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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.

Scope of TDS

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.

 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.

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%

 

 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.

 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.

 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%

 

Reduction in TDS due to COVID-19

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.

Conclusion

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 Finserv 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 Finserv MARKETS is comprehensive. Enjoy dual benefits of tax savings and financial protection with our term insurance plan.

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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.