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 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.
- How To File An Income Tax Return
- Income Tax Calculator
- How To Save Tax
- What Happens If You Miss The Deadline For ITR Filing
- Importance Of Form 16A
- What Is TDS
- What Is TDS On Salary
- What Is TDS Rate
- What Is TDS Refund
- ITR Filing Mistakes
- Income Tax Refund Guide
- Ulip Tax Benefits
- Term Insurance Tax Benefits
- Health Insurance Tax Benefits
- Home Loan Tax Benefit Tax Rebate Of Owning A House Under Pmay
- Tax Benefits On Business Loan In India
- What Are The Tax Benefits Of A Personal Loan
- Home Loan Tax Benefit On Home Loan Balance Transfer
- Income Tax Exemptions Deductions
- Top Tax Saving Investment
- 5 Income Sources You Should Not Forget While Filing Your Itr
- Filing Your Income Tax Return 5 Things To Know About Section 80C
- A Handy List Of Documents You Should Keep Ready When Filing Your Itr
- 7 Tax Provisions That Are Relevant To You Beyond Just Section 80C
- Everything You Need To Know About Income Tax Returns
- Not Hiring A Tax Advisor Here Is The Self Service Guide To Income Tax In India
- The Exempt Exempt Exempt Tax Benefit Of Ulips
- Tax Saving Options Other Than Section 80C
- When Is An Assessee Liable To Pay Capital Gains Tax
- Last Minute Tax Planning Hacks
- Tax Planning Tips For Each Age Group
- Tax Saving Beyond 80D What Are The Options
- What Is Covered Under Income From Other Sources
- What Is The Difference Between Tax Declaration And Tax Filing
- Tax On Interest Income
- Five Most Important Sections Of Income Tax
- Does A Critical Illness Insurance Plan Have Section 80D Tax Benefit
- Everything About Taxation On Gifts
- Tax Identification Number Tin
- Impact Of Budget 2021
- Difference Between Income Tax And Income Tax Return
- Suffering From Overpopulation Or Gaining From Demographic Dividend
- How Close Is India To Its Solar Dream
- Here Are Five Reforms That The Indian Sector Could Use Right Now
- India S Labour Law Reform Where Are We And Where Do We Go Next
- What Can The Government Proposed Stimulus Package Contain
- Why Is In India S Auto Sector In A Slump
- What Are Differential Voting Rights And How Do They Affect Startups
- How Can The Government Revive The Investment Cycle
- Filing Your Itr And Wondering Where Your Taxes Go
- Direct Tax Reforms And Health Insurance Benefits 7 Points You Need To Know
- India S Falling Wealth Creation What Next
- ITR Portal Login
- How to Check Notice in Income Tax Portal
- How to E verify ITR on new IT Portal
- What is statement number in Form 61A
- Fill and File Form 10E
- Register DSC on IT Portal
- GST
- GST Registration
- GST Return
- GST Invoice
- Guide to File GSTR - 3B
- Reverse Charge Under GST
- How to File GSTR 10 on GST Portal
- Eway Bill
- Eway Bill Unblocking
- How to generate Eway Bill on Eway bill portal
- Modify Reject And Cancel E Way Bills Under GST
- E-way Bill Registration
- Impact of E-Way Bill on Indian Logistics Industry
- How to Use Bulk Generation Facility on the E-way Bill Portal
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.
