TDS Meaning and what is TDS Rates Chart in India? – Kotak Life
Close
Close

Buy a life insurance plan in a few clicks

Now you can buy life insurance plans completely online right here.

  • Kotak e-Term Plan

    Kotak e-Term Plan is a pure term plan that provides a high level of protection to your loved ones in your absence.

  • Kotak Health Shield

    The Kotak Health Shield Plan helps secure your finances in times of sudden medical expenses related to illness such as Cardiac, Liver, Neuro and Cancer (all early and major stages of illness /conditions of Cancer); along with offering protection for Personal Accident - in case of accidental death or disability.

  • Kotak Lifetime Income Plan

    Kotak Lifetime Income Plan gives you the assurance of your income continuing throughout your life and in your absence throughout the lifetime of your spouse!

Close

Get a Call

Enter your contact details below and we will get in touch with you at the earliest.

  • Select your Query

Thank you

Our representative will get in touch with you at the earliest.

Back

TDS – Tax Deducted at Source and TDS Rates

Save Tax Now TDS – Tax Deducted at Source and TDS Rates


What is TDS?

Tax Deducted at Source (TDS) is a tax deduction made by an individual or a company when they are making any payment. The TDS is to be deducted if the payable amount exceeds a certain limit. The deduction is mandated by the Income Tax Act, 1961. The return from fixed deposits, your salary, income from services provided to your customers, and many other sources of income are paid after tax deduction. The payer deducts the tax and pays it to the Income Tax Department for the payee. This is the answer to what is tax deducted at source. However, there is plenty more you should know about TDS.

The payer, who deducts the TDS, is known as a deductor, and the payee is known as the deductee. This income tax deduction deduction is applicable on any mode of payment. Knowing the TDS deduction rules is very important for both parties. It helps them to understand how much tax is to be deducted, how to submit it to the government, and how it can be refunded. From paying salary to an employer and buying property to paying rent, the rules of TDS are applicable to all transactions.

What is a TDS certificate?

A TDS certificate is issued by the deductor and given to the deductee while making a payment. Here are some examples of TDS certificates.

  • Form 16 is given in case of salary payments.
  • Form 16A is given in case of non-salary payments.
  • Form 16B is given in case of sale of the property.
  • Form 16C is issued for rent payments.

When should TDS be deducted and by whom?

TDS is deducted when a payment is due or when it is made under the Income Tax Act. TDS can be deducted by

- Employers in the case of private employment
- Employees if they are making the payment on behalf of the employer
- Local authorities or companies if there is any interest on securities
- Drawing and disbursing officers in the case of government employment

If the person making the payment is an individual or Hindu Undivided Family (HUF), and is not obliged to have their books audited, then there is no TDS deducted.

Here is an example to help you understand this concept better:

Imagine that you own a company and have to make a payment of INR 60,000 to a service provider. The applicable TDS income tax is 10% on that amount, which sets the deductible at INR 6,000. However, if you are buying a house for INR 80 lakh, then the TDS applicable on the amount is charged at 1%, which comes to INR 80,000. You have to pay that money directly to the Income Tax Department and not to the seller of the house.

As you can see, different types of payments demand different rates of TDS to be deducted. A TDS rate chart will help you understand this better.

TDS rate chart (TDS on salary)

The TDS on salary is deducted based on the income tax slabs. The slabs for the Assessment Year 2019-20 are given below.

For individuals below 60 years of age:

Income tax slab Tax rate
Up to INR 2,50,000 No Tax
INR 2,50,001 to INR 5,00,000 5% on the income over the INR 2,50,001
INR 5,00,001 to INR 10,00,000 INR 12,500 + 20% of the income over INR 5,00,000
Over INR 10,00,000 INR 1,12,500 + 30% of the income over INR 10,00,000

For senior citizens (aged between 60 and 80 years):

Income tax slab Tax rate
Up to INR 3,00,000 No Tax
INR 3,00,001 to INR 5,00,000 5%
INR 5,00,001 to INR 10,00,000 20%
Over INR 10,00,000 30%

For super senior citizens (aged over 80 years):

Income tax slab Tax rate
Up to INR 5,00,000 No Tax
INR 5,00,000 to INR 10,00,000 20%
Over INR 10,00,000 ₹1,00,000 + 30% of total income exceeding ₹10,00,000

TDS rate chart for the other types of income is

Income type TDS rate
Fixed deposit interest 10%
Bonds 10%
Insurance commissions 5%
Contractor services 1%/2%
Rent 2%/5%/10%
Property 1%
Brokerage 5%
Professional or technical services 10%
Shares and mutual funds None
Savings account interest None
NCDs listed on exchange/td> None

Calculate Term Insurance Premium and Save Tax

TDS Rate Chart for FY 2020-21

N/A

Section Type Of Payment Limit Resident Indian Non-Resident Indian
192 Salaries N/A Normal Slab Rate Normal Slab Rate
192A Premature withdrawal from EPF 50000 10 10
193 Interest on securities - 8% Savings (Taxable) Bonds, 2003 or 7.75% Savings (Taxable) Bonds, 2018 during the financial year 10000 7.5 N/A
193 Interest on securities - Interest on securities for money issued by or on behalf of any local authority/statutory corporation, listed debentures of a company(other than Demat form), any other interest on securities 5000 7.5 N/A
194 Dividends 5000 7.5 N/A
194A Interest (Banking co., co-operative society engaged in banking, post office) 40000 7.5 N/A
194A Interest (Any other person) 5000 7.5 N/A
194B Winning from lotteries 10000 30 30
194BB Winning from Horse race 10000 30 30
194C Contractor-Single transaction
-Individual/HUF
- HUF
30000 0.75
1.5
N/A
N/A
194C Contractor – Consolidated Payment During the F.Y.
- Individual/HUF
- Others
100000 0.75
1.5
N/A
N/A
194D Insurance commission
- Other than Company
- Company
15000 3.75
10
N/A
N/A
194DA Maturity of Life insurance policy 100000 3.75 N/A
194E Non-resident sportsmen or sports association N/A N/A 20
194EE NSS 2500 7.5 10
194F Repurchase units by MFs N/A 15 20
194G Commission-Lottery 15000 3.75 5
194H Commission/Brokerage 15000 3.75 N/A
194I Rent of
- Plant/Machinery /Equipment
- Land and Building/Furniture & Fixture
240000 1.5
7.5
N/A
N/A
194IA Transfer of certain immovable property other than agriculture land 50 lakh 0.75 N/A
194IB Rent by Individual/HUF 50000 per month 3.75 N/A
194IC Payment under Joint Development Agreements to Individual/HUF N/A 7.5 N/A
194J Professional Fees 30000 7.5 N/A
194J Technical Fees (w.e.f. 01.04.2020) 30000 1.5 N/A
194J Payment to call centre operator (w.e.f. 01.06.2017) 30000 1.5 N/A
194J Director’s fees N/A 7.5 N/A
194K Payment of any income in respect of
  • Units of a mutual fund as per section 10(23D); or
  • Units from the administrator; or
  • Units from a specified company
    (w.e.f. 01.04.2020)
5000 7.5 N/A
194LA Compensation on transfer of certain immovable property other than agriculture land (TDS exempted if covered under RFCTLARR Act w.e.f. 01.04.2017) 250000 7.5 N/A
194LB Income by way of interest from infrastructure debt fund N/A N/A 5
194LBA

Income from units of business trust

- interest received or receivable from a special purpose vehicle; or

- dividend referred to in sub-section (7) of section 115-O

N/A

7.5

7.5

5

10

194LBA

Distribution of rental income to unitholders

- Other than Company

- Company

N/A

7.5

7.5

30

40

194LBB

Income in respect of units of investment fund

- Other than Company

- Company

N/A

7.5

7.5

30

40

194LBC

Income in respect of investment in securitization fund



- Individual/HUF



- Company



- Other Person

N/A

18.75
22.5

22.5

30

40

30

194LC Income by way of interest by an Indian specified company to a non-resident/foreign company on foreign currency approved loan / long-term infrastructure bonds from outside India N/A N/A 5
194LC Income by way of interest by an Indian specified company on a rupee-denominated bond / any long-term bonds from outside India, which is listed only on a recognized stock exchange located in any International Financial Services Centre N/A N/A 4
194LD Interest on certain bonds from Govt. securities N/A N/A 5
194M Certain payments by Individual/HUF 50 lakh 3.75 N/A
194N Payment of certain amount in cash 1 Crore 2 2
194N

Payment of certain amount in cash (first proviso of section 194N)if-

- Amount is more than Rs.20 lakh but up to Rs. 1 crore

- Amount exceeds Rs. 1 crore (Applicable from 01.07.2020)

2

5

2

5

194-O Applicable for e-commerce operator for the sale of goods or provision of services facilitated by it through its digital or electronic facility or platform (Applicable from 01.10.2020) N/A 0.75 N/A
195 Income of Investment made by an NRI N/A N/A 20
195

Long-term capital gain

- Under Section - 115E/112(1)(c)(iii)/112A

- Any Other Gains

N/A

N/A

10

20

195 Short-term capital gain - 111A N/A N/A 15
195 Royalty N/A N/A 10
195 Fees for technical services N/A N/A 10
195 Interest income payable by Govt./Indian concern (other than section 194LB or 194LC) N/A N/A 20
195 Any Other Income - Other than Company - Company N/A

N/A

N/A

30

40

196A

Income in respect –

- of units of a Mutual Fund specified under clause (23D) of section 10; or

- from the specified company referred to in the Explanation to clause (35) of section 10

N/A N/A 20
196B Income from units to an offshore fund N/A N/A 10
196C Income from foreign currency bonds or GDR of an Indian company N/A N/A 10
196D Income of foreign Institutional Investors from securities (not being dividend or capital gain) N/A N/A 20
Save Tax Now

TDS refund

You can claim a TDS refund if excess tax is deducted on payments made to you by an individual or a company. If you notice that your employer has deducted more tax than payable, this can be corrected when you fill your income tax return. You need to provide your bank details when filing the return so that the Income Tax Department can refund the amount of extra tax paid.

Another important thing to remember is that your bank pays your benefits from a fixed deposit account with the applied TDS. If your total annual income puts you under the non-taxable income slab, you can apply for the refund when filing your tax returns. The amount will be credited to your bank account. If you are a senior citizen, you can submit form 15H to ensure that your bank does not deduct TDS on fixed deposit earnings. These earnings are exempt from tax for senior citizens.

How and when to file TDS returns?

Anybody who has deducted TDS must file a TDS return. While filing the TDS return, you need details of the TAN of the deductor, the total amount of TDS, the PAN of the deductee, etc.

Depending on the type and reason of the TDS, you can file TDS returns using one of the following forms:

  • TDS on salary: Form 24Q
  • TDS on rent: Form 26QC
  • TDS on the sale of property: Form 26QB
  • TDS on payments made to non-resident Indians excluding salaries: Form 27Q

TDS on sale on property and rent must be filed within 30 days from the end of the month in which the TDS was charged. TDS on salary and other payments is charged quarterly. The due date for each quarter is as follows:

  • Quarter 1: 31st July
  • Quarter 2: 31st October
  • Quarter 3: 31st January
  • Quarter 4: 31st May

TDS credits in Form 26AS

  • All information pertaining to TDS is available in Form 26AS. All PAN holders can access this form to get details of the TDS deducted by each deductee. Along with the TDS, Form 26AS also contains information on Advance Tax or Self-Assessment Tax.
  • You can download Form 26AS from the government’s income tax website.

The Ministry of Finance has recently extended the deadline for filing tax returns for individuals from July 31st, 2019 to August 31st, 2019.

TDS payment online

To make the TDS payment online, you must follow the below steps:

1. Login to NSDL tax payment portal

2. Select Challan no/ITNS 281

3. Select the deductee type as applicable, that is, company on non-company

4. Provide information regarding the assessment year and Tax Deduction and Collection Account Number (TAN) to which the payment relates

5. Select if the payment is made by the taxpayer for regular assessment

6. Enter the nature and mode of payment, and press the ‘Submit’ button

7. Make sure that the confirmation screen displays the taxpayer’s name correctly, which happens only if a valid TAN is provided

8. Confirm the data so that you are taken to the net-banking payment page

9. Select your preferred payment mode and complete the online payment process

10. Save the challan generated once the payment is successfully made

Now that you know what is tax deducted at source and what TDS means, you must make sure that TDS on any payment you have made or received in the previous financial year is in order. This way, you can prevent making losses that are easily avoided.

Tax liability in a case where TDS is already deducted from Income
When you file your income tax return (ITR), you may receive a refund or have to pay the tax due depending on your investments and the total income charged for the year. TDS is not deducted as per your total income in a year. Therefore there may be instances of lower or higher tax deducted at times. Hence, it is crucial to file an ITR.
SMS Alerts for Higher Transparency
In order to create a higher level of transparency, the income tax department sends an SMS to all taxpayers to inform them of the TDS linked to their PAN. The SMS is sent from VK-ITDEFL every quarter. You can compare the amount mentioned in the SMS with the one mentioned on the Form 26AS to check for any discrepancies.

FAQs

1. What is the due date for depositing the TDS to the government?

The TDS deducted in the present month must be reported to the government by the 7th of the next month. In case of rent, the TDS must be deposited within 30 days from the end of the month when the TDS was deducted.

2. How to deposit TDS?

In order to deposit TDS, the Challan ITNS-281 has to be filled. This challan can be found on the government’s income tax website.

Read Here for More Related Articles:

- A Consumer Education Initiative series by Kotak Life

Tags

Also read

  • What Is Advance Tax and How Is It Calculated?

    What Is Advance Tax and How Is It Calculated?

    Advance Tax is a tax, which you need to pay beforehand. If you have earnings apart from salary, then you are liable to pay advance tax. Know what is a...

    Read more
  • Have You Considered Term Insurance a Part of Your Tax Planning?

    Have You Considered Term Insurance a Part of Your Tax Planning?

    Have You Considered Term Insurance a Part of Your Tax Planning? | Tax Saving Scheme

    Read more

Related Plans

  • Kotak e-Term Plan - Online Term Insurance

    Kotak e-Term Plan - Online Term Insurance

    Kotak e-Term Plan is a pure term insurance plan that provides a holistic life protection at affordable prices. Find out the eligibility criteria, key ...

    Know more
  • Kotak Assured Savings Plan

    Kotak Assured Savings Plan

    Kotak Assured Savings Plan is an affordable protection plan that enables you to accumulate wealth and strengthens your finances for the future.

    Know more