unit repurchase by Unit Trust of India (UTI) or a Mutual Fund |
20% |
15% |
20% |
20% |
Section 194G: Payments/commission, etc., on the sale of lottery tickets |
5% |
3.75% |
5% |
5% |
Section 194H: Commission or brokerage |
5% |
3.75% |
5% |
5% |
Section 194-I: Rent on a) Plant/Machinery b) Land/building/furniture/fitting, effective 1st April 2019, with tax deduction limit on rent increasing from ₹1.8 Lakh p.a. to ₹2.4 Lakh p.a. |
2%
10% |
1.5%
7.5% |
2%
10% |
2%
10% |
Section 194-IA: Payment on transferring certain immovable property (not agricultural land). Section 194-IB: Rent payment by individual/HUF not covered under Section 194I Section 194-IC: Payment under Joint Development Agreements (JDA) to Individual/Hindu Undivided Family |
1%
5%
10% |
0.75%
3.75%
7.5% |
1%
5%
10% |
1%
5%
10% |
Section 194J: Any sum paid for: (a) Professional services remuneration; (b) A director’s remuneration/fee/commission; (c) For not conducting any business activities; (d) For not divulging any information, patent, copyright etc. (e) Technical service fees, and (f) Royalty income from the sale/distribution/exhibition of cinematographic films. (g) Technical services remuneration where the payee serves in the business of call centre operations |
10%
2% |
7.5%
1.5% |
10%
10%
10%
10%
2%
2%
2%
|
10%
10%
10%
10%
2%
2%
|
Section 194K: Income paid for mutual fund units under Section 10(23D) or from an administrator/specified company |
|
7.5% |
10%
|
10%
|
Section 194LA: Compensation payment for acquisition of certain immovable property. |
10% |
7.5% |
10% |
10% |
Section 194LBA(1): Certain income distributed by a business trust to its unitholder |
10% |
7.5% |
10% |
|
Section 194LBB: Certain income paid to a unitholder for investment fund units. |
10% |
7.5% |
10% |
10% |
Section 194LBC: Remuneration from securitisation fund investments (a) Individual and Hindu Undivided Family (b) Others |
25% 30% |
18.75% 22.5% |
25% 30% |
25% 30% |
Section 194M: Certain payments by Individual/HUF (Limit- ₹50 Lakh) |
5% |
3.75% |
5% |
5% |
Section 194N: Cash withdrawn above the ₹1 crore limit. In case ₹20 Lakh or more is withdrawn by the person not-filing ITR for the last 3 years, for which the ITR filing due date has passed, the TDS rates will be as below - For the amount more than ₹20 Lakh but up to ₹1 crore, and for the amount exceeding ₹1 crore (effective 01.07.20) |
2%
5% |
2%
5%
|
2% 2%
5% |
2% 2%
|
Section 194O: For sale of goods/offering services by the e-commerce operator through its digital/electronic facility/platform. |
-
|
0.75%
|
1% |
1% |
Section 194P: Tax deduction by specified banks paying pension or interest to specified senior citizens of 75 years of age and above. |
- |
- |
Tax on net income (as per existing rates) |
Tax on net income (as per existing rates) |
Section 194Q: Payments to residents for the purchase of goods if the total value of goods is above ₹50 Lakh. (TDS deductible on value exceeding ₹50 Lakh) |
- |
- |
0.1%
|
0.1%
|
Other Income |
10% |
10% |
10% |
10% |
Reduction in TDS Rates Due to COVID-19
During the COVID-19 pandemic and the subsequent lockdown that slowed down various segments of the domestic and global economy, the Government of India offered some relief in the TDS rates between 14.05.2020 to 31.03.2021.
However, this benefit was only extended to TDS rates; TCS (tax collected at source) and TDS (tax deducted at source), where the tax collections take place at a higher rate, did not see any changes. Furthermore, only resident Indians and not Non-Resident Indians could benefit from the tax relief on TDS rates in that period.
TDS Rate Chart for Non-Resident Indian (Other than a Company)
Section |
FY 2020-21 |
FY 2021-22 |
TDS Rate |
|
TDS rates 01.04/20-13.05.20 |
TDS rates 14.05.20-31.03.21 |
TDS Rate |
|
|
Section 192: Salary Payment Section 192A: Premature withdrawal from Employee Provident Fund |
Normal Slab Rate 10% |
Normal Slab Rate 10% |
Normal Slab Rate 10% |
Normal Slab Rate 10% |
Section 194B: Earnings from lotteries, crossword puzzles, card games and other games of any sort |
30% |
30% |
30% |
30% |
Section 194BB: Income from winning equestrian races |
30% |
30% |
30% |
30% |
Section 194E: Payment to non-resident sports association or sportsmen |
20% |
20% |
20% |
20% |
Section 194EE: Payment for National Savings Scheme deposits |
10% |
10% |
10% |
10% |
Section 194F: Payment on account of repurchase of a unit by Mutual Fund or Unit Trust of India |
20% |
20% |
20% |
20% |
Section 194G: Commission, etc., on sale of lottery tickets |
5% |
5% |
5% |
5% |
Section 194LB: Interest payable on infrastructure debt fund |
5% |
5% |
5% |
5% |
Section 194LBA or 194LBA(2): Income from units of business trust – interest received/receivable from a SPV (special purpose vehicle); or – dividend mentioned in sub-section (7) of section 115-O |
5%
10% |
5%
10% |
5%
10% |
5%
10% |
Section 194LBA(3)- payment of rental income to unitholders, from real estate assets owned directly by such business trust. |
|
|
30% |
|
Section 194LBB: Payment of certain income by an investment fund to a unitholder. |
|
|
30% |
|
Section 194LBC: Income from securitisation fund investment |
30% |
30% |
30% |
30% |
Section 194LC: Interest paid by an Indian Company/business trust for money borrowed in foreign currency as per loan agreement or through the issuing long-term bonds or long-term infrastructure bonds *For interest payable against long-term bonds in recognised IFSC stock exchanges |
5% |
5% |
5%
|
5% |
Section 194LD: Interest payment on rupee denominated bond of an Indian Company or Government securities to a Foreign Institutional Investor or a Qualified Foreign Investor |
5% |
5% |
5% |
5% |
Section 194N: Payment of a certain amount in cash (Limit 1 Crore) |
2% |
2% |
|
2% |
Section 194N: Payment of certain amount in cash (first proviso of section 194N) if - The amount exceeds ₹20 Lakh but up to ₹1 crore - The amount is above ₹1 crore (effective 01.07.20) |
25% |
25% |
|
- |
Section 195: Payment of any other sum to a Non-Resident |
|
|
|
|
a) Income in respect of investment made by a Non-Resident Indian citizen |
20% |
20% |
20% |
20% |
b) Long-term capital gains or LTCG income mentioned in Section 115E for a Non-Resident Indian |
10% |
10% |
10% |
10% |
c) Income from long-term capital gains referred to in sub-clause (iii) of clause (c) of sub-section (1) of Section 193 |
10% |
10% |
10% |
10% |
d) Income from short-term capital gains referred to in Section 111A |
15% |
15% |
15% |
15% |
e) Other LTCG income [other than LTCG mentioned in clauses (33), (36) and (38) of Section 10] |
20% |
20% |
20% |
20% |
f) Interest income payable by Government/Indian concern for borrowed money or debt by Government/Indian concern in foreign currency (not the interest income as under Section 194LB or Section 194LC |
20% |
20% |
|
20% |
g) Royalty income payable by Government/Indian concern as per an agreement with the Government/Indian concern where the amount is paid to transfer of all or any rights (including the granting a license) for copyright in any book on a subject referred to in the first proviso to sub-section (1A) of Section 115A of the Income-tax Act, to the Indian concern. or for any computer software referred to in the second proviso to sub-section (1A) of Section 115A of the Income-tax Act, to an Indian resident |
10% |
10% |
10% |
10% |
h) Royalty income [not as referred to in sub-item (b)(i)(F)] payable by Government/Indian concern as per an agreement made by it with the Government/Indian concern. An agreement made with the Indian concern the agreement should be approved by the Central Government or if it relates to industrial policy matters applicable when the agreement conforms with that policy. |
10% |
10% |
20% |
10% |
i) Technical services fees payable by Government/Indian concern as per agreement with the Government/Indian concern and where such agreement is with an Indian concern, it is approved by the Central Government or where it relates an industrial policy matter of the Government of India, for the time being in force, and the agreement conforms with that policy. |
10% |
10% |
10% |
10% |
j) Any other income |
30% |
30% |
30% |
30% |
Section 196A: Income in respect – of units of a Mutual Fund as under clause (23D) of section 10; or-from the specified company referred to in the Explanation to Clause (35) of section 10 |
20% |
20% |
|
20% |
Section 196B: Earnings from units (including LTCG on transferring units) to an offshore fund |
10% |
10% |
10% |
10% |
Section 196C: Earnings from foreign currency bonds or GDR of an Indian company (including long-term capital gain on transferring the bonds or GDR) |
10% |
10% |
10% |
10% |
Section 196D: Remuneration of Foreign Institutional Investors from investments (not capital gains or dividends earned on them) |
20% |
20% |
20% |
20% |
Given here are the amendments which the Union Budget 2022 proposed for TDS and TCS provisions so that the scope for new TDS and TCS provisions vide Finance Bill, 2022 can be widened:
Under Section 194-IA, it has been proposed that the amount on which TDS will be deducted should be amended. The buyer of the property can deduct 1% tax on the sum paid or the property’s stamp duty value, whichever is higher.
A new provision, namely Section 194S, has been introduced by the government that accounts for the purchase and sale of virtual digital assets. As per this provision, TDS can be deducted at 1% by persons on transactions of virtual digital assets, depending on the amount being transacted.
Threshold Limit: As per the threshold limit, if the total value of the transfer of the virtual digital assets exceeds ₹10,000 in a financial year, TDS will be deducted. However, this is only applicable under certain circumstances for an individual or HUF:
One should not have any income from their profession or business.
In the case of earnings from a profession or business, the income should not exceed ₹50 Lakh or ₹1 crore, respectively.
If the total value of the virtual digital assets is above ₹50,000 during the year, they should be in charge of deducting TDS as per this section.
Tax Deduction: The tax deduction is also subject to the payments made in kind or partly in kind, as per the government’s clarification on TDS deduction.
Under these TDS provisions, if the person -
Makes the payments in kind or partially in kind; however, the part cash payment does not qualify for a TDS deduction on the whole transaction.
The payment has been made completely in kind or in return for another virtual digital asset, eliminating cash payment.
The person charged with deducting the TDS has to ensure that the tax is paid on the transfer of these virtual digital assets and should enable the payment for such a transaction.
The TDS deduction is made by someone (the deductor) who offers monetary or non-monetary benefits to a resident for conducting their business or profession. The deductor will deduct TDS on the total value or the value of these benefits.
Applicability – If you are an individual or a HUF (Hindu Undivided Family), there will be no tax deduction if the total value of the benefit is less than ₹20,000.
Purpose - This provision has been introduced by the government so that the person availing of these benefits (the deductee) does not miss reporting these benefits under income while filing their income tax returns.
Tax Deduction - If the benefit to be given is in-kind and cash is insufficient for TDS deduction, before releasing such payment, it is to be ensured that tax has been paid in respect of such benefit or perquisite.
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What exactly is a TDS Certificate?
The Tax Deducted at Source (TDS) certificate is also known as Form 16/16A and is a certificate of the tax deduction at the source, which is issued to an employee by their employee. These two certificates must be issued to taxpayers as they contain information on TDS/TCS for all the transactions that the deductor and deductee have carried out between themselves.
What should you do if there is an error in the deduction of Tax at Source (TDS)?
When one deducts the TDS, a delay in depositing the amount with the IT Department on time can lead to a mismatch between the TDS mentioned in Form 16 (tax credit statement for the employee) and Form 26AS (the government record of the TDS).
Since the TDS is deducted by the employer or the person making the payment to the payee or deductee, an error on the deductor’s part can be managed once you inform them about the same.
Have your employer file a revised TDS return correctly. Though it may take some time for the changes to reflect on Form 26AS, once revised, your TDS returns will be filed correctly.
In case you receive an intimation from the Income Tax Department about the error, you can reply to the message on the Income Tax e-filing portal.
How can I reduce my TDS on my salary?
To ensure that excess TDS is not deducted on your salary, be sure to submit all your investment proofs as applicable under Sections 80C and 80D of the Income Tax Act for tax deduction benefits.
If a company wants to lower their TDS liability, these are the following documents they need to submit to the TDS department:
Cover letter describing the company’s business and the reason for a lower TDS certificate as well as correct address & TAN.
A New Form 13.
Estimated company financials & calculation of the total income.
Audited company financials from the past 3 years.
Tax Audit Reports from the past 3 years.
An e-TDS return receipt from the last 2 years of all 4 quarters.
ITR acknowledgement from the past 3 years.
A copy of the application & the certificate procured earlier.
Proof of the TDS payment in case of any short payment of TDS from the past 3 years.
A No Dues Certificate from the income tax assessing officer.
What is the TDS rate without PAN?
The TDS will be deducted at the rate of 20%, which is above 5% or 2%, in case the employee or the deductee does not provide the PAN details to the deductor.
Is TDS deducted on cryptocurrency in India?
A TDS at the rate of 1% will be deducted on transactions of virtual digital assets/cryptocurrencies that exceed ₹10,000 in a financial year, as per Section 194S of the Income Tax Act and the Finance Act, 2022.
Who is responsible for deducting TDS?
A company or a person who makes the payment to the employee or the deductee is responsible for the deduction of TDS. The deductor must deduct TDS before they make the payment and then deposit the deducted amount with the government.
Can TDS be refunded?
Yes, in case you are eligible for a TDS refund, here is how you can go about it:
You can claim your TDS refund, if any, by logging on to the Income Tax Department portal.
Under your applicable ITR form, click on “Taxes Paid and Verification” and verify your returns.
Once verified, the system will assess your information and the TDS refund, if any.
The actual refund amount will depend on the calculation made by the Income Tax Department once they process your returns.
Are TDS rates applicable for advertisement?
Yes, advertising agencies as the deductor will deduct TDS at 5% as per Section 194J of the Income Tax Act while crediting payments to their artists, models, actors and so on. A 2% TDS will be deducted if the payments are made for the purpose of producing programmes, films, videos, etc., for broadcast or telecast.
What is the TDS rate on fixed deposits?
The TDS on fixed deposits can be applied only when the interest earned is above the limit during a financial year (only interest that is taxable).
In a given fiscal year, a financial institution or a bank can deduct the TDS on FDs at 10% on the interest earned. For FY 2021-22, the TDS on fixed deposit interest earned by Indian residents is 10%, while NRIs will have to pay a TDS of 30% along with relevant surcharges and taxes on fixed deposit interest.
What are the TDS rates that are applicable to interest on securities?
As per Section 193 of the Income Tax Act, the TDS on interest on securities is as follows:
A TDS of 10% is deducted for individual and Hindu Undivided Families (HUFs) on the interest earned from securities that cross the limit of ₹5000 on debentures and ₹10,000 on others.
What are the responsibilities of the person deducting tax at source (TDS)?
A deductor or a person deducting TDS has to ensure the following:
If the payment or credit of income to the deductee is being subject to tax deduction at source at the prescribed rates.
They will have to issue a certificate of tax deduction at source to the deductee from whose payment or income the TDS has been deducted through Form 16A. This should be done within a month from the end of the payment month.
The deductor will also have to file the annual return of TDS within a specified time limit and as per a prescribed form after the end of the financial year.
The person deducting tax will also have to file quarterly TDS statements for the quarters ending 30th June, 30th September, 31st December and 31st March for each financial year.
What should you do if there is an error in the deduction of Tax at Source (TDS)?
As a taxpayer, if there is a TDS deduction that is incorrectly made, you will have to contact the bank and apply for the correction of this error within a period of 7 days of the deposit. You will need to submit a challan correction application to the bank.
Should TDS be deducted from payments made to the government?
Tax Deducted at Source (TDS) was introduced so that tax could be collected from the source of income. And as per this concept, the deductor who makes payments in some specified form to another individual (deductee) can deduct tax at the source and then transfer it into the Central Government’s account.
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L&C/Advt/2022/Aug/1956
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