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TDS or Tax Deducted at Source is a critical tool for the purpose of Income Tax collection. By means of it, the government collects tax from a person’s income at the time it is generated. The primary objective of TDS is to reduce incidences of tax evasion by ensuring it’s deducted at source of income generation rather than at a future date. 

Tax Deducted at Source applies to an array of income kinds, like salary, interest accrued on term deposits, interest earned on securities, etc. The TDS rates thus levied also vary across income varieties and the person taxed. 

What is the TDS Rates in India?

In India, TDS applies to four types of persons – 

  • Resident individuals
  • Non-resident individuals
  • Domestic companies
  • Organisations other than domestic companies

Resident of India 

The following table displays the TDS rate chart for Resident Individuals. 

Particulars Section Applicable TDS rate from 14th May 2020 – 31st March 2021 Effective TDS rate till 13th May 2020
Salary Section 192 Relevant slab rate Relevant slab rate
Withdrawal from Employee Provident Fund  Section 192A 10% 10%
Yields from repurchasing of any unit by Unit Trust of India or Mutual Fund Section 194F 15% 20%
Brokerage commission Section 194H 3.75% 5%
Interest earned from securities –

  • Issued by a local government authority or corporation
  • Central or State Government issued debenture
  • Corporate bonds or securities
  • Other debt instruments
Section 193 7.5% 10%
Income from deposits made under the National Savings Scheme Section 194EE 7.5% 10%
Amount received against a life insurance policy Section 194D 3.75% 5%
Commission earned by selling lottery tickets Section 194G 3.75% 5%
Earnings from horse race gambling Section 194BB 30% 30%
Dividend income except earnings mentioned in Section 115-O Section 194 7.5% 10%
Rent earned from –

  1. Land or building
  2. Furniture or fitting
  3. Plant and machinery
Section 194-I
  1. 7.5%
  2. 7.5%
  3. 1.5%
  1. 10%
  2. 10%
  3. 2%
Payment on account of – 

  1. Royalties, technical services
  2. Professional services, not sharing patent, know-how, copyright, etc. 
Section 194J
  1. 1.5%
  2. 7.5%
  1. 2%
  2. 10%
Interest earnings from term deposits 

Note: TDS does not apply to such interest income if it does not exceed Rs.40,000, and Rs.50,000 for general and senior citizens respectively, in a given Financial Year.

Section 194A 7.5% 10%
Income in the form of insurance commission  Section 194D 3.75% 5%
Earning from the sale of any immovable property apart from agricultural land  Section 194-IA 0.75% 1%
Yields from lotteries, card games, crossword puzzles, etc. Section 194B 30% 30%
Income from – 

Invest in elss funds
  • Mutual fund units
  • Units from a specified organisation
  • Units from the administrator
Section 194K 7.5% 10%
Rent earnings from a HUF or individual apart from the ones covered under Section 194-I Section 194-IB 3.75% 5%
Compensatory income against the sale of specific immovable property Section 194LA 7.5% 10%
Earnings from HUFs or Individuals (up to Rs.50 lakh) Section 194M 3.75% 5%
Rent income by an individual or HUF under Joint Development Agreements if it exceeds Rs.50,000 per month Section 194-IC 7.5% 10%
Income in cash of any amount –

  1. More than Rs.20 lakh but up to Rs.1 crore
  2. Above Rs.1 crore
Section 194N
  1. 2%
  2. 5%
  1. 2%
  2. 5%
Earnings from a securitisation fund by –

  1. HUFs and individuals
  2. Others
Section 194LBC
  1. 18.75%
  2. 22.5%
  1. 25%
  2. 30%
Specific income earned by an investor Section 194LBB 7.5% 10%

The Indian Finance Ministry implemented new TDS rates for resident individuals, which is applicable from 14th May 2020 – 31st March 2021, to provide financial respite in light of the recent economic crisis. 

Non-resident Individuals 

The TDS interest rates for non-residents of India are enumerated in the table below. 

Particulars  Section Effective TDS Rates
Income from repurchasing of units by Mutual Fund or UTI Section 194F 20%
Income from securitisation fund Section 194LBC 30%
Earnings from National Savings Scheme deposits Section 194EE 10%
Yields from units transferred to an offshore fund, including long-term capital gains Section 196B 10%
Yields from an Indian organisation’s foreign-currency funds Section 196C 10%
Income from the following sources –

  1. Long-term capital gains as per Section 115E
  2. Short-term capital gains as per Section 111A
  3. Long-term Capital Gains as per  Section 193 sub-section 1 clause c sub-clause iii
  4. Long-term Capital Gains not mentioned in Section 10 clauses 33, 36, and 38
  5. Interest income from foreign-currency debt instruments issued by the Indian Government or an Indian Concern (other than income as per Section 194LC or 194LB)
Section 195
  1. 10%
  2. 15%
  3. 10%
  4. 20%
  5. 20%
Income from MF units as per Section 10 clause 23D from a company mentioned in Section 10 clause 35 Section 196A 20%
Earnings from securities by Foreign Institutional Investors, apart from dividend income or capital gains Section 196D 20%
Interest earnings from infrastructure debt funds Section 194LB 5%
Interest income from a loan or long-term bonds in the foreign currency issued by a business trust or an Indian organisation Section 194LC 5%
Income by non-resident sports organisation or individual Section 194E 20%
Withdrawal from EPF Section 192A 10%
Interest earnings by a Qualified Foreign Investor or Foreign Institutional Investor from rupee-denominated government securities or corporate bonds by an Indian organisation Section 194LD 5%

Domestic Companies 

The table below shows the TDS rates levied on income by domestic organisations.

Particulars  Section  Applicable TDS rates from 14th May 2020 – 31st March 2021 TDS rates till 13th May 2020
Interest on securities Section 193 7.5% 10%
Yields against an insurance policy  Section 194DA 3.75% 5%
Brokerage commission  Section 194H 3.75% 5%
Dividends earned Section 194 7.5% 10%
Income received from a business trust Section 194LBA 7.5% 10%
Earnings from National Savings Scheme Deposits Section 194EE 7.5% 10%
Income from repurchasing of MF units or UTI units Section 194F 15% 20%
Earnings by means of insurance commission Section 194D 3.75% 5%

Companies Other than Domestic Organisations

The TDS rates list applicable for any company apart from domestic organisations is noted in the table below. 

Particulars  Section Effective TDS rates
Income by a foreign sports association Section 194E 20%
Income received from a trust under a business Section 194LBA 5%

Earnings from interest through infrastructure debt fund Section 194LB 5%
A Foreign Institutional Investor or Qualified Foreign Investor’s income from investment in rupee-denominated bonds Section 194LD 5%

These are the TDS rates applicable to different persons recognised in India. It’s worth noting that taxpayers need to pay a higher TDS amount if they do not furnish PAN or Aadhaar. Also, the relaxation in tax rates effective from 14th May 2020 to 31st March 2021 does not apply to such taxpayers.

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