TDS Rates in India

TDS Rates in India

Understanding Tax Deducted at Source (TDS) rates is crucial for navigating the Indian income tax system. TDS involves the government collecting tax on various income sources at the time it's generated, minimizing tax evasion. This article clarifies TDS rates applicable to different income categories and taxpayer residency.

Resident vs. Non-Resident TDS Rates

India classifies taxpayers as residents and non-residents. Here's a breakdown of TDS rates for each category:

Resident Individuals (Assessment Year 2024-25)

The TDS rate you pay depends on the type of income you receive. This table summarizes the rates for common income sources:

·       Local Govt./Corporation Bonds | 193 | 10% |

·       Central/State Govt. Debentures | 193 | 10% |

·       Corporate Bonds/Securities | 193 | 10% | | National Savings Scheme Deposits | 194EE | 10% | | Life Insurance Maturity | 194D | 5% | | Lottery Ticket Sales Commission | 194G | 5% | | Horse Race Winnings | 194BB | 30% | | Dividend Income (except Section 115O) | 194 | 10% | | Rent from Property/Equipment | 194-I | Varies (10%, 10%, 2%) | | Royalty/Technical Service Payments | 194J | Varies (2%, 10%) | | Professional Service Fees (excluding Patent/Know-How) | 194J | 10% | | Term Deposit Interest (above exemption limit) | 194A | 10% | | Insurance Commission | 194D | 5% | | Sale of Immovable Property (except Agricultural Land) | 194-IA | 1% | | Lottery/Game/Puzzle Winnings | 194B | 30% | | Mutual Fund/Specified Unit Income | 194K | 10% | | Rent from HUF/Individual (not covered under Sec. 194-I) | 194-IB | 5% | | Specific Immovable Property Sale Compensation | 194LA | 10% | | HUF/Individual Income (up to Rs. 50 lakh) | 194M | 5% | | Rent under JDA by Individual/HUF (above Rs. 50,000/month) | 194-IC | 10% | | Cash Payments | | |

·       Rs. 20 lakh - Rs. 1 crore | 194N | 2% |

·       Above Rs. 1 crore | 194N | 5% | | Securitization Trust Income | | |

·       HUF/Individuals | 194LBC | 25% |

·       Others | 194LBC | 30% | | Specific Investor Income | 194LBB | 10% |

Non-Resident Individuals

Non-residents generally face higher TDS rates compared to residents. Here's a summary of common TDS rates for non-residents:

·       Sec. 115E (LTCG) | 195 | 10% |

·       Sec. 111A (STCG) | 195 | 15% |

Domestic Companies vs. Other Companies

Domestic Companies

Domestic companies in India also have TDS obligations when making certain payments. Here's a summary of common TDS rates applicable to domestic companies:

Companies Other Than Domestic Companies

Companies that are not considered domestic companies in India face different TDS rates. Here's a breakdown for some common scenarios:

Conclusion

Understanding TDS rates in India is essential for both residents and non-residents. Knowing the applicable rates helps ensure tax compliance and avoids potential penalties. The Income Tax Department of India website (https://www.incometax.gov.in/iec/foportal/) is a valuable resource for further information on TDS and other tax regulations.