TDS (Tax Deducted at Source) is a mechanism of collecting income tax at the source of income. Under this system, the payer deducts a certain percentage of tax before making the payment and deposits it with the government on behalf of the payee.
Purpose of TDS
- Ensures regular flow of tax revenue to government
- Widens the tax base
- Reduces tax evasion
- Minimizes burden on taxpayer at year-end
Key TDS Rates (FY 2024-25)
| Section | Payment Type | Threshold | TDS Rate |
|---|---|---|---|
| 192 | Salary | Basic exemption | Slab rates |
| 194A | Interest (Banks) | Rs. 40,000 | 10% |
| 194C | Contractor (Individual) | Rs. 30,000 | 1% |
| 194C | Contractor (Others) | Rs. 30,000 | 2% |
| 194H | Commission | Rs. 15,000 | 5% |
| 194I(a) | Rent (P&M) | Rs. 2,40,000 | 2% |
| 194I(b) | Rent (Land/Building) | Rs. 2,40,000 | 10% |
| 194J | Professional fees | Rs. 30,000 | 10% |
TDS Due Dates
- Deposit: 7th of the following month (30th April for March)
- Return Filing: Quarterly (31st July, 31st Oct, 31st Jan, 31st May)
- TDS Certificates: Within 15 days of return due date
TDS Returns
- Form 24Q: TDS on salary
- Form 26Q: TDS on non-salary payments
- Form 27Q: TDS on payments to NRIs
- Form 27EQ: Tax collected at source
Non-Deduction/Lower Deduction
Payees can submit Form 15G/15H (no tax liability) or obtain certificate under Section 197 for lower/nil deduction.
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