What is TDS?
Tax Deducted at Source (TDS) is a means of collecting income tax in India, governed by the Income Tax Act, 1961. Under this mechanism, a person (deductor) who is liable to make payment of specified nature to any other person (deductee) shall deduct tax at source and remit the same into the account of the Central Government.
How TDS Works
Payer/Deductor
Makes payment
Deducts TDS
% of amount
Government
Receives TDS
TDS Rates Chart
TDS rates vary based on the nature of payment and status of the recipient (Resident/Non-Resident). Below are common TDS rates for residents:
| Section | Nature of Payment | Threshold | Rate |
|---|---|---|---|
| 192 | Salary | As per slab | Slab rate |
| 194J | Professional/Technical Services | ₹30,000/year | 10% |
| 194C | Contractors/Sub-contractors | Single: ₹30,000 Annual: ₹1,00,000 |
1% (Individual/HUF) 2% (Others) |
| 194H | Commission/Brokerage | ₹15,000/year | 5% |
| 194I | Rent (Land/Building) | ₹2,40,000/year | 10% |
| 194I | Rent (Plant/Machinery) | ₹2,40,000/year | 2% |
| 194A | Interest (Bank/Post Office) | ₹40,000 (₹50,000 Sr. Citizen) | 10% |
| 194Q | Purchase of Goods | ₹50,00,000/year | 0.1% |
| 206C(1H) | Sale of Goods (TCS) | ₹50,00,000/year | 0.1% |
Note on Higher TDS (Section 206AB)
If deductee has not filed ITR for last 2 years and TDS deducted is ₹50,000+, TDS must be deducted at higher of: (a) Twice the specified rate, or (b) 5%
When to Deduct TDS?
TDS must be deducted at the time of credit to the account of the payee OR at the time of actual payment, whichever is earlier.
Credit to Account
When amount is credited to:
- • Suspense account
- • Any other account (even if called by different name)
- • Provisional accounting entries
TDS deductible immediately!
Actual Payment
When payment is made by:
- • Cash
- • Cheque/draft
- • Bank transfer
- • Any other mode
TDS deductible at payment!
TDS Payment Due Dates
Monthly TDS Deposit Due Dates
| Month | Government Due Date | Other Deductors |
|---|---|---|
| April - February | 7th of next month | 7th of next month |
| March | April 30 | April 30 |
Consequences of Late Payment
| Delay Period | Interest Rate |
|---|---|
| TDS not deducted | 1% per month (from due date to actual deduction) |
| TDS deducted but not paid | 1.5% per month (from deduction to payment) |
TDS Return Filing
TDS returns must be filed quarterly (for most deductors) reporting all deductions made during the quarter.
| Form | Nature of Payment | Frequency | Due Date |
|---|---|---|---|
| 24Q | Salary | Quarterly | Q1: July 31 Q2: October 31 Q3: January 31 Q4: May 31 |
| 26Q | Non-salary payments to Residents | Quarterly | Same as above |
| 27Q | Payments to Non-Residents | Quarterly | Same as above |
| 26QB | TDS on Property (Buyer) | Within 30 days of month end | Online form |
Late Filing Fee (Section 234E)
Fee of ₹200 per day (₹100 under CGST + ₹100 under SGST) shall be levied for each day of default, subject to maximum of TDS amount.