ITR filing: Check TDS rates applicable on salary, interest, other incomes

ITR filing: Check TDS rates applicable on salary, interest, other incomes

Individuals must have noticed a certain amount deducted on their incomes like salaries, interest, commission received, dividends etc. Short for ‘Tax Deducted at Source’, TDS was brought in to collect tax at the source from where an individual’s income is generated. Basically, the entity/person making a payment to an individual is required to cut the tax and transfer the remaining amount to the person concerned.

However, TDS is not applicable to all incomes and people for all transactions. The Income-tax Act, 1961 has notified different TDS for different payments. Any individual can check the amount deducted as tax in their income in Form26AS, issued by the deductor.

TDS rates on salaried and non-salaried payments for FY 2021-22

Nature of Payment

Threshold (Rs)

TDS Rate (%)

Salarie

Rs 2.5 lakh (for those below 60 years)

Normal slab rate

Withdrawal from EPF before completion of 5 continuous year

50,000

10Interest on securities such as debentures etc.

50,00010Dividends from companies (Effective from April 1, 2020)

5,000

10Interest received from banks, post office or co-operative society engaged in banking for e.g. interest from fixed deposit

40,000 (50,000 in case of resident senior citizen)

10Winning from lotteries, crosswords or any game

10,00030Winning from Horse race

10,00030Payment to Contractors and sub-contractors

30,000

1% (Individual/HUF), 2% (Others)

Insurance commission

15,000

5%(individuals), 10% (Company)

Maturity of Life insurance policy those not exempted under Section 10(10D)

100,000

5National Savings Schemes

2500

10Commission on sale of lottery tickets

15,000

5Commission/Brokerage received except for insurance commission

15,000

5Rent of Plant/Machinery /Equipment

240,000

2Rent of Immovable property

240,000

10Transfer of certain immovable property such as land, building*

50 lakh

1Payment of rent by Individual/HUF

50,000 per month

5Payment under Joint Development Agreements to Individual/HUF**

-10Payment of Professional Fees

30,000

2% (FTS, Certain royalties,) 10%(Others)

Dividend received from mutual funds (Effective from April 1, 2020)

5000

10Payment of compensation on acquisition of certain immovable property (other than Agricultural land) by government

250,000

10Payments made to professional/commission/brokerage Rs 50 lakh or more

50 lakh5Cash withdrawal from bank account exceeding Rs 20 lakh or Rs 1 crore as the case maybe

1 crore

2TDS on e-commerce participants (w.e.f. 01.04.2020)

5 lakh

1TDS deducted for exempting Senior citizens above 75 years from ITR filing

Rs 3 lakh or Rs 5 lakh (in old tax regime) or Rs 2.5 lakh (in new tax regime)

Normal slab rate

Purchase of Goods

50 lakh

0.1

Now, tax will be also deducted on the transfer of crypto assets at the rate of 1 per cent effective from July 1, 2022, if the transfer amount crosses Rs 50,000 in case of specified person (Rs 10,000 in other case).

TDS applicable only above threshold

Individuals must keep in mind that the TDS is only cut when the value of payment is above the specified threshold level.

How to avoid TDS

If an individual expects their total income in a financial year to be below the exemption limit, they can ask the payer not to deduct TDS by submitting Form 15G/15H.

TDS refund

The TDS amount deductor can be claimed as refund provided your tax liability for financial year is lower than the tax deducted. To claim TDS as return, the individual is needed to file income tax return.