Tax deducted at source or TDS is a tax deducted by a person or company before making a payment over certain threshold limits to any other person. It is to be deducted at the rates prescribed by the tax department and remit the amount into the account of the Central Government. A deductor is a person or company responsible to deduct TDS before making any payment and a deductee is a person or company receiving the payment. It is deducted regardless of the mode of payment, be it cash or cheque, and linked to the PAN of the deductor and deductee.
TDS is an advance tax that is deducted on various types of payments including salaries, rent payments, interest paid by banks, consultation fees, and commission payments, etc. However, TDS is required to be deducted when making payments or paying fees to professionals like doctors and lawyers. It is the responsibility of deductors to deduct TDS and then deposit it to the government periodically. For the deductee, they can claim the deducted TDS in the form of a tax refund by filing their income tax return (ITR).
In this article, we will look at the TDS rates applicable for the financial year 2020-21. Additionally, you will learn about the due dates and the mode of paying tax deducted at source to the government.
TDS Rates for F.Y. 2020-21 (A.Y 2021-22)
| Section | Particulars | TDS Rate (in %) if payment to – | |||
| Resident Indian (i.e. Individual, HUF etc. other than a company) | Non-resident Person other than a company*(see note) | Domestic Company | Foreign Company *(see note) | ||
| 192 | Payment of salary | Normal slab rate | Normal slab rate | – | – |
| 192A | Payment of accumulated balance of provident fund which is taxable in the hands of an employee. | 10 | 10 | – | – |
| 193 | Interest on Securities | 10 | – | 10 | – |
| 194 | Dividend
(Monetary Limit- ₹5000) |
10 (w.e.f 01.04.2020 | – | 10 (w.e.f 01.04.2020 | – |
| 194A | Income by way of interest other than “Interest on securities” (Monetary Limit – ₹40,000) |
10 | – | 10 | – |
| 194B | Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort (Monetary Limit – ₹10,000) |
30 | 30 | 30 | 30 |
| 194BB | Income by way of winnings from horse races (Monetary Limit – ₹10,000) |
30 | 30 | 30 | 30 |
| 194C | A Payment to contractor/ sub-contractor (Monetary Limit – ₹30,000 for single payment or ₹1,00,000 for aggregate amount during the year) |
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| a. HUF/Individuals | 1 | – | 1 | – | |
| b. Others | 2 | – | 2 | – | |
| 194D | Insurance commission (Monetary Limit – ₹15,000) |
5 | – | 10 | – |
| 194DA | Payment in respect of life insurance policy w.e.f. 1/9/2019, the tax shall be deducted on the amount of income comprised in insurance pay-out (Monetary Limit – ₹1,00,000) |
5 | – | 5 | – |
| 194E | Payment to non-resident sportsmen/sports association | – | 20 | – | 20 |
| 194EE | Payment in respect of deposit under National Savings scheme | 10 | 10 | 10 | – |
| 194F | Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India | 20 | 20 | 20 | – |
| 194G | Commission, etc., on sale of lottery tickets | 5 | 5 | 5 | 5 |
| 194H | Commission or brokerage (Monetary Limit – ₹15,000) |
5 | – | 5 | – |
| 194-I | Rent (Monetary Limit – ₹2,40,000) |
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| a. Plant &Machinery | 2 | – | 2 | – | |
| b. Land or building or furniture or fitting | 10 | – | 10 | – | |
| 194-IA | Payment on transfer of certain immovable property other than agricultural land (Monetary Limit – if consideration exceeding ₹50,00,000) | 1 | – | 1 | – |
| 194-IB | A Payment of rent by individual or HUF not liable to a tax audit (Monetary Limit – Rent for the month or part of the month exceeds ₹50,000) |
5 | – | – | – |
| 194-IC | Payment of monetary consideration under Joint Development Agreements | 10 | – | 10 | – |
| 194J | A Payment for fees for Technical services, Professional services or royalty etc. (Monetary Limit – ₹30,000 p.a) | ||||
| a. Fee for technical services or royalty where such royalty is in the nature of consideration for sale, distribution or exhibition of cinematographic films | 2 (w.e.f. 01.04.2020) |
– | 2 (w.e.f. 01.04. 2020) |
– | |
| b. Fee in other all cases as per Section 194J Note: With effect from June 1, 2017, the rate of TDS would be 2% in case of payee engaged in the business of operation of a call centre. |
10 | – | 10 | – | |
| 194K | Payment of any income in respect of: a) Units of a Mutual Fund as per Section 10(23D)b)The Units from the administratorc) Units from specified company (Monetary Limit -₹5,000) |
10 (w.e.f. 01.04.2020) |
– | 10 (w.e.f. 01.04.2020) |
– |
| 194M | Payment of commission (not being insurance commission), brokerage, contractual fee, professional fee to a resident person by an individual or a HUF who are not liable to deduct TDS under Section 194C, 194H, or 194J. | 5 | – | 5 | – |
| 194N | Cash withdrawal above ₹1 crore during the previous year from one or more account maintained by a person with a banking company, co-operative society engaged in the business of banking or a post office
Please Note- The Scope of TDS on cash withdrawal has been extended. TDS at 2% is required to be deduced if the withdrawer has not filed his tax return for three years and withdrawal during the year exceeds Rs 20 lakhs but is less than Rs 1 crore. For withdrawal more than Rs 1 crore at 5%. |
2 | – | 2 | – |
| 194-O | Applicable for E-commerce operator for the sale of goods or provision of service facilitated by it through its digital or electronic facility or platform. | 1 (w.e.f. 01.10.2020) |
– | 1 (w.e.f. 01.10.2020) |
– |
| 195 | Payment of any other sum to a Non-resident | ||||
| a)Any other income | – | 30 | – | 40 | |
| b)Income by way of fees for technical services | – | 10 | – | 10 | |
| c) Royalty | – | 10 | – | 10 | |
| d) Income in respect of investment made by a Non-resident Indian Citizen | – | 20 | – | – | |
| e) Income by way of interest payable by Government or an Indian concern on money borrowed or debt incurred by Government or the Indian concern | – | 20 | – | 20 | |
| f) Income by way of long-term capital gains | |||||
| – u/s 115E/112(1)(c)(iii)/112A | – | 10 | – | 10 | |
| – Any Other Gains | – | 20 | – | 20 | |
| g) Income by way of short -term capital gains referred to in Section 111A | – | 15 | – | 15 | |
Note:*TDS rate shall be increased by applicable Surcharge and Health & Education Cess in case of payment to a Non-resident person other than a company or a foreign company.
Due dates for the payment and filing of TDS return
| Month of deduction | Quarter Period | Due dates for TDS paid through challan | Due dates for filing TDS return for all deductors | |
| For Govt. deductor | For other deductors | |||
| April
May June |
1stApril to 30thJune | 7thMay
7thJune 7thJuly |
31stJuly | |
| July
August September |
1stJuly to 30thSeptember | 7thAugust
7thSeptember 7thOctober |
31stOctober | |
| October
November December |
1stOctober to 31stDecember | 7thNovember
7thDecember 7thJanuary |
31stJanuary | |
| January
February March |
1stJanuary to 31stMarch | 7thFebruary
7thMarch 7thApril |
30thApril | 31stMay |
What are the modes of payment for TDS?
The tax deducted at source can be deposited to the credit of the Central Government through the following modes:
- An electronic mode of payment is mandatory for:
- Corporate assesses
- All assesses (other than a company) to whom provisions under Section 44AB of the Income Tax Act, 1961 are applicable.
- The physical payment mode can be used by submitting the Challan ITNS281 in the authorized bank branch.
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