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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. 

ParticularsSectionApplicable TDS rate from 14th May 2020 – 31st March 2021Effective TDS rate till 13th May 2020
SalarySection 192Relevant slab rateRelevant slab rate
Withdrawal from Employee Provident Fund Section 192A10%10%
Yields from repurchasing of any unit by Unit Trust of India or Mutual FundSection 194F15%20%
Brokerage commissionSection 194H3.75%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 1937.5%10%
Income from deposits made under the National Savings SchemeSection 194EE7.5%10%
Amount received against a life insurance policySection 194D3.75%5%
Commission earned by selling lottery ticketsSection 194G3.75%5%
Earnings from horse race gamblingSection 194BB30%30%
Dividend income except earnings mentioned in Section 115-OSection 1947.5%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 194A7.5%10%
Income in the form of insurance commission Section 194D3.75%5%
Earning from the sale of any immovable property apart from agricultural land Section 194-IA0.75%1%
Yields from lotteries, card games, crossword puzzles, etc.Section 194B30%30%
Income from – 

  • Mutual fund units
  • Units from a specified organisation
  • Units from the administrator
Section 194K7.5%10%
Rent earnings from a HUF or individual apart from the ones covered under Section 194-ISection 194-IB3.75%5%
Compensatory income against the sale of specific immovable propertySection 194LA7.5%10%
Earnings from HUFs or Individuals (up to Rs.50 lakh)Section 194M3.75%5%
Rent income by an individual or HUF under Joint Development Agreements if it exceeds Rs.50,000 per monthSection 194-IC7.5%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 investorSection 194LBB7.5%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 SectionEffective TDS Rates
Income from repurchasing of units by Mutual Fund or UTISection 194F20%
Income from securitisation fundSection 194LBC30%
Earnings from National Savings Scheme depositsSection 194EE10%
Yields from units transferred to an offshore fund, including long-term capital gainsSection 196B10%
Yields from an Indian organisation’s foreign-currency fundsSection 196C10%
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 35Section 196A20%
Earnings from securities by Foreign Institutional Investors, apart from dividend income or capital gainsSection 196D20%
Interest earnings from infrastructure debt fundsSection 194LB5%
Interest income from a loan or long-term bonds in the foreign currency issued by a business trust or an Indian organisationSection 194LC5%
Income by non-resident sports organisation or individualSection 194E20%
Withdrawal from EPFSection 192A10%
Interest earnings by a Qualified Foreign Investor or Foreign Institutional Investor from rupee-denominated government securities or corporate bonds by an Indian organisationSection 194LD5%

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 2021TDS rates till 13th May 2020
Interest on securitiesSection 1937.5%10%
Yields against an insurance policy Section 194DA3.75%5%
Brokerage commission Section 194H3.75%5%
Dividends earnedSection 1947.5%10%
Income received from a business trustSection 194LBA7.5%10%
Earnings from National Savings Scheme DepositsSection 194EE7.5%10%
Income from repurchasing of MF units or UTI unitsSection 194F15%20%
Earnings by means of insurance commissionSection 194D3.75%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 SectionEffective TDS rates
Income by a foreign sports associationSection 194E20%
Income received from a trust under a businessSection 194LBA5%

Earnings from interest through infrastructure debt fundSection 194LB5%
A Foreign Institutional Investor or Qualified Foreign Investor’s income from investment in rupee-denominated bondsSection 194LD5%

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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