Tax deduction at source (tds)

Author: Lexn Tax

TDS Provisions in India – Overview & Compliance GuideIntroduction to TDS Provisions

Tax Deducted at Source (TDS) provisions are introduced with the following objectives:

  • To ensure a continuous flow of revenue to the Government

  • To curb tax evasion among taxpayers

  • To encourage timely filing of Income Tax Returns, as taxpayers with TDS deductions usually file ITR

At Lex N Tax Associates, we provide professional TDS Services in Delhi NCR with experienced and qualified experts who assist businesses in accurate deduction, payment, and return filing.

Applicability of TDS Provisions

  • Companies and LLPs must comply with TDS provisions irrespective of turnover

  • Individuals and HUFs are required to deduct TDS if turnover exceeds ₹2 crore

TDS on Salary – Section 192

Any employer paying salary must deduct TDS as per applicable income tax slab rates prescribed under the Finance Act.

Current Income Tax Slabs:

  • Up to ₹2,50,000 – Nil

    • 2,50,001 to ₹5,00,000 – 5%
    • 5,00,001 to ₹10,00,000 – 20%

  • Above ₹10,00,000 – 30%

  • Health & Education Cess applicable

Employees must submit Form 12BB to claim deductions under Sections 80C to 80U.

TDS on Contractors – Section 194C

  • 1% when payment is made to Individuals or HUF

  • 2% when payment is made to Companies

TDS on Rent – Section 194I

  • 10% on rent exceeding ₹2,40,000 per year

  • 2% on rent paid for machinery or equipment

TDS on Professional Fees – Section 194J

  • 10% on professional fees exceeding ₹30,000 annually

  • 2% on technical services with effect from 01.04.2020

TDS on Commission – Section 194H

  • 5% if commission exceeds ₹15,000 in a financial year

TDS on Insurance Commission – Section 194D

  • 5% if commission exceeds ₹15,000 annually

TDS on Interest on Securities – Section 193

  • 10% if interest exceeds ₹5,000 in a year

TDS on Interest Other Than Securities – Section 194A

  • 10% if interest exceeds ₹5,000

  • For bank term deposits:

      • 40,000 for individuals
      • 50,000 for senior citizens
TDS on Purchase of Property – Section 194IA

  • 1% if property value exceeds ₹50 lakh

  • Not applicable on agricultural land in rural areas

TDS on Insurance Policy Maturity – Section 194DA

  • 5% if payout exceeds ₹1,00,000

  • Applicable when exemption under Section 10(10D) is not available

TDS on Rent by Individual/HUF – Section 194IB

  • 5% if monthly rent exceeds ₹50,000

  • Deducted in the last month of the financial year or tenancy

  • Paid using Form 26QC on the TIN NSDL portal

TAN Application – Section 203A

Every person liable to deduct TDS must apply for TAN using Form 49B within 30 days of applicability.

TAN is a 10-digit alphanumeric number issued by the Income Tax Department.

Individuals or HUFs deducting TDS under Sections 194IA, 194IB, and 194IC are not required to obtain TAN.

TDS Payment Due Dates

  • TDS must be deposited by 7th of the next month

  • TDS for March must be deposited by 30th April

Interest on Late Payment:

1.5% per month from the date of deduction until payment.

TDS Return Filing

  • TDS returns must be filed quarterly

  • Due dates:

    • Q1, Q2, Q3: 31st of the following month

    • Q4 (March): 31st May

Lex N Tax Associates provides reliable TDS Return Filing Services in Delhi NCR, ensuring timely compliance and accurate reporting.

Higher TDS Rate – Section 206AA

If the deductee fails to provide a PAN, TDS will be deducted at 20%, irrespective of the applicable section.

Need Professional TDS Support?

Visit Lex N Tax Associates for expert TDS Services in Delhi NCR, including TDS deduction, payment, return filing, and compliance advisory.

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