What is TDS?

Tax Deducted at Source (TDS) is a mechanism that has been introduced by the Income Tax Department. Under this, the responsible person is supposed to deduct a certain percentage of income as tax before making the payment to the receiver. The payment includes salary, commission, professional fees, interest, rent, etc.

For detailed discussion on TDS, please visit: https://www.hostbooks.com/in/blog/tds/complete-guide-tax-deducted-source-tds/

Now, let’s have a look at the TDS/TCS Rates applicable for financial year 2021-22 as per Finance Bill 2021 presented by Finance Minister Smt. Nirmala Sitharaman dated on 1st February, 2021:

TDS Rate Chart for F.Y. 2021-22 (A.Y: 2022-23)

Section	Nature of payment	Threshold Limit Rs.	Applicable from 01/04/2021 to 31/03/2022
			Resident	Non-resident *
		Rs.	TDS Rate (%)	TDS Rate (%)
192	Salaries	-	Normal slab rate	Normal slab rate
192A	Premature withdrawal from EPF	50000	10	10
193	Interest on securities - 8% Savings (Taxable) Bonds, 2003 or 7.75% Savings (Taxable) Bonds, 2018 during the financial year	10000	10	-
193	Interest on securities - Interest on securities for money issued by or on behalf of any local authority/statutory corporation, listed debentures of a company(other than demat form), any other interest on securities	5000	10	-
194	Dividends	5000	10	-
194A	Interest (Banking co., co-operative society engaged in banking, post office)	40000	10	-
194A	Interest (Any other person)	5000	10	-
194B	Winning from lotteries	10000	30	30
194BB	Winning from Horse race	10000	30	30
194C	Contractor-Single transaction-Individual/HUF -Others	30000	1 2	- -
194C	Contractor – Consolidated Payment During the F.Y - Individual/HUF - Others	100000	1 2	- -
194D	Insurance commission - Other than Company - Company	15000	5 10	- -
194DA	Maturity of Life insurance policy	100000	5	-
194E	Non-resident sportsmen or sports association	-	-	20
194EE	NSS	2500	10	10
194F	Repurchase units by MFs	-	20	20
194G	Commission-Lottery	15000	5	5
194H	Commission/Brokerage	15000	5	-
194I	Rent of - Plant/Machinery /Equipment - Land and Building/Furniture & Fixture	240000	2 10	- -
194IA	Transfer of certain immovable property other than agriculture land	50 lakh	1	-
194IB	Rent by Individual/HUF	50000 per month	5	-
194IC	Payment under Joint Development Agreements to Individual/HUF	-	10	-
194J	Professional Fees	30000	10	-
194J	Technical Fees (w.e.f. 01.04.2020)	30000	2	-
194J	Payment to call centre operator (w.e.f. 01.06.2017)	30000	2	-
194J	Director's fees	-	10	-
194K	Payment of any income in respect of (a) units of a mutual fund as per section 10(23D); or (b) the units from the administrator; or (c) units from specified company (w.e.f. 01.04.2020)	5000	10	-
194LA	Compensation on transfer of certain immovable property other than agriculture land (TDS exempted if covered under RFCTLARR Act w.e.f. 01.04.2017)	250000	10	-
194LB	Income by way of interest from infrastructure debt fund	-	-	5
194LBA	Income from units of business trust -interest received or receivable from a special purpose vehicle; or - dividend referred to in sub-section (7) of section 115-O	-	10 10	5 10
194LBA	Distribution of rental income to unit holders - Other than Company - Company	-	10 10	30 40
194LBB	Income in respect of units of investment fund - Other than Company - Company	-	10 10	30 40
194LBC	Income in respect of investment in securitization fund - Individual/HUF - Company - Other Person	-	25 30 30	30 40 30
194LC	Income by way of interest by an Indian specified company to a non-resident/foreign company on foreign currency approved loan / long-term infrastructure bonds from outside India	-	-	5
194LC	Income by way of interest by an Indian specified company on rupee denominated bond / any long-term bonds from outside India, which is listed only on a recognized stock exchange located in any International Financial Services Centre	-	-	4
194LD	Interest on certain bonds from Govt. securities	-	-	5
194M	Certain payments by Individual/HUF	50 lakh	5	-
194N	Payment of certain amount in cash	1 Crore	2	2
194N	Payment of certain amount in cash (first proviso of section 194N)if- - Amount is more than Rs.20 lakh but up to Rs. 1 crore - Amount exceeds Rs. 1 crore		2 5	2 5
194-O	Applicable for e-commerce operator for the sale of goods or provision of services facilitated by it through its digital or electronic facility or platform (w.e.f. 01.04.2020)	-	1	-
194-P	Deduction of tax in case of specified senior citizen. [Change will applicable from 1st April, 2021.]	-	Applicable rates in force	-
194-Q	Payment of certain sum by the buyer to the seller (resident Indian) for purchase of goods [Change will applicable from 1st July, 2021.]	50 lakh	0.1	-
195	Income of Investment made by an NRI	-	-	20
195	Long-term capital gain - Under Section - 115E/112(1)(c)(iii)/112A - Any Other Gains	-	- -	10 20
195	Short-term capital gain - 111A	-	-	15
195	Royalty	-	-	10
195	Fees for technical services	-	-	10
195	Interest income payable by Govt./Indian concern (other than section 194LB or 194LC)	-	-	20
195	Any Other Income - Other than Company - Company	-	- -	30 40
196A	Income in respect – - of units of a Mutual Fund specified under clause (23D) of section 10; or - from the specified company referred to in the Explanation to clause (35) of section 10	-	-	20
196B	Income from units to 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 (not being dividend or capital gain)	-	-	20

* TDS rate shall be increased by applicable surcharge and Health & Education Cess.

Note: As per section 206AA, In case of non-furnishing of PAN/Aadhaar by deductee, TDS will be charged at normal rate or 20% (5% in case of section 194-O), whichever is higher.

Note: As per new section 206AB, where tax is required to be deducted at source under the provisions of Chapter XVIIB, on any sum or income or amount paid, or payable or credited, other than sections 192, 192A, 194B, 194BB, 194LBC or 194N by a person to a specified person, the tax shall be deducted at the higher of the following rates.

Twice the rate specified in the relevant provision of the Act; or
Twice the rate or rates in force; or
The rate of five per cent.

Note: Provision of section 206AA (Non furnishing of PAN/Aadhaar) shall be override on the provision of section 206AB and then tax shall be deducted at higher of the two rates provided in section 206AA and in section 206AB.

[These change will be applicable from 1st July, 2021.]

TCS Rate Chart for F.Y. 2021-22 (A.Y: 2022-23)

Section	Nature of payment	Applicable from 01/04/2021 to 31/03/2022 TCS Rate (%)
206C	Scrap	1
206C	Tendu leaves	5
206C	Timber obtained under a forest lease or other mode	2.5
206C	Any other forest produce not being a timber or tendu leaves	2.5
206C	Alcoholic liquor for human consumption and Indian made foreign liquor	1
206C	Parking lot, toll plaza, mining and quarrying (other than mining and quarrying of mineral oil, petroleum and natural gas)	2
206C	Minerals, being coal or lignite or iron ore	1
206C	Sale of motor vehicle of the value exceeding Rs. 10 Lacs	1
206C	Remittance out of India under the Liberalized Remittance Scheme of the RBI of the value exceeding 7 Lacs in a financial year	5
206C	Sale of overseas tour programme package	5
206C	Remittance out of India for education under the Liberalized Remittance Scheme of the RBI of the value exceeding 7 Lacs in a financial year	0.5
206C	Sale of any goods (other than goods exported out of India or goods given in the above points) of the value exceeding 50 Lacs	0.1

Note: As per section 206CC, In case of non-furnishing of PAN/Aadhaar by collectee, TCS will be charged at twice of the normal rate applicable or 5% {1% in case of sale of any goods (given in the last point) of the value exceeding 50 Lacs}, whichever is higher.

Note: As per new section 206CCA, where tax is required to be collected at source under the provisions of Chapter XVII-BB, on any sum or income or amount paid, or payable or credited by a person to a specified person, the tax shall be collected at the higher of the following rates.

Twice the rate specified in the relevant provision of the Act; or
The rate of five per cent.

Note: Provision of section 206CC (Non furnishing of PAN/Aadhaar) shall be override on the provision of section 206CCA and then tax shall be collected at higher of the two rates provided in section 206CC and in section 206CCA.

[These change will be applicable from 1st July, 2021.]