TDS Rates

  • Author :
  • TATA AIG Team
  • Published on :
  • 04/01/2024

The Indian Taxation System is intricate and provides rules and regulations for a taxpayer to comply with. Just as there are different tax rates for different transactions, there are different tax payment modes, periods, and due dates. While some of the tax is paid to the government out of income earned, there is some income on which tax is charged before being handed to the receiver of income. Such kinds of taxes are commonly known as TDS.

TDS in itself is vast as it lays out different rates on different kinds of business or economic activities, their exemption limit and time of payment, etc. Being part of this ecosystem, it is essential to have a detailed understanding of the tax norms and varied chargeable rates. This article is a detailed guide to helping you understand more about them.

What is TDS in Income Tax?

TDS is an acronym for Tax Deducted at Source. This is an indirect way of collecting income taxes at the source by the Government of India and is taken care of by the Central Board of Direct Taxes(CBDT).

TDS is deducted from various types of income, including income earned from commissions, incentives, dividend payments, money received from renting or selling properties, and interest earned from fixed deposits.

How much TDS will be deducted from your income depends on your income source. It could be in the range of 1% to 30%. The responsibility of depositing the TDS at appropriate rates and following the TDS threshold limit is upon the individual or corporation paying the income to you.

Example of TDS Compliance

Ram Enterprises pays office rent of ₹1.00,000 per month to the property owner. As per the tax laws, TDS will be deducted at 10%. Accordingly, Ram Enterprises should deduct ₹10,000 (10% of ₹ 1,00,000) as the TDS.

The remaining ₹90,000 will be paid to the property owner. The property owner receives ₹90,000 post-TDS deduction. He should show his total income as ₹1,00,000 and can claim ₹10,000 deducted by Ram Enterprises as a credit against the final tax due.

When should TDS be deducted and Why?

Any person who is making specific payments that are mentioned in the Income Tax Act is required to deduct TDS at the time of making that specific payment.

If an individual or Hindu Undivided Family (HUF) is not required to get their books of accounts audited, they are not mandated to deduct TDS. However, there is something more to it; if an individual or HUF is paying more than ₹50,000 as rent, they must deduct a TDS at 5%. Moreover, they do not need a Tax Deduction Account Number(TAN) to deduct this 5% TDS.

When it comes to employers, they deduct your TDS as per the income tax slab under which you are falling. Financial institutions like banks and NBFCs deduct TDS at 10%. However, if they do not have your Permanent Account Number(PAN), they will deduct TDS of 20% on your deposits.

The tax law gives the rates of TDS nature of payment. If you show your investment proof where you can take deductions or if your income is outside the tax-paying bracket, the TDS will not be deducted from your income.

For banks to not deduct tax from the interest you earn on your deposits, you must submit forms like 15H and 15G. An important thing to note here is that your total income from all sources does not qualify for paying income taxes.

TDS Rates for Different Transactions

Following is an account of how much TDS percentage is deducted from income as a TDS on various payments made in India:

The above table shows the TDS chart for FY 2023-24. The rates may change in the future with the introduction of amendments in provisions of the Income Tax Act 1961.

How to File a TDS Return?

Filing Tax Deducted at source is compulsory for all entities that deduct TDS. These entities must file TDS returns quarterly in addition to the details that need to be submitted. These details include things like the amount of TDS deducted, TAN, PAN of deductee, and type of payment.

Moreover, different types of forms are prescribed for filing TDS depending upon the purpose of payment.

Due Dates for TDS Payment

Below tabulated are the details of the forms that have to be filled and submitted along with their due dates:

" " " "
Form No.  Transactions Reported in the Return  Due Date 
Form 24Q TDS on salary Q1 – 31st July  Q2 – 31st October  Q3 – 31st January  Q4 – 31st May
Form 27Q TDS on all payments made to non-resident India excluded of salary. Q1 – 31st July  Q2 – 31st October  Q3 – 31st January  Q4 – 31st May
Form 27QB TDS on sale of property  30 days from the end of the month in which TDS is deducted
Form 26QC  TDS on rent  30 days from the end of the month in which TDS is deducted

TDS Credits in Form 26AS

It is crucial to know how your PAN is linked to TDS. These deductions are linked to the PAN of both the deductor as well as deductee. Form 26AS is the document that records all the tax deducted from your income and is available to all PAN holders.

Form 26AS includes all taxes you paid by yourself, like self-assessment tax or advance tax. Thus, it becomes vital for you to provide your PAN details accurately so that the TDS deducted from your income is properly recorded.

How to Upload a TDS Statement?

Following are the steps that you will have to follow to upload TDS statements on the website of the income tax department.

Go to the Income Tax website and log in using your TAN.

Click on “e-file,” “Income Tax Forms,” and then select “File Income Tax Forms” on the home page.

Select the appropriate form and fill it.

Confirm it with a Digital Signature Certificate or an Electronic Verification Code(EVC).

Conclusion

In a nutshell, it is wise to understand the concept of TDS, its rates, and filing requirements in India. It is important for everyone who is involved in dealing, including the deduction of taxes.

There are various TDS slabs for FY 2023-24, according to which TDS is deducted for different types of transactions currently. If TDS is deducted from your income, then you need to understand it.

Also, you can avail of tax benefits under section 80D for purchasing health insurance as it helps you get tax savings and health benefits. It is also important to stay updated with all the changes related to tax regulations for effective tax planning.

Tax Benefits with Tata AIG Under Section 80D

While considering the Income Tax Act, Section 80D mainly focuses on the health insurance premium deductions for medical insurance taken by the assessee. ₹50,000 per year for senior citizens and ₹25,000 for other individuals, or the amount spent, whichever is lower, can be deducted from gross total income before tax calculation.

With tax benefits on a medical insurance policy, one can safeguard one’s health while availing tax benefits. At Tata AIG, we provide medical insurance online at a very affordable cost with add-on facilities as per your requirements.

Remember to keep the documents for tax benefits when you buy a health insurance policy in India.

Disclaimer / TnC

Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.

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