Tax Deducted at Source or TDS applies to resident Indians, non-resident Indians, domestic companies, and international companies that operate in India. The TDS percentage can vary between 1% and 30%, based on your income source. In some rare cases, it may even touch 50%.
Some of you may have noticed that your accountant at work deducts more TDS than required, meaning that you have to claim an income tax rebate when filing your returns. The onus of deducting tax falls on the payer, and it must be levied while making the payment. Additionally, they must deposit the tax within the given deadline.
TDS is applicable not only on your income but also on your investments and any earnings made on your fixed assets. Hence, you must be aware of TDS rates and applicability while planning your investments. Tax is deductible at source, even on big-ticket purchases like buying a new home. The scope of TDS is a lot wider than many people would assume. For example, did you know you have to pay tax on online poker game earnings?
Let’s discuss the applicable TDS rates as people get ready to file their taxes for the previous fiscal year. We will look at TDS rate charts across the following 4 areas: resident and non-resident Indians, domestic companies and international companies.
1. TDS for Both Resident and Non-Resident Indians
Section |
Description |
TDS rate for resident Indian |
TDS rate for non resident Indian |
192 |
Salary |
Depends on the income tax slab |
Depends on the income tax slab |
194B |
Income earned from card games, lotteries and/or any other games |
30% |
30% |
194BB |
Income earned through winnings from horse racing |
30% |
30% |
194EE |
Deposits in National Saving Scheme |
10% |
10% |
194F |
Payment made for repurchase of units by Unit Trust of India or Mutual Funds |
20% |
20% |
194G |
Commission/ other income earned on lottery ticket sales |
5% |
5% |
194LBB |
Income earned from an Investment fund that pays income to you Note: Income earned under section 10 (23 FBB) won’t be taxed |
10% |
30% |
194LBC |
Income earned from securitisation trust (as per section 115TCA) |
25% |
30% |
In addition, resident Indians and NRIs have a bunch of other taxes to be paid. We have drawn up a list that includes some of the TDS specific to each category of individuals.
2. TDS Specific to Resident Indians
Section |
Description |
TDS rate |
193 |
Interest on securities |
10% |
194 |
Dividend other than dividend as specified in section 115-O |
10% |
194A |
Interest earned on securities |
10% |
194D |
Insurance commission |
5% |
194DA |
Payment towards life insurance policy |
1% |
194H |
Commission or brokerage |
5% |
194I |
Rent on plant or machinery |
2% |
194I |
Rent on furniture or fixtures |
10% |
3. TDS Rates Specific to Non-Resident Indians
Section |
Description |
TDS rate |
195 |
Payment of any other sum to a NRI |
30% |
Income from investments |
20% |
|
Income from long-term capital gains |
10% to 20% |
|
Income from short term capital gains |
15% |
|
Income by way of interest payable by the Indian government or an Indian company |
20% |
|
Income by way of royalty payable |
10% |
|
Income by way of technical fees payable by government or an Indian company |
10% |
|
196C |
Income from units linked to an offshore fund |
10% |
196D |
Income from foreign institutional investors in securities |
20% |
Now, let us look at TDS rate charts for organisations, that is, domestic companies and international companies.
4. TDS Rates Applicable for a Domestic Company
Section |
Description |
TDS rate |
193 |
Interest on securities |
10% |
194 |
Dividend |
10% |
194A |
Interest other than interest on securities |
10% |
194B |
Income by way of any sort of games or lotteries |
30% |
194BB |
Income from horse races |
30% |
194C |
Payments to contractors Individuals: Others: |
1% 2% |
194D |
Insurance commission |
10% |
194DA |
Life insurance payment |
2% |
194EE |
Deposits in Nation Saving Schemes |
10% |
194 |
Payment towards repurchase of units of mutual funds |
20% |
194G |
Commission etc. on sale of lottery tickets |
10% |
194H |
Commission or brokerage |
5% |
194I |
Rent Plant or machinery: Land or building, furniture or fitting: |
2% 10% |
194IA |
Payment on property (except agricultural) transfer |
1% |
194J |
Payments towards professional services, royalty, fees, remuneration and commission |
10% |
194LA |
Payment as compensation for acquisition of immovable property |
10% |
194LBA |
Income distributed by business trust to unit holder |
10% |
Any other income earned by a domestic company is subject to 10% TDS.
5. TDS Rates for an International Company Operating in India
Section |
Description |
TDS rate |
194B |
Income from any sort of games and lotteries |
30% |
194BB |
Income from horse races |
30% |
194E |
Payment to non resident sports association |
20% |
194G |
Commission or other earnings on sale of lottery tickets |
5% |
194LB |
Payment of interest on infrastructure debt fund |
5% |
194LBA |
Certain income distributed by business trust to unit holders |
5% |
194LC |
Payment of interest by an Indian company related to money borrowed in foreign currency under loan agreement or long term bonds |
5% |
194LD |
Payment of interest on a rupee-denominated bond |
5% |
195 |
Interest by way of long term capital gains mentioned in section 112 |
10% |
Interest by way of long term capital gains mentioned in section 10 |
20% |
|
Income by way of short term capital gains mentioned in section 111A |
15% |
|
Income by way of interest payable by the government or an Indian company in foreign currency |
20% |
|
Royalty payable by the government or an Indian company in foreign currency
|
10% to 50% |
|
Fees received for rendering technical services |
10% to 50% |
The government has provided relief on TDS rates, effective from 14/05/2020 to 31/03/2021, due to the adverse effects of COVID-19 on businesses. This relief is limited to the TDS and not for taxes collected/deducted at a higher rate. Moreover, this revision of tax amount is limited to resident Indians only.
Check the respective TDS rates and claim any applicable TDS refunds to minimise your tax outgo. Furthermore, you can invest in tax-saving instruments like term insurance. You can consider the Bajaj Allianz Smart Protect Goal Term Insurance policy available on Bajaj Markets, which can help you claim tax deductions on the premiums paid. Additionally, any payouts received under the policy are also exempted from taxation. With high coverage of ₹1 crore at affordable premiums starting at just ₹13 a day, riders that offer coverage for up to 55 critical illnesses and rapid claim settlement, the term insurance plan on Bajaj Markets is comprehensive. Enjoy dual benefits of tax savings and financial protection with our term insurance plan.
FAQs on TDS Rates
What is the TDS rate without PAN?
TDS is deducted at 20% if you do not furnish your PAN.
Is TDS deducted on cryptocurrency in India?
Yes, TDS shall be deducted on payments related to the transfer of crypto assets at 1% if the amount exceeds a certain threshold.
Who is responsible for deducting TDS?
The person making the payment is responsible to deduct TDS before transferring the money.
How can I reduce my TDS on my salary?
You can make tax-saving investments as well as avail multiple exemptions like HRA, PPF, LTA, etc. to reduce your income tax burden.
Can TDS be refunded?
Yes, if you have paid TDS in excess, it can be refunded.
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