TDS Rate Chart for FY 2022-23(AY 2023- 24): A Comprehensive Guide

TDS, an acronym for Tax Deducted at Source, entails the collection of income tax from diverse income sources like salary, rent, asset sales, dividends, and other forms. This procedure mandates the payer to withhold the applicable tax amount from the income being credited or paid to the recipient, subsequently remitting it to the government on the payee's behalf.

At the heart of simplifying the overall tax collection process, in the preview of the implementation of this system, tax obligations get effectively fulfilled at the source.

Unfolding corresponding updates from the budget 2023:

1. Section 194BA - Embracing the digital era, the budget introduces the inclusion of TDS on income derived from online gaming. This step aims to ensure fair taxation practices in this rapidly growing industry.

2. Section 196A - Recognizing the global nature of investments, starting April 1st, 2023, non-residents earning income from mutual funds in India are granted a valuable opportunity. They can now provide a Tax Residency Certificate, unlocking the potential to avail themselves of TDS rates specified in tax treaties. This provision offers them flexibility and aligns with international tax principles.

3. Section 192A - Addressing the concerns of employees without a PAN card, a positive change has been implemented. The TDS rate on PF withdrawal has been reduced to 20%, replacing the previous maximum marginal rate. This revision ensures that employees without PAN are not unduly burdened while accessing their hard-earned savings.

4. Section 193 - An adjustment in tax regulations has been made concerning interest earned from listed debentures. To promote consistency and effective tax administration, the exemption from TDS on such interest has been removed. Henceforth, the tax must be deducted on interest from these specified securities, ensuring a level playing field.

5. Section 194N - Recognizing the evolving financial landscape, the budget brings forth an increase in the TDS threshold for cash withdrawals by cooperative societies. Starting April 1st, 2023, cooperative societies will be subject to TDS if the cash withdrawal amount surpasses Rs 3 crores. This amendment, up from the previous limit of Rs 1 crore, aims to enhance transparency and compliance in large-scale cash transactions.

Comprehending the TDS Rate Chart for FY 2022-23

Category 1:

Salary and Provident Fund

Section 192:

• Nature of Payment: Salary

• Taxable income liable to tax serves as the benchmark for applicability

• TDS Rate: Determined based on the normal slab rate or the new tax regime slab rate chosen by the employee

Section 192A:

• Nature of Payment: Payment of the accumulated balance of provident fund subject to taxation for the employee

• Minimum threshold: ₹50,000

• TDS Rate: 10%

Category 2:

Interest and Dividends

Section 193:

• Nature of Payment: Interest on securities

• Minimum limit: ₹2,500

• TDS Rate: 10%

Section 194:

• Nature of Payment: Dividend

• Minimum limit: ₹5,000

• TDS Rate: 10%

Section 194A:

• Nature of Payment: Interest earned from bank deposits, post office deposits, and banking cooperative society deposits (excluding interest on securities)

a) Senior citizens:

• Minimum limit: ₹50,000

• TDS Rate: 10%

b) Others:

• Minimum limit: ₹10,000

• TDS Rate: 30%

Section 194BB:

• Nature of Payment: Winnings from horse races

• Minimum limit: ₹10,000

• TDS Rate: 30%

Category 3:

Contractor Payments, Commissions, and Rent

Section 194C:

• Nature of Payment: Payment made to contractors or sub-contractors

• a) HUF/Individuals:

• Minimum limit: Single transaction: ₹30,000 and aggregate of transactions: ₹1,00,000

• TDS Rate: 1%

• b) Others:

  • Minimum limit: Single transaction: ₹30,000 and aggregate of transactions: ₹1,00,000

  • TDS Rate: 2%

Section 194D:

• Nature of Payment: Insurance commission

a) Individuals:

• Minimum limit: ₹15,000

• TDS Rate: 5%

b) Companies:

• Minimum limit: ₹15,000

• TDS Rate: 10%

Section 194DA:

• Nature of Payment: Payment concerning life insurance policies (tax deducted on the income component)

• Minimum limit: ₹1,00,000

• TDS Rate: 5%

Section 194E:

• Nature of Payment: Payment made to non-resident sportsmen/sports associations

• TDS Rate: 20%

• Note: The TDS rate may be subject to surcharge and health and education cess.

Section 194EE:

• Nature of Payment: Payment concerning deposits under the National Savings Scheme

• Minimum limit: ₹2,500

• TDS Rate: 10%

Category 4:

Miscellaneous Payments

Section 194F:

• Nature of Payment: Payment made for the repurchase of units by a mutual fund or Unit Trust of India

• TDS Rate: 20%

Section 194G:

• Nature of Payment: Commission on the sale of lottery tickets

• Minimum limit: ₹15,000

• TDS Rate: 5%

Section 194H:

• Nature of Payment: Commission or brokerage

• Minimum limit: ₹15,000

• TDS Rate: 5%

Section 194I:

• Nature of Payment: Rent

a) Plant and Machinery:

• Minimum limit: ₹2,40,000

• TDS Rate: 2%

b) Real estate property, including land, buildings, furniture, or fixtures:

• Minimum limit: ₹2,40,000

• TDS Rate: 10%

Section 194IA:

• Nature of Payment: Payment made on the transfer of certain immovable properties (excluding agricultural land)

• Minimum limit: ₹50 lakhs

• TDS Rate: 1%

Section 194IB:

• Nature of Payment: Rent payment by individuals or HUFs is not liable to tax audit

• Minimum limit: ₹50,000 per month

• TDS Rate: 5%

Section 194IC:

• Nature of Payment: Payment of monetary consideration under Joint Development Agreements

• TDS Rate: 10%

Section 194J:

• Nature of Payment: Fees for professional services

a) Amount paid or to be paid for availing technical services:

• Minimum limit: ₹30,000 per month

• TDS Rate: 2%

b)Payment made or to be made for the use of royalty in exchange for the sale, distribution, or presentation of motion pictures on the big screen:

• Minimum limit: ₹30,000 per month

• TDS Rate: 2%

c) Any other sum:

• Minimum limit: ₹30,000 per month

• TDS Rate: 10%

Section 194LA:

• Nature of Payment: Compensation paid for the acquisition of certain immovable properties

• Minimum limit: ₹2,50,000 per month

• TDS Rate: 10%

Section 194LB:

• Nature of Payment: Payment of interest on infrastructure debt to non-residents

• TDS Rate: 5%

• Note: The TDS rate may increase due to an applicable surcharge and Health and Education cess.

Section 194LBA (1):

• Nature of Payment: Business trust deducts tax while distributing the interest received or receivable from a Special Purpose Vehicle (SPV) or income from renting, leasing, or letting out real estate assets directly owned by it to its unit holders.

• TDS Rate: 10%

Section 194LC:

• This section pertains to the payment of interest by an Indian company or business trust against a loan agreement or the issuance of long-term bonds borrowed in foreign currency.

• The TDS rate applicable in this case is 4%.

• It should be noted that if the interest is payable against long-term bonds listed on a recognized stock exchange in IFSC, this provision also applies.

Section 194LD:

• Under this section, the payment of interest on rupee-denominated bonds to Foreign Institutional Investors or Qualified Foreign Investors are covered.

• The TDS rate for such payments is set at 5%.

Section 196B:

• Income derived from units of an offshore fund, including long-term capital gains, falls under this section.

• The TDS rate for this type of income is 10%.

Section 196C:

• This section covers income, including long-term capital gains, generated from foreign currency bonds or Global Depository Receipts (GDR) issued by an Indian company.

• The TDS rate applicable in such cases is 10%.

Section 196D:

• Income obtained from Foreign Institutional Investors, excluding dividends and capital gains, is covered by this section.

• The TDS rate for this type of income is set at 20%.

Discover the all-new tax regime for the assessment year 2023-2024! With the implementation of the Finance Act of 2020, individuals and HUF now have the choice to avail themselves of reduced tax rates, starting from the assessment year 2021-22 and continuing into the future. This exciting development opens up a world of possibilities for taxpayers, offering the opportunity to experience the advantages of a streamlined and more beneficial tax system.

TDS Rate Chart for FY 2022-23

tds rate chart

FAQ:

Q1 What proactive steps can get taken if the TDS deduction rate is found to be lower than the specified rate in the Act, and how should the balance tax be effectively addressed in such scenarios?

Individuals may inadvertently deduct TDS at rates that are lower than the prescribed rates outlined in the Act. Hence, it becomes crucial to diligently verify the TDS deduction rate for each transaction prior to filing the TDS return. In cases where under-deduction of TDS is identified, it is imperative to promptly remit the remaining tax amount using a fresh challan to ensure compliance with the regulations.

When it comes to buying or selling property in India, taxes are an important part.

Q2 What are the essential components of the Tax Deducted at Source (TDS) on property sales under Section 194-IA in India? Who bears the responsibility for deducting the tax, and what are the key steps involved in filing TDS for property transactions?

When it comes to purchasing or selling real estate in India, taxes play a pivotal role. One important tax in this regard is the Tax Deducted at Source (TDS) applied to property sales under Section 194-IA. In this context, property specifically refers to immovable assets such as land and buildings. Before making a payment to the seller, the buyer has a legal obligation to deduct the applicable tax during the property acquisition process. This comprehensive article delves deeper into the concept of TDS on property sales under Section 194-IA, shedding light on the party responsible for a tax deduction and providing detailed insights on the procedure for filing TDS on property sales.

Q3 What are the repercussions of paying TDS beyond the specified due date, and what is the prescribed penalty under Section 234E for such delays? Is there a maximum limit to the late fee imposed, considering the actual TDS amount?

In the event of delayed TDS payments, it is important to note that a penalty of Rs 200 per day, as outlined in Section 234E, needs to be paid. The party responsible for deducting the TDS will be liable for this penalty for each day that the non-compliance persists. However, it is crucial to understand that the late fee amount cannot exceed the actual TDS amount.