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Tax Deducted at Source or TDS is referred to a type of tax where an individual is liable to deduct tax for services rendered. The tax deducted from the total payment amount goes to the government for various types of activities such as infrastructure development, defense, development, etc. Depending on the type of service, a certain type of tax (TDS) is levied that the payee is expected to deduct. If the individual has deducted more than the required tax amount, he/she will be eligible for a TDS Refund. The individual will require filing their TDS Return in order to receive the refund amount. TDS can be collected on a regular, periodical, or occasional basis, it is applicable on salary, interest, commission, fee, etc.
TDS Rate on Salary :
Any employer has the authority to deduct tax at source while making the actual payment to the employee. The employers deduct tax from salaries only at the time of payment. TDS is deducted if the total income of the employee is taxable. TDS will not be deducted if your total income is Rs. 2, 50,000. This amount is applicable for men and women below the age of 60 years. Normally, TDS deduction rate on salary ranges from 5% to 30%.
The following chart contains the TDS amount applicable for each type of payment :
Rate Chart for FY 2017-2018
Calulate your Income Tax with: Income Tax Calculator
| Particulars | TDS Rates (in %) |
|---|---|
| Section 192: Payment of salary | According to Income Slab as specified above |
| Section 192A: Payment of accumulated balance of provident fund which is taxable in the hands of an employee (with effect from 01.06.2015). | 10 |
| Section 193: Interest on securities | |
| a) any debentures or securities for money issued by or on behalf of any local authority or a corporation established by a Central, State or Provincial Act; | 10 |
| b) any debentures issued by a company where such debentures are listed on a recognized stock exchange in accordance with the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and any rules made thereunder; | 10 |
| c) any security of the Central or State Government; | 10 |
| d) interest on any other security | 10 |
| Section 194: Dividend other than the dividend as referred to in Section 115-O | 10 |
| Section 194A: Income by way of interest other than "Interest on securities" | 10 |
| Section 194B: Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort | 30 |
| Section 194BB: Income by way of winnings from horse races | 30 |
| Section 194C: Payment to contractor/sub-contractor | |
| a) HUF/Individuals | 1 |
| b) Others | 2 |
| Section 194D: Insurance commission | 5 (10% till Assessment year 2016-17) |
| Section 194DA: Payment in respect of life insurance policy | 1 (2% till 31-5-2016) |
| Section 194EE: Payment in respect of deposit under National Savings scheme | 10 (20% till 31-5-2016) |
| Section 194F: Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India | 20 |
| Section 194G: Commission, etc., on sale of lottery tickets | 5 (10% till 31-5-2016) |
| Section 194H: Commission or brokerage | 5 (10% till 31-5-2016) |
| Section 194-I: Rent | |
| a) Plant & Machinery | 2 |
| b) Land or building or furniture or fitting | 10 |
| Section 194-IA: Payment on transfer of certain immovable property other than agricultural land | 1 |
| Section 194J: Any sum paid by way of a) Fee for professional services, b) Fee for technical services c) Royalty, d) Remuneration/fee/commission to a director or e) For not carrying out any activity in relation to any business f) For not sharing any know-how, patent, copyright etc. | 10 |
| Section 194LA: Payment of compensation on acquisition of certain immovable property | 10 |
| Section 194LBA(1): Business trust shall deduct tax while distributing, any interest received or receivable by it from an SPV or any income received from renting or leasing or letting out any real estate asset owned directly by it, to its unitholders. | 10 |
| Section 194LBB: Investment fund paying an income to a unitholder [other than income which is exempt under Section 10(23FBB)] | 10 |
| Section 194LBC: Income in respect of investment made in a securitization trust (specified in Explanation of Section 115TCA) | 25% in case of Individual or HUF 30% in case of other individuals |
| Any Other Income | 10 |
The TDS on income/salary is calculated on an annual basis. The TDS calculation is based on various types of slabs as indicated in the Budget 2017 – 2018. The following table provides the details of income slab with their applicable tax amount in percentage -
Income Tax Slabs in India for FY 2017 - 2018
Tax applicable for individuals below 60 years
| Annual Income | Tax Rates | Education Cess | Secondary and Higher Education Cess |
|---|---|---|---|
| Up to Rs.2,50,000 | Nil | Nil | Nil |
| Rs.2,50,001-Rs.5,00,000 | 5% | 2% of income tax | 1% of income tax |
| Rs.5,00,001-Rs.10,00,000 | Rs.12,500 + 20% | 2% of income tax | 1% of income tax |
| Above Rs.10,00,000 | Rs.1,12,500 + 30% | 2% of income tax | 1% of income tax |
Tax applicable for individuals over 60 years and under 80 years
| Annual Income | Tax Rates | Education Cess | Secondary and Higher Education Cess |
|---|---|---|---|
| Up to Rs.3,00,000 | Nil | Nil | Nil |
| Rs.3,00,001-Rs.5,00,000 | 5% | 2% of income tax | 1% of income tax |
| Rs.5,00,001-Rs.10,00,000 | Rs.10,00 + 20% | 2% of income tax | 1% of income tax |
| Above Rs.10,00,000 | Rs.1,10,000 + 30% | 2% of income tax | 1% of income tax |
Tax applicable for individuals over 80 years and above
| Annual Income | Tax Rates | Education Cess | Secondary and Higher Education Cess |
|---|---|---|---|
| Up to Rs.5,00,000 | Nil | Nil | Nil |
| Rs.5,00,001-Rs.10,00,000 | 20% | 2% of income tax | 1% of income tax |
| Above Rs.10,00,000 Rs.1,12,500 | Rs.1,00,000 + 30% | 2% of income tax | 1% of income tax |
Frequently Asked Questions
- What is a TDS Certificate?
- What if Form 16?
- What is Form 16A?
- What are the TDS rates applicable to interest on securities?
- What is the minimum exemption limit for individuals under 60 years of age?
A TDS certificate is a document that is issued by a deductor to a deductee. The two kinds of TDS certificates are Form 16 and Form 16A.
Form 16 is issued by employers to employees. It contains details regarding the tax deducted over the course of the year.
Form 16A certifies the amount deducted at source, the kind of payments and the payments that have been deposited with the IT Department. It is issued for payments apart from salary, such as rent, professional charges, bank interest payments, etc.
The TDS rate for interest on securities is 10%.
Individuals who are below 60 years of age and earn under Rs.2.5 lakh will be exempt from tax.
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