Tax Deduction at Source (TDS) is a crucial compliance requirement for Income Tax Assessees. The Income Tax Law contains several sections that specify varying TDS rates, payment types, and threshold limits for TDS. The Budget 2023 has introduced some significant changes concerning TDS. These changes include a higher limit of 3 crore for TDS on cash withdrawal provided to co-operative societies, removing the minimum threshold of INR 10,000 for TDS related to online gaming, and reducing the TDS rate from 30% to 20% on the taxable portion of EPF withdrawal in non-PAN cases.
This article presents a tabular representation of the various TDS rates applicable for the Financial Year (FY) 2023-2024 or Assessment Year (AY) 2024-2025, which spans from 01.04.2023 to 31.03.2024. Additionally, it also explains the changes proposed in Budget 2023 with respect to TDS.
Updates concerning TDS in Union Budget 2023-24
The TDS Rate Chart for FY 2023-2024 / AY 2024-2025 includes several updates and changes. These changes are outlined below:
Section 194BA: TDS introduced on income from online gaming, applicable from 1st April, 2024.
Section 196A: Non-residents earning income from mutual funds in India can provide a Tax Residency Certificate from April 1st, 2023, to avail the benefit of TDS as per the rate given in the tax treaty, instead of the flat rate of 20%.
Section 192A: The TDS rate on PF withdrawal for employees who do not have PAN has been reduced from the maximum marginal rate to 20%.
Section 193: There will be no exemption from TDS on interest from listed debentures. Thus, tax has to be deducted on interest on such specified securities.
Section 194N: The TDS threshold on cash withdrawal by co-operative societies has been increased. Starting April 1st, 2023, tax will be deducted on cash withdrawals exceeding Rs 3 crore, instead of the previous limit of Rs 1 crore.
What is TDS (Tax Deducted at Source)?
The TDS stands for tax deducted at source. As per the Income Tax Act, any company or person making a payment is required to deduct tax at source if the payment exceeds certain threshold limits. TDS has to be deducted at the rates prescribed by the tax department.
TDS Rate Chart For Financial Year 2023-24 and Assessment Year 2024-25
|
Section of the Income-tax Act
|
Nature of Payment
|
Rate of TDS
|
Threshold (INR)
|
Remarks
|
|
192
|
Salary Payment
|
Normal slab rates or New Tax Regime Slab Rate as opted by employee
|
Taxable Income that is laible to tax
|
Basic exemption limit for employees
|
|
192A
|
Premature Withdrawal from EPF
|
10%
|
50000
|
The suggestion is to remove the second provision in Section 192A of the act, which would result in tax being deducted The suggestion is to remove the second provision in Section 192A of the act, which would result in tax being deducted at a rate of 20% instead of the maximum marginal rate in the event that the individual fails to provide their PAN for payment of their outstanding balance. This change would come into effect for the Assessment Year 2023-24.
|
|
193
|
Interest on Securities
|
10%
|
2500
|
The proposal suggests the removal of clause ix from the proviso to Section 193 of the Act. This would result in the exemption from TDS on payment of interest on listed debentures to a resident being eliminated, starting from 01-04-2023.
|
|
194
|
Dividend
|
10%
|
5000
|
–
|
|
194A
|
Interest other than interest on securities (Bank Deposit/Post Office Deposit/Banking Co-Society Deposit)
|
10%
|
|
–
|
|
(a) Senior Citizens
|
50000
|
|
|
(b) Others
|
40000
|
|
|
194A
|
Interest other than interest on securities (Other than Bank Deposit/Post Office Deposit/Banking Co-Society Deposit)
|
10%
|
5000
|
|
|
194B
|
Winnings from lotteries, crossword puzzles, card games and other games
|
30%
|
10000
|
The threshold limit of 10,000 for TDS on lottery, crossword puzzles, and other similar games shall remain in place, but it will now apply to the total winnings received throughout a financial year. Additionally, starting from 01-07-23, there is a proposal to amend Section 194B. The amendment aims to exclude online games from the scope of this section and introduce a new section 194BA
|
|
194BA
|
Winning from Online Games
|
30%
|
Nil
|
As per the proposed amendment, any individual who is responsible for paying income to another individual in the form of winnings from an online game during a financial year must deduct income-tax on the net winnings present in the user account at the end of the financial year. The computation method for the same shall be prescribed. However, in cases where there is a withdrawal from the user account during the financial year, the income-tax shall be deducted at the time of withdrawal on the net winnings present in the withdrawal amount and the remaining net winnings in the user account at the end of the financial year.
|
|
194BB
|
Income earned from winning in horse races
|
30%
|
10000
|
Threshold limit 10,000 for TDS shall continue but shall apply to aggregate winnings during a financial year
|
|
194C
|
Payment of Contractors and sub-contractors
|
1% (individual/HUF)
2% (others)
|
Single Transaction: 30,000/ Aggregate of Transactions: 1,00,000
|
–
|
|
194D
|
Insurance Commission
|
5% (Individual)
10% (Companies)
|
15000
|
–
|
|
194DA
|
Payment in respect of life insurance policy
|
5%
|
100000
|
–
|
|
194E
|
Payment to non-resident sportsmen/sports association
|
20%
|
–
|
The rate of TDS shall be increased by applicable surcharge and Health & Education cess.
|
|
194EE
|
Payments in respect of deposits under National Savings Scheme
|
10%
|
2500
|
–
|
|
194F
|
Payments on account of re-purchase of Units by Mutual Funds or UTI
|
20%
|
|
–
|
|
194G
|
Commission, prize etc., on sale of lottery tickets
|
5%
|
15000
|
–
|
|
194H
|
Commission or brokerage
|
5%
|
15000
|
–
|
|
194-I(a)
|
Rent for plant and machinery
|
2%
|
240000
|
–
|
|
194-I(b)
|
Rent for immovable property
|
10%
|
240000
|
–
|
|
194-IA
|
Payment for acquisition of immovable property other than agriculture land
|
1%
|
50 Lakhs
|
TDS is to be deducted at the rate of one per cent of such sum paid or credited to the resident or the stamp duty value of such property, whichever is higher. In case the consideration paid for the transfer of immovable property and the stamp duty value of such property are both less than fifty lakh rupees, then no tax is to be deducted.
|
|
194-IB
|
Payment of rent by individual or HUF
|
5%
|
50000 per Month
|
–
|
|
194-IC
|
Payment for Joint Development Agreements
|
10%
|
|
–
|
|
194J
|
Fee for Professional or Technical Services (FTS), Royalty, etc.
|
2% (FTS, certain royalties, call centre)
10% (others)
|
30000
|
–
|
|
194K
|
Payment of dividend by Mutual Funds
|
10%
|
–
|
–
|
|
194LA
|
Payment of Compensation on acquisition of immovable property
|
10%
|
250000
|
–
|
|
194LBA(1)
|
Payment of income by Business trust
|
10%
|
|
–
|
|
194LBB(i)
|
Payment of income by Investment fund
|
10%
|
|
–
|
|
194LBC(1)
|
Income by securitization trust
|
25% (Individual/HUF)
30% (Others)
|
|
–
|
|
194M
|
Payment to commission, brokerage etc. by Individual and HUF
|
5%
|
50 Lakhs
|
–
|
|
194N
|
Cash withdrawal during the previous year from one or more account maintained by a person with a banking company, co-operative society engaged in business of banking or a post office
|
2% / 5%
|
20 Lakhs / 1 Crore
|
–
|
|
194-O
|
TDS on e-commerce participants
|
1%
|
5 Lakhs
|
In case of non-availability of PAN, TDS Rate shall be 5%
|
|
194P
|
TDS on Senior Citizen above 75 Years
|
Tax Rates in Force
|
Taxable Income liable to Tax
|
–
|
|
194Q
|
Purchase of goods (applicable w.e.f 01.07.2021)
|
0.10%
|
50 Lakhs
|
–
|
|
194R
|
TDS on benefit or perquisite of a business or profession
|
10%
|
20000
|
–
|
|
194S
|
Transfer of Virtual Digital Assets
|
1%
|
|
|
| 195 |
Payment of any other sum to a Non-resident
|
|
|
The rate of TDS shall be increased by applicable surcharge and Health & Education cess.
|
| 195 |
(a) Investment made by a Non-resident Indian Citizen
|
20%
|
|
–
|
| 195 |
(b) Long-term capital gains referred to in Section 115E in case of a Non-resident Indian Citizen
|
10%
|
|
–
|
|
195
|
(c) Long-term capital gains referred to in sub-clause (iii) of clause (c) of sub-Section (1) of Section 112
|
10%
|
|
–
|
|
195
|
(d) Long-term capital gains as referred to in Section 112A
|
10%
|
|
–
|
|
195
|
(e) Short-term capital gains referred to in Section 111A
|
15%
|
|
–
|
| |
(f) Any other income by way of long-term capital gains
|
20%
|
|
–
|
| |
(g) Income by way of interest payable by Government or an Indian concern on moneys borrowed or debt incurred by Government or the Indian concern in foreign currency (not being income by way of interest referred to in Section 194LB or Section 194LC)
|
20%
|
|
–
|
| |
(h)Any other Income
|
30%
|
|
|
|
196B
|
Income from units from an offshore fund
|
10%
|
|
|
|
196C
|
Income from foreign currency bonds or GDR of an Indian company
|
10%
|
|
|
|
196D
|
Income of foreign Institutional Investors from securities
|
20%
|
|
|
|
206AB
|
Payment to non-filers, i.e. those who have not filed their income tax return in the last year
|
– 2 times the rate given in the Income Tax Act or Finance Act or
– 5%, whichever is higher
|
–
|
Non filers do not include:
– People who are not required to file their ITRs
– NRs who do not have a PE in India
|
|
206AA
|
TDS rate in case of Non availability of PAN
|
Rates specified above or 20%, whichever is higher
|
–
|
–
|
Note:
Tax Deducted at Source (TDS) under Goods and Service Tax (GST) is required to be deducted at the rate of 2% on payments made to the supplier of taxable goods and/or services by certain notified persons under GST. The person deducting tax is required to file a TDS return in form GSTR-7 within 10 days from the end of the month. In this article, we discuss all about TDS under GST, including the TDS rate under GST, the deduction limit, applicability, forms to be filed, interest and penalties applicable, and more.
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