Tax Deduction at Source (TDS) is one of the important compliance for Income Tax Assessee. Every Deductor has to deduct the TDS at the specified rate, if the payment exceeds threshold limit specified in particular section. There are various sections in Income Tax Law, which specify different TDS rates, nature of payment & its threshold limits for TDS and the same have been summarized in this article. Every year when the Budget is presented by FM, under Direct Tax Proposals, various changes in respect of TDS/TCS are also introduced. In Budget 2021 also, major changes have been made viz. Introduction of New Section of TDS & TCS for Non-Filer of Income Tax Returns (ITR) and TDS on Purchase of Goods w.e.f 01/07/2021. In this article, various TDS rates applicable for FY 2021-2022 (AY 2022-2023) i.e. for the period from 01.04.2021 to 31.03.2022 have been presented in Tabular Form along with explanation of Budget 2021 Changes in respect of TDS.
Sunset period for Lower TDS Rates due to COVID-19 (14/05/2020 to 31/03/2021)
After outbreak of COVID-19 pandemic, Govt has specified Lower TDS rates in “The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020”. In case of the provisions of sections 193, 194, 194A, 194C, 194D, 194DA,194EE, 194F, 194G, 194H, 194-I,194-IA, 194-IB, 194-IC, 194J, 194K,194LA, sub-section (1) of section 194LBA, clause (i) of section 194LBB, sub-section (1) of section 194LBC, sections 194M and 194-O require deduction of tax at source during the period commencing from the 14th day of May, 2020 to the 31st day of March, 2021, then notwithstanding anything contained in these sections the deduction of tax shall be made at the rate being the three-fourth of the rate specified in these sections.
These concessional rates of TDS were applicable till 31.03.2021 only. Hence old TDS rates (prior to 14/05/2020) would be applicable w.e.f 01.04.2021. Various TDS Rates applicable for FY 2021-2022 (AY 2022-2023) have been summarized in this article.
TDS Rate Chart for FY 2021-2022 (AY 2022-2023) including Budget 2021 Amendments
| Section | Nature of Payment | Threshold | TDS Rate | Remarks |
| 192 | Salary | Taxable Income liable to Tax | Normal Slab Rate(or)New Tax Regime Slab Rate as opted by employee | Refer Note 4 & 5 for Old & New Regime Slab RatesOPTION TO CHOOSE BETWEEN NEW AND OLD TAX SLAB REGIME FOR SALARIED EMPLOYEES |
| 192A | Payment of accumulated balance of provident fund which is taxable in the hands of an employee. | 50,000 | 10% | – |
| 193 | Interest on securities | 2,500 | 10% | – |
| 194 | Dividend | 5,000 | 10% | Budget 2021 UpdateThis amendment proposes to amend second proviso to section 194 of the Act to further provide that the provisions of section 194 i.e. TDS on dividend shall also not apply to dividend income credited or paid to a business trust by a special purpose vehicle or payment of dividend to any other person as may be notified.This means that no TDS needs to be deducted to AIF Category III also. |
| 194A | Interest on Bank Deposit/Post Office Deposit/Banking Co-Society Deposit(Interest other than “Interest on securities” ) | |||
| a) Senior Citizen | 50,000 | 10% | – | |
| b) Others | 40,000 | 10% | – | |
| 194A | Interest other than “Interest on securities”(Other Than Bank Deposit/Post Office Deposit/Banking Co-Society Deposit) | 5,000 | 10% | – |
| 194B | Winnings from lotteries, crossword puzzles, card games and other games of any sort | 10,000 | 30% | – |
| 194BB | Winnings from horse races | 10,000 | 30% | – |
| 194C | Payment to contractor/sub-contractor: | Single Transaction: 30,000 & Aggregate of Transactions: 1,00,000 | – | |
| a) HUF/ Individuals | 1% | – | ||
| b) Others | 2% | – | ||
| 194D | Insurance commission | |||
| a) Individuals | 15,000 | 5% | – | |
| b) Companies | 15,000 | 10% | – | |
| 194DA | Payment in respect of life insurance policy, the tax shall be deducted on the amount of income comprised in insurance pay-out | 1,00,000 | 5% | – |
| 194E | Payment to non-resident sportsmen/sports association | – | 20% | The rate of TDS shall be increased by applicable surcharge and Health & Education cess. |
| 194EE | Payment in respect of deposit under National Savings scheme | 2,500 | 10% | – |
| 194F | Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India | – | 20% | – |
| 194G | Commission on sale of lottery tickets | 15,000 | 5% | – |
| 194H | Commission or brokerage | 15,000 | 5% | – |
| 194-I | Rent: | |||
| 194-I(a) Plant & Machinery | 2,40,000 | 2% | – | |
| 194-I(b) Land or building or furniture or fitting | 2,40,000 | 10% | – | |
| 194-IA | Payment on transfer of certain immovable property other than agricultural land | 50 Lakh | 1% | – |
| 194-IB | Payment of rent by individual or HUF not liable to tax audit | 50,000 per month | 5% | – |
| 194-IC | Payment of monetary consideration under Joint Development Agreements | – | 10% | – |
| 194J | Fees for professional or technical services: | |||
| i) sum paid or payable towards fees for technical services | 30,000 | 2% | – | |
| ii) sum paid or payable towards royalty in the nature of consideration for sale, distribution or exhibition of cinematographic films; | 30,000 | 2% | – | |
| iii) Any other sum | 30,000 | 10% | – | |
| 194K | Income in respect of units payable to resident person | – | 10% | – |
| 194LA | Payment of compensation on acquisition of certain immovable property | 2,50,000 | 10% | – |
| 194LB | Payment of interest on infrastructure debt fund to Non Resident | – | 5% | The rate of TDS shall be increased by applicable surcharge and Health & Education cess. |
| 194LBA(1) | Business trust shall deduct tax while distributing, any interest received or receivable by it from a SPV or any income received from renting or leasing or letting out any real estate asset owned directly by it, to its unit holders. | – | 10% | – |
| 194LBB | Investment fund paying an income to a unit holder [other than income which is exempt under Section 10(23FBB)] | – | 10% | – |
| 194LBC | Income in respect of investment made in a securitisation trust (specified in Explanation of section115TCA) | |||
| a) HUF/Individuals | – | 25% | – | |
| b) Others | – | 30% | – | |
| 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. | 50 Lakh | 5% | – |
| 194N | Cash withdrawal during the previous year from one or more account maintained by a person with a banking company, co-operative society engaged in business of banking or a post office: | |||
| i) in excess of Rs. 1 crore | 1 Crore | 2% | – | |
| ii) in excess of Rs. 20 lakhs (for those persons who have not filed return of income (ITR) for three previous years immediately preceding the previous year in which cash is withdrawn, and the due date for filing ITR under section 139(1) has expired.) The deduction of tax under this situation shall be at the rate of: | ||||
| a) On amount withdrawn in cash if the aggregate of the amount of withdrawal exceeds Rs. 20 lakhs during the previous year; | 20 Lakh | 2% | – | |
| b) On amount withdrawn in cash if the aggregate of the amount of withdrawal exceeds Rs. 1 crore during the previous year; | 1 Crore | 5% | – | |
| 194-O | Payment or credit of amount by the e-commerce operator to e-commerce participant | 5 Lakh | 1% | – |
| 194Q | Purchase of goods (applicable w.e.f 01.07.2021) | 50 Lakh | 0.10% | Budget 2021 UpdateA new section 194Q is proposed to be inserted to provide for deduction of TDS by person responsible for paying any sum to any resident for purchase of goods @ 0.1%.Refer Note 1 for details about this amendment |
| 195 | Payment of any other sum to a Non-resident | The rate of TDS shall be increased by applicable surcharge and Health & Education cess. | ||
| a) Income in respect of investment made by a Non-resident Indian Citizen | – | 20% | – | |
| b) Income by way of long-term capital gains referred to in Section 115E in case of a Non-resident Indian Citizen | – | 10% | – | |
| c) Income by way of long-term capital gains referred to in sub-clause (iii) of clause (c) of sub-Section (1) of Section 112 | – | 10% | – | |
| d) Income by way of long-term capital gains as referred to in Section 112A | – | 10% | – | |
| e) Income by way of short-term capital gains referred to in Section 111A | – | 15% | – | |
| f) Any other income by way of long-term capital gains [not being long-term capital gains referred to in clauses 10(33), 10(36) and 112A | – | 20% | – | |
| g) Income by way of interest payable by Government or an Indian concern on moneys borrowed or debt incurred by Government or the Indian concern in foreign currency (not being income by way of interest referred to in Section 194LB or Section 194LC) | – | 20% | – | |
| h) Any other Income | – | 30% | – | |
| 206AB | TDS on non-filers of ITR at higher rates(applicable w.e.f 01.07.2021) | Refer Note 2 | Refer Note 2 | Budget 2021 Update Refer Note 2 |
| 194P | TDS on Senior Citizen above 75 Years | Refer Note 3 | Refer Note 3 | Budget 2021 Update Refer Note 3 |
Detailed Explanations of Budget 2021 Changes in respect of TDS
Note 1: Section 194Q – New TDS on purchase of goods [applicable w.e.f. 01.07.2021]
a) TDS Rate
A new section 194Q is proposed to be inserted to provide for deduction of TDS by person responsible for paying any sum to any resident for purchase of goods @ 0.10%.
b) Deductor
It is proposed that TDS under this section is only required to be deducted by those person (i.e. buyer) whose total sales or gross receipts or turnover from the business carried on by him exceed Rs. 10 Crores during the financial year immediately preceding the financial year in which the purchase of goods is carried out.
c) Threshold
Tax is required to be deducted by such person, if the purchase of goods by him from the seller is of the value or aggregate of such value exceeding Rs. 50 Lakhs in the previous year.
d) TDS Non-Applicability
It is proposed to provide that the provisions of this section shall not apply to –
(i) a transaction on which tax is deductible under any provision of the Act; and
(ii) a transaction, on which tax is collectible under the provisions of section 206C (other than transaction to which section 206C(1H) applies.)
e) Exemption from TCS (if TDS Paid)
This means, if on a transaction a TDS or TCS is required to be carried out under any other provision, then it would not be subjected to TDS under this section, other than a transaction where TCS is required under section 206C(1H) as well as TDS under this section, then on that transaction only TDS under this section shall be carried out.
f) Exception from TDS applicability
Central Government is proposed to be empowered by notification in the Official Gazette to exempt a person from obligation under this section on fulfillment of conditions as may be specified in that notification. Board with the approval of the Central Government has been empowered to issue guidelines for removing difficulty in giving effect to the provisions of this section.
g) Higher Rate of TDS due to non availability of PAN
Consequential amendment is also proposed in section 206AA(1) of the Act and insert second proviso to further provide that where the tax is required to be deducted under section 194Q and PAN is not provided, the TDS shall be at the rate of 5%.
Note 2 : Insertion of new section 206AB and 206CCA – TDS/ TCS on non-filers of ITR at higher rates [applicable w.e.f. 01.07.2021]
a) Applicability
It is proposed to insert a new section 206AB in the Act as a special provision providing for higher rate for TDS for the non-filers of income-tax return. Similarly, it is proposed to insert a section 206CCA in the Act as a special provision for providing for higher rate of TCS for non-filers of income-tax return. Proposed section 206AB of the Act would apply on any sum or income or amount paid, or payable or credited, by a person (herein referred to as deductee) to a specified person.
b) Non-Applicability
This section shall not apply where the tax is required to be deducted under sections 192, 192A, 194B, 194BB, 194LBC or 194N of the Act.
c) TDS Rate
The proposed TDS rate in this section is higher of the followings rates –
- twice the rate specified in the relevant provision of the Act; or
- twice the rate or rates in force; or
- the rate of 5%
d) TDS rate in case of Non Availability of PAN
If the provision of section 206AA of the Act is applicable to a specified person, in addition to the provision of this section, the tax shall be deducted at higher of the two rates provided in this section and in section 206AA of the Act.
Section 206AA (1) Notwithstanding anything contained in any other provisions of this Act, any person entitled to receive any sum or income or amount, on which tax is deductible under Chapter XVIIB (hereafter referred to as deductee) shall furnish his Permanent Account Number to the person responsible for deducting such tax (hereafter referred to as deductor), failing which tax shall be deducted at the higher of the following rates, namely:—
(i) at the rate specified in the relevant provision of this Act; or
(ii) at the rate or rates in force; or
(iii) at the rate of twenty per cent:
[Provided that where the tax is required to be deducted under section 194-O, the provisions of clause (iii) shall apply as if for the words “twenty per cent”, the words “five per cent” had been substituted.]
e) TCS Rate
Proposed section 206CCA of the Act would apply on any sum or amount received by a person (herein referred to as collectee) from a specified person. The proposed TCS rate in this section is higher of the following rates –
- twice the rate specified in the relevant provision of the Act; or
- the rate of 5%
f) TCS rate in case of Non Availability of PAN
If the provision of section 206CC of the Act is applicable to a specified person, in addition to the provision of this section, the tax shall be collected at higher of the two rates provided in this section and in section 206CC of the Act.
g) Deductee i.e. Specified Person
“Specified person” proposes to means a person
1. who has not filed the returns of income for both of the two assessment years relevant to the two previous years which are immediately before the previous year in which tax is required to be deducted or collected, as the case may be.
2. further the time limit for filing tax return under section 139(1) of the Act has expired for both these assessment years.
3. There is another condition that aggregate of TDS and TCS in his case is Rs. 50,000 or more in each of these two previous years.
4. Specified person shall not include a non-resident who does not have a permanent establishment in India.
Note 3 : Relaxation for senior citizen from filing ITR (Subject to Tax Deduction under Section 194P) [AY 2021-22]
It is proposed to insert a new section 194P to the Act, which proposes to provide relief to the senior citizens of the age of 75 years or above from the compliance of section 139 of the Act which provides for filing of return of income.
A senior citizen of the age of 75 year or above is not required to file the return of income, if the following conditions are satisfied –
- The senior citizen is resident in India and of the age of 75 or more during the previous year;
- He has only pension income and may also have interest income from the same bank (specified bank – to be notified by the CG) in which he is receiving his pension income;
- He shall be required to furnish a declaration to the specified bank. The declaration shall be containing such particulars, in such form and verified in such manner, as may be prescribed.
Once the declaration is furnished, the specified bank would be required to compute the income of such senior citizen after giving effect to the deduction allowable under Chapter VI-A and rebate allowable under section 87A of the Act, for the relevant assessment year and deduct income tax on the basis of rates in force. Once this is done, there will not be any requirement of furnishing return of income by such senior citizen for this assessment year.
Note 4: New Tax Regime Slab for AY 2022-2023
Tax rates under section 115BAC, on satisfaction of certain conditions as per the provisions of section 115BAC, an individual or HUF shall, from assessment year 2021-22 onwards, have the option to pay tax in respect of the total income at following rates:
Total Income (Rs) Rate
Upto 2,50,000 Nil
From 2,50,001 to 5,00,000 5 per cent.
From 5,00,001 to 7,50,000 10 per cent.
From 7,50,001 to 10,00,000 15 per cent.
From 10,00,001 to 12,50,000 20 per cent.
From 12,50,001 to 15,00,000 25 per cent.
Above 15,00,000 30 per cent.
Note 5: Basic Slab Rates for AY 2022-2023
(i) The rates of income-tax in the case of every individual (other than those mentioned in (ii) and (iii) below) or HUF or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Act (not being a case to which any other Paragraph of Part III applies) are as under:—
Total Income (Rs) Rate
Up to Rs. 2,50,000 Nil.
Rs. 2,50,001 to Rs.5,00,000 5 percent.
Rs. 5,00,001 to Rs.10,00,000 20 percent.
Above Rs. 10,00,000 30 percent.
(ii) In the case of every individual, being a resident in India, who is of the age of sixty years or more but less than eighty years at any time during the previous year,—
Total Income (Rs) Rate
Up to Rs. 3,00,000 Nil.
Rs. 3,00,001 to Rs.5,00,000 5 percent.
Rs. 5,00,001 to Rs.10,00,000 20 percent.
Above Rs. 10,00,000 30 percent.
(iii) in the case of every individual, being a resident in India, who is of the age of eighty years or more at any time during the previous year,—
Total Income (Rs) Rate
Up to Rs.5,00,000 Nil.
Rs. 5,00,001 to Rs.10,00,000 20 percent.
Above Rs 10,00,000 30 percent.
Note 6: Applicability of Surcharge on TDS in Certain Cases
The amount of tax so deducted shall be increased by a surcharge,—
(a) in the case of every individual or HUF or association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Act, being a non-resident, calculated,—
(i) at the rate of ten per cent of such tax, where the income or aggregate of income (including the income by way of dividend or income under the provisions of sections 111A and 112A of the Act) paid or likely to be paid and subject to the deduction exceeds fifty lakh rupees but does not exceed one crore rupees;
(ii) at the rate of fifteen per cent of such tax, where the income or aggregate of income (including the income by way of dividend or income under the provisions of sections 111A and 112A of the Act) paid or likely to be paid and subject to the deduction exceeds one crore rupees but does not exceed two crore rupees;
(iii) at the rate of twenty-five per cent of such tax, where the income or aggregate of income (excluding the income by way of dividend or income under the provisions of sections 111A and 112A of the Act) paid or likely to be paid and subject to the deduction exceeds two crore rupees but does not exceed five crore rupees;
(iv) at the rate of thirty-seven per cent of such tax, where the income or aggregate of income (excluding the income by way of dividend or income under the provisions of sections 111A and 112A of the Act) paid or likely to be paid and subject to the deduction exceeds five crore rupees;
(v) at the rate of fifteen per cent of such tax, where the income or aggregate of income (including the income by way of dividend or income under the provisions of section 111A and 112A of the Act) paid or likely to be paid and subject to the deduction exceeds two crore rupees, but is not covered under (iii) and (iv) above provided that in case where the total income includes any income by way of dividend of income chargeable under section 111A and section 112A of the Act, the rate of surcharge on the amount of income-tax deducted in respect of that part of income shall not exceed fifteen per cent.
(b) in the case of every co-operative society or firm, being a non-resident, calculated at the rate of twelve per cent of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees;
(c) in the case of every company, other than a domestic company, calculated,—
(i) at the rate of two per cent of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees but does not exceed ten crore rupees;
(ii) at the rate of five per cent of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds ten crore rupees.
No surcharge will be levied on deductions in other cases.
Note 7: Applicability of Health & Education Cess on TDS in Certain Cases
Health and Education Cess‖ shall continue to be levied at the rate of four per cent of income tax including surcharge wherever applicable, in the cases of persons not resident in India including company other than a domestic company.
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