Any entity making the payments specified under the Income Tax Act, 1961, needs to deduct TDS. The exception to this includes individuals and HUFs whose books are not required to be audited as per the Act. So, if you are required to deduct and deposit TDS, you need to know the rates at which the tax needs to be deducted.
This is necessary because the rates vary based on the kind of payment being made. For instance, the rate for TDS on salary is different from the rate for TDS on freight. Additionally, the rates of TDS are also different for residents, non-resident Indians and companies.
Reduction in TDS for FY 2020-21 due to COVID-19
On account of the coronavirus pandemic, the government of India provided some relief by lowering the TDS rates for the period from May 14, 2020 to March 31, 2021. Here is a TDS rate chart showing the regular TDS rates as well as the revised TDS rates applicable for residents of India (other than companies).
| Section of the Income Tax Act, 1961 | Particulars | Normal TDS rate (%) from 01.04.2021 | Revised TDS rate (%) (From May 14, 2020 to March 31, 2021) |
| 192 | Payment of salary | 10 | 10 |
| 192A | Premature EPF withdrawal | 10 | 10 |
| 193 | Interest on securities | 10 | 7.5 |
| 194 | Dividend | 10 | 7.5 |
| 194A | Interest other than interest on securities | 10 | 7.5 |
| 194B | Winnings from lotteries, crossword puzzles, and other games | 30 | 30 |
| 194B | Winnings from horse races | 30 | 30 |
| 194C | Payments to contractors and sub-contractors who are individuals or HUFs | 1 | 0.75 |
| 194C | Payments to contractors and sub-contractors other than individuals or HUFs | 2 | 1.50 |
| 194D | Commission from insurance | 5 | 3.75 |
| 194DA | Payment received on maturity of a life insurance policy | 5 | 3.75 |
| 194EE | Payment from National Savings Scheme | 10 | 7.5 |
| 194F | Payment due to repurchase of a unit by Mutual Fund or Unit Trust of India | 20 | 15 |
| 194G | Commission from the sale of lottery tickets | 5 | 3.75 |
| 194H | Other commission and brokerage | 5 | 3.75 |
| 194I | Rent received on rental of plant and machinery | 2 | 1.5 |
| 194I | Rent received on rental of land, building or furniture and fittings | 10 | 7.5 |
| 194-IA | Payments on transfer of immovable property (except agricultural land) | 1 | 0.75 |
| 194-IB | Rent payable by an individual or HUF, not covered under section 194I | 5 | 3.75 |
| 194-IC | Payments to an individual or a HUF under a Joint Development Agreement | 10 | 7.5 |
| 194J | Fees for professional or technical services: | ||
| i) sum paid or payable towards fees for technical services | 2% | 1.50% | |
| ii) sum paid or payable towards royalty in the nature of consideration for sale, distribution or exhibition of cinematographic films; | 2% | 1.50% | |
| iii) Any other sum | 10% | 7.50% | |
| 194K | Any payments made with respect to units of a mutual fund, units from the administrator, or units from a specified company | 10 | 7.5 |
| 194LA | Compensation paid for acquisition of immovable property | 10 | 7.5 |
| 194LBA | Income paid by a business trust to its unit holders | 10 | 7.5 |
| 194LBB | Income paid by investment funds to its investors | 10 | 7.5 |
| 194LBC | Income paid to an investor (individual or HUF) on account of investment in a securitization trust | 25 | 18.75 |
| 194LBC | Income paid to an investor (other than individual or HUF) on account of investment in a securitization trust | 30 | 22.50 |
| 194M | Payments (made by individuals) not covered under u/s 194C, 194J and 194H, provided such payments exceed Rs. 50 lakhs | 5 | 3.75 |
| 194N | Payments to e-commerce operators for goods or services that they facilitate via digital or electronic platforms | – | 0.75 |
Shown below is the TDS rate chart that is applicable to Non-Resident Indians (NRIs).
| Section of the Income Tax Act, 1961 | Particulars | Normal TDS rate (%) from 01.04.2021 |
Revised TDS rate (%)
(From May 14, 2020 to March 31, 2021) |
| 192 | Payment of salary | 10 | 10 |
| 192A | Premature EPF withdrawal | 10 | 10 |
| 193 | Interest on securities | 10 | 7.5 |
| 194 | Dividend | 10 | 7.5 |
| 194B | Winnings from lotteries, crossword puzzles, and other games | 30 | 30 |
| 194BB | Winnings from horse races | 30 | 30 |
| 194E | Payment made to non-resident sportspersons | 20 | 20 |
| 194EE | Payment from National Savings Scheme | 10 | 10 |
| 194F | Payment due to repurchase of a unit by Mutual Fund or Unit Trust of India | 20 | 20 |
| 194G | Commission from the sale of lottery tickets | 5 | 5 |
| 194LB | Payment of interest from infrastructure debt funds | 5 | 5 |
| 194LBA | Income paid by a business trust to its unit holders | 5 | 5 |
| 194LBC | Income paid to an investor (individual or HUF) on account of investment in a securitization trust | 30 | 30 |
| 194LC | Interest payments by an Indian company with regard to money borrowed in foreign currency | 5 | 5 |
| 194LD | Interest payments on rupee-denominated bonds to Foreign Institutional Investors | 5 | 5 |
Conclusion
The TDS rate chart given above should give you a better idea of the TDS rates applicable on different kinds of specified payments. If you are a recipient or a payer making any payments that require TDS to be deducted at source, make sure that you keep an eye out for the latest rates notified by the Government of India.
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