Tax Deducted At Source is the tax deducted by deductor before paying any amount to deductee. It is a kind of Advance Tax where the amount of tax is paid periodically as mentioned in the Act.
TDS involves two parties: one who deducts tax called Deductor. A person or company who pays amount to other will have to deduct tax if it exceeds the mentioned amount. Other person or company who accept the deducted amount is Deductee.
The liability of payment of tax lies with Deductor. There are several types of payment in which TDS is to be deducted. This must be paid irrespective of mode of payment(cash, cheque or bank transfer). PAN no. of deductor is to be furnished in its return. TDS return is to be filled quarterly in a year.
In the Interim Budget of 2019, there were several changes in Section 194A and 194I. The TDS limit under section 194A is hiked from Rs.10,000 to Rs.40,000 for Post office saving account and Bank deposits.
For Section 194I ,i.e., Rental Income, no tax is required to be deducted on Rent payments made for use of any land or buildings or furniture or fittings for income not exceeding Rs. 2,40,000.
TYPES OF TAX DEDUCTED AT PAYMENT:-
|Sections of TDS||Threshold limit||Rate in %|
|192(Salary)||As per applicable slab||As per applicable slab|
|193(Interest on securities)||Rs.5000 in respect of debenture payment||10% of security investment in respect of debenture.|
|194( Dividend income)||Rs.2500||10% of proceeds of deemed dividend|
|194A(Interest other than interest on securities)||Rs.5000|
Rs.10000 in case where payer is :
(a)Banking company or any bank or a banking institution
(b)Co-operative society engaged in the business of banking
(c)Post office (on deposit under scheme framed and notified by Central Government)
Rs.50000 for senior citizen for:
a) Deposit with Banks
b) Deposit with Post Offices
c) Fixed Deposits Schemes
d) Recurring Deposit Schemes.
|10% where PAN is furnished
20% where no PAN is furnished
|194B( winning from lottery or any other game)||Rs.10000||30%|
|194BB(payment for arranging horse race or betting)||Rs.10000||30%|
|194C(payment to contractor or sub-contractor)||Rs.30000 per contractor.|
Rs.100000 per annum
|194D(payment as insurance commission)||Rs.15000||10% of earning as insurance commission.|
|194EE(Payment in respect of deposit under National Saving Scheme)||Rs.2500||20% of expense in NSS deposits|
|194F(payment for repurchase of mutual funds or UTI units)||Nil||20% of investment in MF or UTI units|
|194G(commission from lottery ticket selling)||Rs.1500||10% of commission in lottery ticket selling|
|194H(payment of commission or brokerage)||Rs.15000||10% of brokerage earning|
|194I(payment of rent)||Nil||2% for rent to plant and machinery
10% for rent to land and building
|194J(payment for professional services)||Rs.30000 per annum||10%|
|194L(payment of compensation for acquisition of capital asset)||Rs.100000||10% of transfer money paid for purchase of Immovable property|