TDS Rates in India – The Indian government uses TDS (Tax Deducted at Source) to collect income tax directly at the source. This method ensures tax deduction at the time of income generation, reducing tax evasion. TDS applies to various income types such as salary, interest, and brokerage, and the TDS rates vary based on the type of income and the taxpayer’s category.
In India, the Income Tax Act prescribes TDS rates for different categories of taxpayers:
These rates are updated each fiscal year. Let’s explore the TDS rates applicable for the financial year 2023-24 (assessment year 2024-25).
You may also want to know Form 10E
The following table illustrates TDS rates for various types of income sources for resident individuals:
| Income Source | Section | TDS Rate |
| Salary | Section 192 | Applicable slab rate |
| EPF Withdrawals | Section 192A | 10% |
| Interest on Securities | Section 193 | 10% |
| National Savings Scheme Deposits | Section 194EE | 10% |
| Lottery Winnings | Section 194B | 30% |
| Rent | Section 194-I | 10% for land/buildings; 2% for machinery |
| Insurance Policy Payments | Section 194DA | 5% |
| Mutual Fund Income | Section 194K | 10% |
| Immovable Property Sales | Section 194-IA | 1% |
| Horse Race Winnings | Section 194BB | 30% |
| Professional Fees | Section 194J | 2% for royalties and technical services; 10% for others |
| Cash Withdrawals (Above Rs. 1 crore) | Section 194N | 5% |
For non-residents, TDS rates differ based on the income source:
| Income Source | Section | TDS Rate |
| Mutual Fund Redemption | Section 194F | 20% |
| Interest on Debt Instruments | Section 195 | 10-20% |
| Capital Gains | Section 196B | 10% |
| Foreign Sports Income | Section 194E | 20% |
| Infrastructure Debt Fund | Section 194LB | 5% |
Domestic companies are subject to TDS on different types of earnings. Here are some common income sources and applicable rates:
| Income Source | Section | TDS Rate |
| Insurance Commission | Section 194D | 10% |
| Brokerage | Section 194H | 5% |
| Dividends | Section 194 | 10% |
| Trust Income | Section 194LBA | 10% |
| Interest on Securities | Section 193 | 10% |
The table below details the TDS rates applicable for companies other than domestic organizations:
| Income Source | Section | TDS Rate |
| Foreign Sports Income | Section 194E | 20% |
| Business Trust Income | Section 194LBA | 5% |
| Infrastructure Debt Fund Interest | Section 194LB | 5% |
| Investment in Rupee-Denominated Bonds | Section 194LD | 5% |
You may also want to know Section 80CCG
TDS is usually deducted by employers, banks, or other payers and deposited with the government. The deductor is responsible for filing TDS returns quarterly. Non-compliance or late deposit of TDS can result in penalties.
TDS plays a crucial role in tax collection, ensuring tax compliance and reducing evasion risks. By deducting tax at the source, the government maintains a steady revenue stream. However, individuals and organizations need to stay updated on the latest TDS rates and comply with timely deductions and filings.
TDS, or Tax Deducted at Source, is a tax collection mechanism where tax is deducted directly at the time of income generation. It ensures a regular inflow of tax and minimizes evasion.
You can check your TDS deduction through Form 26AS on the Income Tax Department’s official website or via your e-filing account.
If TDS is not deducted or deposited in time, the deductor could face penalties, and the recipient might need to pay the due taxes independently.
No, TDS does not apply to all income types but is levied on specific incomes such as salary, interest, rent, and professional fees.
If excess TDS is deducted, you can claim a refund by filing an income tax return, and the excess amount will be credited to your bank account after assessment.
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