TDS (Tax Deducted at Source) means collection of taxes by the Indian government at the source of income. TDS is applicable on various income like salary, rent, dividend, asset sales etc. TDS (Tax Deducted at Source) is an important part of Income Tax compliance. TDS has to be deducted at the rates prescribed by the tax department. Below you’ll find the TDS rate chart, which summarises all the TDS provisions of the Income Tax Act.
Budget 2024 introduces reductions in the TDS rates for specific payments to foster business operations and improve compliance among taxpayers. These changes are set to take effect on either October 1, 2024 or April 1, 2025.
Budget 2024: Rationalization of TDS Rates
| Section | Current TDS Rate | New TDS Rates | Effective Date |
|---|---|---|---|
| Section 194H – Payment of commission or brokerage | 5% | 2% | October 1, 2024 |
| Section 194-IB – Payment of rent by certain individuals or HUF | 5% | 2% | October 1, 2024 |
| Section 194M – Payment of certain sums by certain individuals or Hindu undivided family | 5% | 2% | October 1, 2024 |
| Section 194-O – Payment of certain sums by e-commerce operator to e-commerce participant | 1% | 0.1% | October 1, 2024 |
| Section 194F – Payments on account of repurchase of units by Mutual Fund or Unit Trust of India | Proposed to be omitted | — | October 1, 2024 |
TDS Rate Chart for FY 2024-2025
The TDS rates as applicable in the Financial Year 202-2024 (Assessment Year 2024-2025) are highlighted in the TDS Rate Chart table below –
| Section | Nature of payment | Threshold limit (INR) | Rate of TDS |
| 192 | Salary | Taxable income liable to income tax | Any of the following rate as opted by the employee – · Normal slab rate; or · New tax regime slab rate. |
| 192A | Premature withdrawal from Employees’ Provident Fund | INR 50,000 | 10% |
| 193 | Interest on securities | INR 2,500 | 10% |
| 194 | Dividend | INR 5,000 | 10% |
| 194A | Interest (other than interest on securities) | Bank deposit/ banking co-operative society deposits/ post office deposit – · In case of senior citizens – INR 50,000; · Any other case – INR 40,000. Deposits (other than above) – INR 5,000 | 10% |
| 194B | Winning from lottery/ crossword puzzle | 10,000 | 30% |
| 194BA | Winning from online games | – | 30% |
| 194BB | Winning a horse race | 10,000 (notably, a threshold of INR 10,000 will apply to aggregate winning during the Financial Year) | 30% |
| 194C | Payments to contractors | Single transaction – INR 30,000; and Aggregate of transactions – INR 1,00,000 | In case of individuals/ HUF – 1% Any other case – 2% |
| 194D | Insurance commission | INR 15,000 | In the case of individuals – 5% In case of company – 10% |
| 194DA | Payment relating to life insurance policy | INR 1,00,000 | 5% |
| 194E | Payment to non-resident sportsmen/ sports association | – | 20% |
| 194EE | Payments relating to deposits under NSS (National Savings Scheme) | INR 2,500 | 10% |
| 194F | Payment towards repurchase of the unit by Unit Trust of India/ Mutual Fund | – | 20% |
| 194G | Commission/ prize, etc. on sale of the lottery tickets | INR 15,000 | 5% |
| 194H | Commission/ Brokerage | INR 15,000 | 5% |
| 194-I | Rent | INR 2,40,000 | In the case of plant and machinery – 2% In the case of land/ building/ factory/ furniture/ fittings – 10% |
| 194-IA | Payment towards transfer of certain immovable property (other than agricultural land) | INR 50 Lakhs | 1% |
| 194-IB | Payment of rent by HUF/ individual (not liable to tax audit) | INR 50,000 per month | 5% |
| 194-IC | Payment under JDA (Joint Development Agreement) | NIL | 10% |
| 194J | FTS (Fees for Professional or Technical Services) | INR 30,000 | In the case of fees for technical services/ specified royalties – 2% In any other case – 10% |
| 194K | Income relating to specified units | INR 5,000 | 10% |
| 194LA | Payment towards compensation for acquisition of certain specified immovable property [land (other than agricultural land)/ building or part thereof] | INR 2,50,000 | 10% |
| 194LB | Income relating to interest from infrastructure debt fund | NIL | 5% |
| 194LBA | Income from the units of business trust | NIL | 10% |
| 194LBB | Income from units of investment funds | NIL | 10% |
| 194LBC | Income relating to investment in securitization trust | NIL | In case the payee is individual/ HUF – 25% In any other case – 30% |
| 194LC | Income relating to interest from Indian Company/ business trust | NIL | 5% |
| 194LD | Income relating to interest on certain specified bonds/ government securities | NIL | 5% |
| 194M | Payment of certain sums (i.e. commission/ brokerage/ fees for professional | INR 50 Lakhs | 5% |
| 194N | Payment of certain amounts in cash, i.e. cash withdrawals | INR 20 Lakhs in case the recipient has not furnished income tax return for three previous years (immediately preceding the previous year in which cash is withdrawn) INR 1 crore in any other case | In case amount/ aggregate amounts exceed INR 20 Lakhs – 2% In case amount/ aggregate amounts exceed INR 1 crore – 5% |
| 194-O | Payment of sum by an e-commerce operator to participant | INR 5 Lakhs | 1% |
| 194P | Tax deduction in case of senior citizen of 75 or more years age | Taxable income which is liable to tax | As per rates in force |
| 194Q | Payment towards purchase of goods | INR 50 Lakhs | 0.10% |
| 194R | Benefit/ perquisite in respect of business/ profession | INR 20,000 | 10% |
| 194S | Payment relating to transfer of virtual digital asset | Payment done by specified person – INR 50,000 Payment done by any other person – INR 10,000 | 1% |
| 195 | Payment of any other amount/ sum to a non-resident | ||
| Income relating to investment done by a non-resident Indian Citizen | NIL | 20% | |
| Income relating to LTCG referred in section 115E of the Income Tax Act with regard to a non-resident Indian Citizen | NIL | 10% | |
| Income relating to LTCG referred in section 112(1)(iii) of the Income Tax Act | NIL | 10% | |
| Income relating to LTCG referred in section 112A of the Income Tax Act | NIL | 10% | |
| Income relating to STCG referred in section 111A of the Income Tax Act | NIL | 15% | |
| Any other income relating to LTCG | NIL | 20% | |
| Income relating to interest payable by the Government/ Indian concerns on money borrowed/ debt incurred in foreign currency | NIL | 20% | |
| Any other income | NIL | 30% | |
| 206AA | TDS deduction in case Permanent Account Number (PAN) of deductee is not furnished to deductor | NIL | Higher of the following – 1. At rates specified in relevant section; 2. At rate/ rates in force; or 3. At 20%. |
| 206AB | TDS deduction in case of non-filers of income tax return | NIL | Higher of the following – 1. At twice the rates specified in relevant section; 2. At twice the rate/ rates in force; or 3. At 5%. |
This TDS rate chart details the sections, nature of payment, threshold limit, and the corresponding TDS rates.
Important amendments introduced vide the Finance Act, 2023 –
Section 193 – Interest on Securities –
With effect from 1st April 2023, provisions of section 193 of the Income Tax Act will be applicable to payments relating to interest on listed debentures to any resident. Notably, earlier the said payment was exempted from TDS.
Section 194B – Winning from lottery/ crossword puzzle –
- Threshold limit of INR 10,000 will be applicable aggregate amount from winning from lottery/ crossword puzzle/ card game or any other game/ gambling/ betting.
- With effect from 1st April 2023, provisions of section 194B of the Income Tax Act will not apply to winning from any online game.
Section 194BA – Winning from online games (newly inserted provisions effective from 1st April 2023) –
Any person responsible for paying, income by way of winning from any online games, to any person is required to deduct TDS u/s 194BA.
TDS is deductible on net winning in the user account at the end of the Financial Year. However, in case of withdrawal during the Financial Year from the user account, TDS will be deductible at the time of withdrawal.
Section 194 N – Payments of certain amounts in cash (i.e. cash withdrawals) –
The threshold limit, in case if the recipient is co-operative society, will be INR 3 Crores instead of INR 1 Crore.
FAQs
What is TDS?
TDS stands for Tax Deducted at Source. It is a method of collecting income tax in India, where the tax is deducted at the source of income by the payer before making the payment to the payee.
Why is TDS deducted?
TDS is deducted to ensure that the income tax is collected in advance, reducing the chances of tax evasion. It serves as a source of revenue for the government and helps in promoting compliance among taxpayers.