APPLICABLE TDS SECTIONS AND RATES

TDS stands for Tax Deducted at Source. The Income Tax act stipulates for certain payments like Salary, Rent, Purchase of Goods, Commission, dividends, etc.., by requiring the payer to deduct income tax due on such income while crediting/paying to the payee and deposit the same to the government on payee’s behalf. Non deduction, late deduction and late deposit of TDS may lead you to face following consequences: Interest on late deduction /deposit of Tax at source. Disallowance of Expenses, on which tax has not been deducted /deposited u/s 40 (a) (ia) From the date when TDS was deductible till date of actual deduction, rate of interest is 1% p.m. An illustrative list of payments for which TDS is to be deducted and what is Annual threshold monetary limit for not deducting TDS and the rate at which TDS to be deducted

SL. NO	SECTIONS	NATURE OF TRANSACTIONS	THRESHOLD LIMIT	RATE
1.	192	Payment of Salary	Basic exemption limit	Normal slab rates
2.	194	Payment of Dividend	₹ 5000	10%
3.	194A	Interest from other than interest from Securities (banks, post office.)	Banks to Senior Citizen: ₹ 50000 Banks to Others: ₹ 40000 Others: ₹ 5000	10%
4.	194B	Income from lottery winnings, card games, crossword puzzles, and other games of any type.	₹ 10000	30%
5.	194C	Payment to Contractors/Sub contractor.	Single transaction: ₹ 30000 Annual Limit: ₹ 100000	Individuals/HUF-1% Others-2%
6.	194D	Insurance Commission	₹ 15000	Domestic Companies-10% Other than Companies-5%
7.	194H	Commission/ Brokerage	₹ 15000	5%
8.	194I	Rent	₹ 240000	P&M-2% Others-10%
9.	194IA	Payment in consideration of transfer of certain immovable property other than agricultural land.	₹ 50 lakh	1%
10.	194IB	Rent payment by Individual or HUF not covered by 194I	₹ 50000 per month	5%
11.	194J	Any sum paid by way of Fee for professional service Remuneration/fee/commission to a director For not carrying out any activity concerning any business For not sharing any know how, patent, copyright etc. Fee for technical services	₹30000	10% 10% 10% 10% 2%
12.	194N	Cash withdrawal exceeding  a certain limit Cash withdrawal in case of person not filing ITR for last 3 years and the original ITR filing due date expired	₹1CR ₹20Lakh-1Cr Above 1Cr	2% 2% 5%
13.	194O	Payment for the sale of goods or provision of service by the e-commerce operator through its digital or electronical facility or platform	₹ 5Lakh	1%
14.	194Q	Payment for purchase of goods	₹ 50 Lakh	0.1%
15.	194R	Benefits or perquisites provided in respect of businesses or professions.	₹ 20,000	10%
16.	194S	Transfer of Virtual Digital Assets	1. Deductor is Individual/HUF having Business Turnover ≤ 1 crore AND Professional ≤ 50 lakhs: ₹ 10000 2. Others: ₹ 50000	1%

Except 194IA, 194IB and 194S, all other TDS provisions are not applicable to Individual/HUF having Business Turnover ≤ 1 crore AND Professional ≤ 50 lakhs. This Deductor category includes residents having no business or professional income such as Salaried employees.

For them a separate section 194M applies, where they have to deduct TDS at 5% on payment to contractors and professionals if their payment in a year exceeds ₹ 50 lakhs.

Above mentioned TDS sections are for payments made to Residents. Payment to Non-Residents is covered under Section 195 and Tax to be deducted at applicable Income Tax Limit without any threshold limit.