TDS Rates

TDS or Tax Deducted at Source is a mechanism of deducting income tax at the source origin of taxable income. Under this income tax department has specified certain types of payment in case of which the payee needs to deduct a certain amount as specified for that expense at the time of making payment to the beneficiary.

Due to the spread of COVID-19 in the country, the Indian Government announced a relief package namely ‘Atma Nirbhar Relief Package’ on 13th May 2020. In this package, one of the points covered the reduction of TDS rates for various types of payments. The benefit announced in the Atma Nirbhar Package is applicable only for Resident Indians.

TDS Section	Nature of Payment	TDS Rate till 13th May, 2020	TDS Rate from 14th May 2020 to 31st March 2021
194	Dividend	10%	7.50%
194A	Income earned as interest other than ‘Interest on securities’	10%	7.50%
192	Salary	Applicable slab rate	Applicable slab rate
192A	Premature withdrawal from EPF	10%	10%
193	Interest on Securities from - any debenture of security issued by any authority or corporation established by the government, listed debenture of a company, any security of State or Central government, or any other security	10%	7.50%
194B	Income from lotteries, card games, puzzles, etc.	30%	30%
194BB	Income from Horse races	30%	30%
194C	Payment made to contractor/sub-contractor - a) Individual or HUF	01%	0.75%
	b) Others	02%	1.50%
194D	Insurance commission paid - a) Other than a company	05%	3.75%
	b) To Company	10%	10%
194DA	Sum paid to insured with regards to Life Insurance Policy	05%	3.75%
194EE	National Saving Scheme	10%	7.50%
194F	Repurchase of unit by MFs or UTIs	20%	15%
194G	Commission on sale of lottery tickets	05%	3.75%
194H	Commission/Brokerage	05%	3.75%
194I	Rent for a) Plant and Machinery	02%	1.75%
	b) Land and Building or Furniture and Fitting	10%	7.50%
194IA	Transfer of immovable property other than agricultural land	01%	0.75%
194IB	Rent paid by an individual or HUF and not covered under Section 194I (above ₹ 50,000)	05%	3.75%
194IC	Payment under Joint Development Agreement to Individuals/HUF	10%	7.50%
194J	a) Any sum paid with respect to Professional fee or director’s fee	10%	7.50%
	b) Payment made with respect to technical fee or as Royalty for the sale or distribution or exhibition of cinematographic films.	02%	1.75%
194K	Payment made with respect to any of the following: a) MF units as per section 10(23D). b) Units from specified company, or c) Units from administrator.	10%	7.50%
194LA	Compensation for transfer of certain immovable property.	10%	7.50%
194LBA	Specified income distributed by a business trust to its unit holder.	10%	7.50%
194LBB	Income paid by investors fund to its investors	10%	7.50%
194LBC	Income from investment in securitization of fund a) For Individual/HUF	25%	18.75%
	b) For Company or any other person	30%	22.50%
194M	Certain payments made by HUF or Individual above ₹ 50 lakhs	05%	3.75%
194N	Certain payments made in cash: a) Amount more than ₹ 20 lakhs but less than ₹ 1 crore	N.A.	02%
	b) Amount exceeds ₹ 1 crore (Applicable from 1st July, 2020)	N.A.	05%
194O	For E-commerce operators for sale of goods or provision of services facilitated by it through its digital platform (from 1st Oct, 2020)	N.A.	0.75%

For Non-Residents Indians there is no relief under the Atmairbhar package announced on 13th May 2020. Thus, the TDS rates applicable to non-residents remain the same throughout the year.

Section	Nature of Payment	TDS Rate
192	Salary	Applicable slab rate
192A	Premature withdrawal of EPF	10%
194B	Income from lotteries, crossword puzzles, card games, etc.	30%
194BB	Income from winning horse races	30%
194E	Any payment made to non-resident sportsman/association	20%
194EE	Payment with respect to deposits in National Savings Scheme	10%
194F	Payment on account of repurchase of a unit by MF or UTI	20%
194G	Commission on sale of lottery tickets	05%
194LB	Interest of Infrastructure debt fund	05%
194LBA	Income from business trust units - a) Interest received or receivable from special purpose vehicle	05%
	b) Dividend referred in section 115-O(7).	10%
194LBC	Income from investment in securitization fund	30%
194LC	Interest payment by indian company or business trust for loan availed in foreign currency.	05%
194LD	Interest payment on bond of an Indian company or government security to a foreign investor	05%
194N	Certain payments made in cash: a) Amount more than ₹ 20 lakhs but less than ₹ 1 crore	02%
	b) Amount exceeds ₹ 1 crore (Applicable from 1st July, 2020)	05%
195	Various Payments made to Non-Resident a) Income on investment made by Non Resident Indian Citizen	20%
	b) A long term capital gain referred to in Section 115E	10%
	c) Long term capital gain referred to in Section 193(1)(c)(iii).	10%
	d) Short term capital gain referred in section 111A	15%
	e) Any other long term capital gain other than the gain referred in clauses (33), (36), and (38) of section 10	20%
	f) Income from interest payable by government or Indian concern on a debt availed in foreign currency other than the income covered in Section 194LB and 194LC	20%
196A	Income from MF units under clause (23D) of section 10, or from the specified company in clause (35) of section 10	20%
196B	Income from units including long term capital gain or from transfer of units to offshore fund	10%
196C	Income from foreign currency bond or GDR of Indian company	10%
196D	Income of foreign institutional investors from securities	20%

Section	Nature of Payment	TDS Rate till 13th May, 2020	TDS Rate from 14th May, 2020 to 31st March, 2021
193	Interest on Securities	10%	7.50%
194	Dividend	10%	7.50%
194A	Interest income other than interest on securities	10%	7.50%
194B	Income from lotteries, crossword puzzles, card games, etc.	30%	30%
194BB	Income from winning horse races	30%	30%
194C	Payment to Contractor/sub-contractor - a) HUF/Individuals	01%	0.75%
	b) Others	02%	1.50%
194D	Insurance Commission	05%	3.75%
194DA	Payment of Life Insurance Policy	05%	3.75%
194EE	Payment with regards to deposit under National Saving Scheme	10%	7.50%
194F	Repurchase of units by MF or UTIs	20%	15%
194G	Commission on sale of lottery tickets	05%	3.75%
194H	Commission or brokerage	05%	3.75%
194I	Rent - a) Plant and Machinery	02%	1.75%
	b) Land and Building or Furniture and Fitting	10%	7.50%
194IA	Payment on transfer of certain immovable property other than agricultural land	01%	0.75%
194IB	Rent paid by individual or HUF not covered under Section 194I	05%	3.75%
194IC	Payment under Joint Development Agreements to Individual or HUF	10%	7.50%
194J	Payment made as - a) Professional fee or director’s fee/remuneration	10%	7.50%
	b) Technical fee or Royalty for sale/distribution/exhibition of a cinematography films	02%	1.75%
194LBA	Income distributed by a business trust to its unit holders	10%	7.50%
194LA	Payment for acquisition of certain immovable property	10%	7.50%

The reliefs with regards to TDS announced on 13th May 2020 under the Atma Nirbhar Relief Package are only for the Residents; no relief has been announced for the Non-residents on TDS.

Section	Nature of Payment	TDS Rate
194B	Income from lotteries, crossword puzzles, card games, etc.	30%
194BB	Income from winning horse races	30%
194E	Payment to non-resident sports association	20%
194G	Commission on sale of lottery tickets	05%
194LB	Interest on Infrastructure debt fund	05%
194LBA	Income distributed by business trust to unit holders	05%
194LBC	Income in respect of securitization of funds	40%
194LC	Interest payment by indian company or business trust for loan availed in foreign currency.	05%
194LD	Interest payment on bond of an Indian company or government security to a foreign investor	05%
195	Various other payments
	a) Long term capital gain referred to in sub clause (iii) of clause © of sub section (1) of Section 112	10%
	b) Short term capital gain referred in section 111A	15%
	c) Any other long term capital gain not referred in clauses (33), (36), and (38) of section 10	20%
	d) Income from interest payable by indian government or indian concern for loan availed in foreign currency, not covered in Section 194LB and 194LC	20%
	e) Royalty income payable by Indian government or Indian concern (first and second proviso of subsection (1A) of section 115A	10%
196B	Income from units including long term capital gain and transfer of units to offshore funds.	10%
196C	Income from foreign currency bonds or GDR of Indian company	10%
196D	Income of foreign institutional investors from securities	20%

The payment of TDS through challan is required to be made by the 7th of next month for the concerned month. In other words, if you have to pay the amount deducted by you as TDS in the month of April, then it must be done by 7th of May. Thus, in case the payment is not made by the due date then interest on the due amount charged on a monthly basis at the rate of 1.50% on the due amount.

✅How is TDS calculated?

TDS is calculated based on the threshold limit and TDS rate specified by the Income Tax Department for a certain payment.

✅What is the TDS rate?

TDS rate is the percentage specified in the Income Tax Act on the basis of which tax needs to be deducted at source for certain specified payments.

✅What percentage of TDS is deducted?

The percentage of TDS deducted is specified separately for each type of payment which is covered under TDS.

✅What is the minimum amount for TDS deduction?

Not every payment has a minimum threshold limit. However, there are certain specified payments in which TDS has to be deducted if the total amount paid during the financial year exceeds the prescribed limit.