Everything You Need To
Know About TDS [Updated 2020]
Topics Covered :-
What is TDS or Tax Deducted at Source?
What are the due dates of TDS?
Everything You Need To
Know About TDS [Updated 2020]
Topics Covered :-
What is TDS or Tax Deducted at Source?
What are the due dates of TDS?
What is TDS or Tax Deducted at Source?
TDS or ‘Tax Deducted at Source’ is a percentage of money deducted from one’s income at the time of payment. It is exercised by any company or person making payments like salary, commission, professional fees, interest, or rent. Such people/entities are termed as ‘deductors’ and are required to deduct a certain percentage of tax from the sum, prescribed in the Income Tax act, before making the payment. The same has to be deposited in the government’s account.
This system was introduced by the Income Tax Department to minimise tax evasion by taxing the income in advance at the point of payment rather than at a later date.
What is a TDS Certificate?
TDS certificate is a document issued by the deductor to a deductee, a person who is taxed. By law, every deductor is liable to issue a TDS Certificate to its employees. There are two types of TDS certificates issued by the deductor,
- Form 16: It is issued by an employer to all its employees, incorporating details of the tax deductions made by the employer in the given financial year.
- Form 16A: It is issued in all other cases besides salary.
Also, FYI, Form 26AS is a tax credit statement that one can check and view the tax deducted/deposited on the taxpayer’s behalf by the deductor.
What are the Rates of TDS?
Different rates of TDS have been prescribed in the TDS Act for different types of payments. The following are the rates of TDS on salaried and non-salaried payments, applicable from 14 May 2020 to 31 March 2021.
| Section | Nature of Payment | Rate of TDS |
| 192 | Salary | 15% (Educational and higher education cess @ 2 % and 1% respectively in cases where salary exceeds INR 1 Crore) |
| 194 | Deemed Dividend u/s 2(22)(e) | 10% |
| 194A | Interest other than interest on securities | 10% |
| 194C | Payment or credit to a resident contractor/sub-contractor |
1% (in case of individuals and HUF)
2% (in case of a person other than individual and HUF) |
| 194D | Insurance Commission |
5% (in case of individuals and HUF)
10% (in case of a person other than individual and HUF) |
| 194G | Commission on sale of lottery tickets | 10% |
| 194H | Commission or Brokerage | 10% |
| 194-I | Rent |
2% (rent of plant & machinery)
10% (rent of land or building or furniture or fixtures) |
| 194-IA | Payment/credit of consideration to a resident transferor for transfer of any immovable property (other than rural agricultural land) | 1% |
| 194J | Professional fees, technical fees, royalty or remuneration to a director | 10% |
| 194LA | Payment of compensation on acquisition of certain immovable property | 10% |
Read more about TDS rates for AY 2021-22 here,
How to calculate TDS?
TDS can be easily calculated by using the TDS calculator provided on the Income Tax Department website. Click on the link below or copy-paste it to your browser and you will be directed to the TDS Calculator. Enter the Financial year, Residential status, your PAN number, Recipient Type, Section/ Description, Payment amount, Surcharge and Education Cess etc and click on Calculate. Your TDS amount will be calculated. Click on the link below to get directed to the TDS Calculator,
What are the due dates of TDS?
The due dates for TDS payments every month as per the current financial year are as follows,
| Month | Due date of payment of TDS |
| April | 7th of May |
| May | 7th of June |
| June | 7th of July |
| July | 7th of August |
| August | 7th of September |
| September | 7th of October |
| October | 7th of November |
| November | 7th of December |
| December | 7th of January |
| January | 7th of February |
| February | 7th of March |
| March | 30th of April |
How to Deposit TDS?
The deductor, the one who is making the payment is responsible for deducting TDS from the amount to be paid to a person and depositing the TDS to government’s account within the due dates as discussed above. The online procedure to deposit TDS is explained below,
- Visit NSDL’s portal for e-payment of taxes (https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp).
- Under the TDS/TCS section, click on CHALLAN NO./ITNS 281’. You will be directed to the payment page.
- Enter the following details,
- Under Tax Applicable, select 0020 for Company Deductee and 0021 for Non-Company Deductee.
- Enter the TAN number and assessment year details. TAN is mandatory for deductees to deposit TDS.
- Enter the ‘Pin Code’ and select ‘State’ from the drop-down menu.
- Under ‘Type of Payment’, choose either (200) TDS/TCS Payable by Taxpayer or (400) TDS/TCS Regular Assessment, whichever is applicable.
- Next choose the mode of payment, which can be via net banking or Debit Card.
- Enter personal details like address, mobile number etc, enter the CAPTCHA and click on Proceed.
- After clicking on Proceed, review all the details entered by you and make any necessary corrections if any. Proceed to pay if everything is okay.
- You will be directed to your bank’s net banking page where you have to complete the payment.
- Once you have successfully made the payment, you will get a Challan Counterfoil which will be your proof of TDS payment. It will contain all details like amount paid, name of the bank, mode of payment and a Challan Identification Number.
How TDS is collected?
The person/entity who is responsible for collecting TDS deducts a certain percentage from the amount to be paid to an individual as salary, stipend or any other kind of payment and pays the remaining balance to the individual. The deductor deposits the TDS cut in government’s account. By law, the deductor must provide the deductee (i.e. the individual) a TDS Certificate. The deductee can claim this TDS amount as tax paid by him for that financial year. Once the TDS is deposited, it will be reflected in the Form 26AS of individual deductees.
What is the Threshold Level of TDS?
TDS can be deducted only if the value of the payment is above the threshold level, specified by the Income Tax department, different for different types of payment methods as discussed before. The various TDS threshold levels for FY 2020-21 have been compiled as under,
| Section | Nature of Payment | Threshold level of TDS |
| 192 | Salary | Employers need to calculate the tax liability as per the slab rates applicable after considering the deductions and exemptions*. |
| 194 | Deemed Dividend u/s 2(22)(e) | Up to INR 5,000 |
| 194A | Interest other than interest on securities | Up to INR40,000 for payments made by banks, cooperative banks, certain specified cooperative societies or on post office deposits and up to INR 5000 for other cases. [In case of a senior citizen, the limit of INR 40,000 was increase to INR 50,000 w.e.f. 1.4.2018] |
| 194C | Payment or credit to a resident contractor/sub-contractor | Up to INR.30,000 for single payment. Up to INR 1,00,000 for aggregate amount during a FY. Payment to a transporter in course of business where he declares through a PAN that he owns 10 or less goods carriages during the year is also exempt from TDS. |
| 194D | Insurance Commission | Up to INR15,000 |
| 194G | Commission on sale of lottery tickets | Up to INR15,000 |
| 194H | Commission or Brokerage | Up to INR15,000 |
| 194-I | Rent | Up to INR 2,40,000 |
| 194-IA | Payment/credit of consideration to a resident transferor for transfer of any immovable property (other than rural agricultural land) | Less INR 50,00,000 |
| 194J | Professional fees, technical fees, royalty or remuneration to a director | Up to INR 30,000 |
| 194LA | Payment of compensation on acquisition of certain immovable property | Up to INR 2,50,000 |
*For salaried Individuals under Section 192, basic exemption level as per age is given below,
| Age | Minimum income |
| Resident in India below 60 years | Rs 2.5 lakh |
| Senior Citizens between 60 years and below 80 years | Rs 3 lakh |
| Super Senior Citizens above 80 years | Rs 5 lakh |
How to avoid TDS?
TDS can be avoided by submitting Form 15G/15H to the person/entity (i.e. the deductor) if one expects that his/her income in a financial year will be less than the exemption limit. The person must provide his/her PAN at the time of receiving payment to avoid TDS at higher rates.
What is TDS or Tax Deducted at Source?
TDS or ‘Tax Deducted at Source’ is a percentage of money deducted from one’s income at the time of payment. It is exercised by any company or person making payments like salary, commission, professional fees, interest, or rent. Such people/entities are termed as ‘deductors’ and are required to deduct a certain percentage of tax from the sum, prescribed in the Income Tax act, before making the payment. The same has to be deposited in the government’s account.
This system was introduced by the Income Tax Department to minimise tax evasion by taxing the income in advance at the point of payment rather than at a later date.
What is a TDS Certificate?
TDS certificate is a document issued by the deductor to a deductee, a person who is taxed. By law, every deductor is liable to issue a TDS Certificate to its employees. There are two types of TDS certificates issued by the deductor,
- Form 16: It is issued by an employer to all its employees, incorporating details of the tax deductions made by the employer in the given financial year.
- Form 16A: It is issued in all other cases besides salary.
Also, FYI, Form 26AS is a tax credit statement that one can check and view the tax deducted/deposited on the taxpayer’s behalf by the deductor.
What are the Rates of TDS?
Different rates of TDS have been prescribed in the TDS Act for different types of payments. The following are the rates of TDS on salaried and non-salaried payments, applicable from 14 May 2020 to 31 March 2021.
| Section | Nature of Payment | Rate of TDS |
| 192 | Salary | 15% (Educational and higher education cess @ 2 % and 1% respectively in cases where salary exceeds INR 1 Crore) |
| 194 | Deemed Dividend u/s 2(22)(e) | 10% |
| 194A | Interest other than interest on securities | 10% |
| 194C | Payment or credit to a resident contractor/sub-contractor |
1% (in case of individuals and HUF)
2% (in case of a person other than individual and HUF) |
| 194D | Insurance Commission |
5% (in case of individuals and HUF)
10% (in case of a person other than individual and HUF) |
| 194G | Commission on sale of lottery tickets | 10% |
| 194H | Commission or Brokerage | 10% |
| 194-I | Rent |
2% (rent of plant & machinery)
10% (rent of land or building or furniture or fixtures) |
| 194-IA | Payment/credit of consideration to a resident transferor for transfer of any immovable property (other than rural agricultural land) | 1% |
| 194J | Professional fees, technical fees, royalty or remuneration to a director | 10% |
| 194LA | Payment of compensation on acquisition of certain immovable property | 10% |
Read more about TDS rates for AY 2021-22 here,
How to calculate TDS?
TDS can be easily calculated by using the TDS calculator provided on the Income Tax Department website. Click on the link below or copy-paste it to your browser and you will be directed to the TDS Calculator. Enter the Financial year, Residential status, your PAN number, Recipient Type, Section/ Description, Payment amount, Surcharge and Education Cess etc and click on Calculate. Your TDS amount will be calculated. Click on the link below to get directed to the TDS Calculator,
What are the due dates of TDS?
The due dates for TDS payments every month as per the current financial year are as follows,
| Month | Due date of payment of TDS |
| April | 7th of May |
| May | 7th of June |
| June | 7th of July |
| July | 7th of August |
| August | 7th of September |
| September | 7th of October |
| October | 7th of November |
| November | 7th of December |
| December | 7th of January |
| January | 7th of February |
| February | 7th of March |
| March | 30th of April |
How to Deposit TDS?
The deductor, the one who is making the payment is responsible for deducting TDS from the amount to be paid to a person and depositing the TDS to government’s account within the due dates as discussed above. The online procedure to deposit TDS is explained below,
- Visit NSDL’s portal for e-payment of taxes (https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp).
- Under the TDS/TCS section, click on CHALLAN NO./ITNS 281’. You will be directed to the payment page.
- Enter the following details,
- Under Tax Applicable, select 0020 for Company Deductee and 0021 for Non-Company Deductee.
- Enter the TAN number and assessment year details. TAN is mandatory for deductees to deposit TDS.
- Enter the ‘Pin Code’ and select ‘State’ from the drop-down menu.
- Under ‘Type of Payment’, choose either (200) TDS/TCS Payable by Taxpayer or (400) TDS/TCS Regular Assessment, whichever is applicable.
- Next choose the mode of payment, which can be via net banking or Debit Card.
- Enter personal details like address, mobile number etc, enter the CAPTCHA and click on Proceed.
- After clicking on Proceed, review all the details entered by you and make any necessary corrections if any. Proceed to pay if everything is okay.
- You will be directed to your bank’s net banking page where you have to complete the payment.
- Once you have successfully made the payment, you will get a Challan Counterfoil which will be your proof of TDS payment. It will contain all details like amount paid, name of the bank, mode of payment and a Challan Identification Number.
How TDS is collected?
The person/entity who is responsible for collecting TDS deducts a certain percentage from the amount to be paid to an individual as salary, stipend or any other kind of payment and pays the remaining balance to the individual. The deductor deposits the TDS cut in government’s account. By law, the deductor must provide the deductee (i.e. the individual) a TDS Certificate. The deductee can claim this TDS amount as tax paid by him for that financial year. Once the TDS is deposited, it will be reflected in the Form 26AS of individual deductees.
What is the Threshold Level of TDS?
TDS can be deducted only if the value of the payment is above the threshold level, specified by the Income Tax department, different for different types of payment methods as discussed before. The various TDS threshold levels for FY 2020-21 have been compiled as under,
| Section | Nature of Payment | Threshold level of TDS |
| 192 | Salary | Employers need to calculate the tax liability as per the slab rates applicable after considering the deductions and exemptions*. |
| 194 | Deemed Dividend u/s 2(22)(e) | Up to INR 5,000 |
| 194A | Interest other than interest on securities | Up to INR40,000 for payments made by banks, cooperative banks, certain specified cooperative societies or on post office deposits and up to INR 5000 for other cases. [In case of a senior citizen, the limit of INR 40,000 was increase to INR 50,000 w.e.f. 1.4.2018] |
| 194C | Payment or credit to a resident contractor/sub-contractor | Up to INR.30,000 for single payment. Up to INR 1,00,000 for aggregate amount during a FY. Payment to a transporter in course of business where he declares through a PAN that he owns 10 or less goods carriages during the year is also exempt from TDS. |
| 194D | Insurance Commission | Up to INR15,000 |
| 194G | Commission on sale of lottery tickets | Up to INR15,000 |
| 194H | Commission or Brokerage | Up to INR15,000 |
| 194-I | Rent | Up to INR 2,40,000 |
| 194-IA | Payment/credit of consideration to a resident transferor for transfer of any immovable property (other than rural agricultural land) | Less INR 50,00,000 |
| 194J | Professional fees, technical fees, royalty or remuneration to a director | Up to INR 30,000 |
| 194LA | Payment of compensation on acquisition of certain immovable property | Up to INR 2,50,000 |
*For salaried Individuals under Section 192, basic exemption level as per age is given below,
| Age | Minimum income |
| Resident in India below 60 years | Rs 2.5 lakh |
| Senior Citizens between 60 years and below 80 years | Rs 3 lakh |
| Super Senior Citizens above 80 years | Rs 5 lakh |
How to avoid TDS?
TDS can be avoided by submitting Form 15G/15H to the person/entity (i.e. the deductor) if one expects that his/her income in a financial year will be less than the exemption limit. The person must provide his/her PAN at the time of receiving payment to avoid TDS at higher rates.
Still have some queries?
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Ask questions about Tax savings, Tax returns,
notices & compliances etc.
Still have some queries?
Talk to an expert…
Talk to an expert via call, whatsapp or messages.
Ask questions about Tax savings, Tax returns,
notices & compliances etc.
