{"id":5710,"date":"2022-01-07T13:39:28","date_gmt":"2022-01-07T13:39:28","guid":{"rendered":"http:\/\/43.204.200.242\/hr-glossary\/tax-deduction-at-source-tds\/"},"modified":"2024-06-06T11:43:50","modified_gmt":"2024-06-06T06:13:50","slug":"tds","status":"publish","type":"hr-glossary","link":"https:\/\/akriviahcm.com\/resources\/hr-glossary\/tds","title":{"rendered":"TDS – Tax Deduction at Source"},"content":{"rendered":"

TDS stands for Tax Deduction at Source. It is a type of tax applicable only on specified payments such as rent, salary, professional and technical fees, commission, interest, and more. Generally, the income recipient is liable for paying tax. With the introduction of TDS, the person paying the said amount is liable to deduct a specified percentage and then remit the balance amount to the recipient of the income.\u00a0 TTDS provisions are generally applicable for service sales and not for product sales.<\/p>\n

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Who has the responsibility for the deduction of Tax Deduction at Source, and how does it affect you?<\/h3>\n

The responsibility of deduction is upon the organization paying the sum. It is applicable for specified payments mentioned under section 194 of the Income Tax Act, 1961. However, the provisions are not applicable when an individual or HUF is exempted from having their books audited. In the case of salaried income, the employer company is responsible for deducting it. It must be deposited to the Government as per the due dates, and a TDS return must be filed.<\/p>\n<\/div>\n

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Which type of payment is subject to the TDS scheme?<\/h3>\n

\"List<\/p>\n

 <\/p>\n

Only specified payments are liable to TDS, such as:<\/h5>\n
    \n
  1. Salary paid to the residents as well as non-residents in India<\/li>\n
  2. Any payments made to foreign corporations or a non-resident individual<\/li>\n
  3. Technical or professional fees<\/li>\n
  4. Interest<\/li>\n
  5. Dividend<\/li>\n
  6. Brokerage or commission<\/li>\n
  7. Winnings from the lottery, puzzles, races, or card games<\/li>\n
  8. Royalty<\/li>\n<\/ol>\n

    However, if the recipient of income falls under the following category, The TDS provisions are not applicable
    \n1. Central or State Government
    \n2. Reserve Bank of India
    \n3. Mutual Trust
    \n4. Statutory corporate whose income is not liable to tax<\/p>\n<\/div>\n

    \n

    TDS calculation on salary, and how is it deducted?<\/h3>\n

    An individual earns salaried income, taxed as per the Income tax slabs<\/a><\/strong>. If the total taxable income of an employee is within Rs. 5,00,000, the tax liability is nil. However, if it exceeds Rs. 5,00,000, TDS deduction starts. Thus, its rate on salary may differ from 20% to 30% on a case-by-case basis.<\/p>\n

    The employee must specify other income sources under a declaration to the employer company. The employer is liable to deduct it, considering the other income declared by the employee. The amount liable to be deducted is divided into the number of months remaining for the financial year.<\/p>\n

    Accordingly, the monthly portion of TDS is deducted from the in-hand net pay per month. Employers can automate the TDS deduction using cloud-based payroll software. Such payroll processing systems are of immense help in calculating the TDS in salary. The employer needs to report the TDS <\/span>deduction\u00a0of the employee through\u00a0<\/span>Form 24Q,<\/strong><\/a>\u00a0in case of sale of immovable property,\u00a0<\/span>Form 26QB<\/span><\/strong><\/a>\u00a0is filed.<\/span><\/p>\n<\/div>\n

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    What are the TDS rates, and how to calculate the TDS amount?<\/h3>\n

    TDS = Amount * TDS Rate<\/strong><\/p>\n

    TDS rates are as follows:<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
    Section<\/strong><\/td>\nSources of Income\/Expenses<\/strong><\/td>\nThreshold Limit<\/strong><\/td>\nTDS Rate (%)<\/strong><\/td>\n<\/tr>\n
    192<\/td>\nPayment of Salary Income<\/td>\nAs per the Income-tax slab<\/td>\nAs per the slab rate<\/td>\n<\/tr>\n
    192 A<\/td>\nPremature withdrawal of Employee Provident Fund<\/td>\n\u20b9 50,000<\/td>\n10%,<\/p>\n

    20% (In case PAN is not provided)<\/td>\n<\/tr>\n

    193<\/td>\nInterest on Securities and Debentures<\/td>\n\u20b9 10000 for Securities and \u20b9 5000 for Debentures<\/td>\n10%<\/td>\n<\/tr>\n
    194 A<\/td>\nBesides \u2018interest on securities\u2019 like interest on bank deposits, loans, and advances, post office deposits, etc.<\/td>\nIf the payer is a bank or any banking institution, banking co-operative society, or the post office, the threshold is \u20b9 10,000. In any other case, it is \u20b9 5,000<\/td>\n10%<\/td>\n<\/tr>\n
    194 B<\/td>\nPrize money from lottery, crossword puzzle etc.<\/td>\n\u20b9 10,000<\/td>\n30%<\/td>\n<\/tr>\n
    194C<\/td>\nPayments to contractors and sub-contractors<\/td>\n\u20b9 30,000 for Single Payment and \u20b9 1,00,000 for Annual Payment<\/td>\n1%*<\/td>\n<\/tr>\n
    194 DA<\/td>\nMaturity of life insurance policy<\/td>\n\u20b9 1,00,000<\/td>\n5%<\/td>\n<\/tr>\n
    194 G<\/td>\nCommission on the sale of lottery tickets<\/td>\n\u20b9 15,000<\/td>\n5%<\/td>\n<\/tr>\n
    194 H<\/td>\nCommission or Brokerage<\/td>\n\u20b9 15,000<\/td>\n5%<\/td>\n<\/tr>\n
    194 I<\/td>\nRent for use of Land and building\/ furniture\/ fitting<\/td>\n\u20b9 2,40,000<\/td>\n10%<\/td>\n<\/tr>\n
    194 I<\/td>\nRent for use of Plant and machinery<\/td>\n\u20b9 2,40,000<\/td>\n2%<\/td>\n<\/tr>\n
    194 IA<\/td>\nFunds recieved from immovable property other than agricultural land<\/td>\n\u20b9 50,00,000<\/td>\n1%<\/td>\n<\/tr>\n
    194 J<\/td>\nRoyalty, professional or technical services<\/td>\n\u20b9 30,000<\/td>\n10%<\/td>\n<\/tr>\n
    194 K<\/td>\nDividend income from shares and mutual fund units<\/td>\n\u20b9 5,000<\/td>\n10%<\/td>\n<\/tr>\n
    194 LA<\/td>\nCompensation paid on acquisition of certain immovable property<\/td>\n\u20b9 2,50,000<\/td>\n10%<\/td>\n<\/tr>\n
    194 N<\/td>\nAnnual cash withdrawal from one or more accounts with a bank\/ co-operative society\/post office<\/td>\n\u20b9 1,00,00,000<\/td>\n2%<\/td>\n<\/tr>\n
    194-O<\/td>\nPayment made by an e-commerce operator to a seller on the sale of goods and services via its e-commerce portal<\/td>\n\u20b9 5,00,000<\/td>\n1%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

    Note<\/strong><\/h4>\n