Updated TDS Rate Chart for FY 2023-24 in India

Recently the government announced several changes in TDS rates applicable from May 14, 2020. TDS rates for non-salaried payments have now been reduced by 25%. Changes have been announced in TDS rates for other income and payment items as well.

Taxes deducted at source (TDS) and taxes collected at source (TCS) are meaningful terms for individuals and entities while filing income tax returns. Correct information of taxes paid and collected at the source helps compute the payable tax amount and refund amount.

Taxes need to be collected or paid at due schedules and recorded correctly for proper filing of IT returns.

The taxpayer receives income after deduction of tax at source by the payer of income like the employer, bank, or any other source. TDS is sometimes applicable for payments made by the taxpayer for certain purposes and is deductible at source by the taxpayer.

What is TDS Rate Chart?

A TDS chart FY is a structured reference tool outlining the TDS percentage in India for various payment categories. It helps taxpayers, employers, and deductors determine the correct TDS rate for contractors, rent, salaries, and more. Updated annually by the Income Tax Department, the latest TDS chart specifies thresholds, nature of payments, and corresponding rates, ensuring compliance with new TDS rules and tax slab rates. For instance:

• TDS on interest on securities and interest other than securities have specific rates and thresholds.
• Under Section 194LBA, special provisions exist for income distribution by business trusts. 

IT sections for TDS and TCS

The TDS and TCS rates, deduction and collection information, are prescribed under sections and subsections 192, 193, and 194 of the IT Act:

• Items eligible for TDS under section 192 A

U/s 192 if a taxpayer withdraws money from PF account then TDS is deductible on the taxable part of the accumulated PF amount.

• Items eligible for TDS under section 193

U/s 193 TDS is applicable for interest received on securities.

• Items eligible for TDS under section 194 K

U/s 194 and 194K TDS is deductible for dividend income received from mutual fund investments and investments in company shares.

• Items eligible for TDS under section 194 A

Under the section, interest received from other than securities investment is tax deductible at source. For example, interest received on FDs.

• Items eligible for TDS under section 194 B/194 BB

Winnings from lotteries, games, crosswords, horse races (u/s 194 BB), quiz competitions etc. are tax deductible at source u/s 194 B.

• Items eligible for TDS under section 194 D

Under the section income received as insurance, the commission is tax deductible at source.

• Items eligible for TDS under section 194 DA

Under section 194, DA income received from life insurance policies not exempt u/s 10 D is eligible for TDS.

• Items eligible for TDS under section 194 H

Income received as commission, brokerage which is other than insurance commission is tax-deductible at source u/s 194 H.

• Items eligible for TDS under section 194 M

Section 194 M prescribes TDS deduction for income received as professional fee or income received above Rs 50 lakh as brokerage or commission.

• Items eligible for TDS under section 194 N

Cash withdrawal above applicable limits of Rs 20 lakh or 100 lakhs (as according to the case) is eligible for TDS u/s 194 N.

• Items eligible for TDS under section 194 J

Payments made for a professional fee are tax-deductible at source u/s 194 J.

• Items eligible for TDS under section 194 EE

Payments made for deposits under NSS scheme are eligible for TDS u/s 194 EE.

• Items eligible for TDS under section 194-1(a)

Payment made towards land or property purchase, rent for plant and machinery are tax deductible at source under this section.

• Items eligible for TDS under section 194-1(b)

Rent paid above Rs 50,000 per month by individuals or HUF is tax-deductible at source under this section.

New TDS rates chart in India

For FY 2019-20 and AY 2020-21, the government has announced several changes in TDS rates. New TDS rates for FY 2019-20 are as given in the table:

TDS rates on an Immovable Property

• On Purchase of an Immovable Property
  • In case of purchasing any property, which includes the exchange of money between the two pirates i.e. the buyer and the seller/owner, TDS rates applicable are 1%
  • Agricultural lands do not fall under this jurisdiction of TDS
  • The receiver/buyer should make the transaction via cash, cheque, draft or any other agreeable method.
• On Transfer of an Immovable Property
  • In cases where a residential property is transferred, the TDS charges applicable are 1%
  • Agricultural lands do not fall under this jurisdiction of TDS
  • The buyer deducts the applicable tax amount prior to his/her payment to the transferor
  • The transaction should be held via cash, cheque, draft or any other agreeable method.
• On Rent of an Immovable Property
  • TDS on rent FY 23-24 is applicable where the annual rent amount exceeds Rs. 1,80,000 any single financial year at the rate of 10%
  • The rent would consist of lease rental, sublease or any other valid document that allows the usage of building, furnishing. furniture, fittings and similar items
  • The property owner is to responsible of providing duly signed receipts of the rents and any other occurring expenses including the TDS deducted
  • The renter needs to submit the Form 16 TDS certificate at the end of each financial year for a record of all the TDS paid to the tax authorities for the given financial year
  • The transaction must be held via cash, cheque or draft by the one renting the property.

TDS Deduction Exemptions

There are few cases where TDS is exempted, such as payments directed towards RBI or any reimbursement to the central government. Here’s a list of all the case scenarios where TDS is exempted:

• Income Tax Refund
• investments in co-operative companies like LIC and UTI etc.
• Interests accounted from NRE accounts
• Direct Tax Interest Payments
• Interests accounted from IVP, NSC or KVP
• Banking Companies
• Financial Corporations acting under/with any financial bill of any state or Union Government.
• Institutions notified as TDS free organizations.

TDS comes with the simple objectives in which a taxpayer pays their taxes in installments so that they are not burdened with it all at once. For example, a salaried person needs to pay the tax every month as they earn, to collect taxes at the time of payments of income which applies on contractors, professionals etc. another more important objective is to maintain a balance in the taxes, TDS is meant to be deducted prior to a payment, there are other taxes that needs to be fulfilled after the payments. This simply balances the amounts and helps the government maintain its works smoothly all through the year. Therefore, TDS plays a vital source for the Income Tax department and is a regulatory device applied on the above stated transactions.

Key Points to Remember on TDS Deduction

• Deduction Process: The payer deducts TDS at the time of payment and remits it to the government. 

• Applicable Payments: TDS applies to interest on securities, salaries, professional fees for FY (current year), rent TDS rate, and commissions, ensuring all qualifying payments meet tax compliance. 

• TDS Rates: These rates vary based on the nature of payments. 
  • TDS rate on salary aligns with the new tax regime slab rate. 
  • 194J TDS rate FY 23-24 applies to professional and technical fees.
  • TDS rate on interest on unsecured loans is categorised separately. 

• Higher Rates without PAN: If PAN is not provided, deductions occur at a higher rate. 

• Thresholds: Payments below a specific threshold, such as Rs. 30,000 for professional fees, are exempt. For example, if Rs. 40,000 is paid in two installments of Rs. 20,000 each, TDS on professional fees for FY current year applies only to the total amount in the second installment. 

• TDS Calculation: GST components are excluded while calculating TDS. 

• TDS Certificate: Deductors must issue certificates detailing the deduction under specific sections like TDS rate on commission. 

• TDS Deposit and Return: The deducted amount must be deposited by the 7th of the next month, followed by filing returns. 

By adhering to these guidelines, taxpayers and businesses can navigate the complexities of the new tax regime slab and ensure proper compliance with TDS rules in India.

What are the TDS rates on an individual’s salary?

this falls under section 192, no tax will be deducted from the individual’s salary if it does not exceed the given minimum tax slab for the same financial year. However, if it does exceed it will be deducted on the basis of the average rate of income tax of the one paying the tax in the financial year and the rates will be 20% if the taxpayer does not possess PAN card.

Union Budget 2024: New TDS Provisions

The Union Budget 2024 introduced a significant update under Section 194T, impacting payments made by firms to their partners. From April 2025, new TDS rules will mandate a deduction of 10% on amounts such as salary, commission, bonus, or interest exceeding Rs. 20,000 annually. This provision will apply when the payment is credited to the partner’s account or when paid, whichever comes first. Partners should carefully manage withdrawals to mitigate potential impacts on their cash flow and liabilities. 

Conclusion 

The updated rate chart reflects key changes in tax compliance, covering diverse payments like salaries, commissions, and interest. Understanding these rates is essential for accurate tax deductions and avoiding penalties. Platforms like Lendingkart can help businesses manage cash flow effectively while staying aligned with updated tax regulations.

TDS Rates Chart in India for FY 2019-20 & AY 2020-21 FAQs: