TDS Rates and Compliances

An Article by CA Manpreet S. Taneja

Introduction

Being aware of the fact that one is liable to pay/deposit TDS is not sufficient enough. One must also be aware of the rates applicability on the transactions which will ultimately decides the quantum of TDS.

TDS rates and compliances of various sections and categories of the deductees (whose TDS needs to be deducted by deductors) has been detailed in this article.

Before proceeding for the rate applicability, it is pertinent to mention that Owing the COVID-19 situation and less liquidity in the Indian Economy in FY 2020-21, Government of India had provided relief in the TDS rates for the period 14.05.2020 to 31.03.2021.

The relief was limited to the TDS rates only and not for the rates where tax needs to be deducted or collected at a higher rate. The benefit of revised rates applied to only Resident Indians. Hence, Non-residents were not given the benefits of the same.

However, it should be noted that the circular providing benefit of reduced TDS rates was applicable only till March 31.2021. Therefore, from April 1, 2021, normal rates of TDS deduction are applicable.

Therefore, one must not be under any illusion that rates which are applicable till March 31, 2021 would remain same for the financial year 2021-22. Categories of Deductees

  1. Residents of India
  2. Non-Residents of India (NRI)
  3. Domestic Companies
  4. Company other than Domestic Company

TDS rates applicable for Residents of India

Any person making specified payments mentioned under the Income Tax Act, 1961 are required to deduct TDS at the time of making such specified payment.

But no TDS has to deducted if the person making the payment is an individual or HUF whose books are not required to be audited under section 44AB of the Income Tax Act, 1961

However, in case of rent payments made by individuals and HUF exceeding INR 50,000 per month, are required to deduct TDS @ 5% even if the individual or HUF is not liable for a tax audit.

Also, such Individuals and HUF liable to deduct TDS @ 5% need not apply for TAN.

TDS rates applicable for Non-Residents of India (NRI)

Note: – The provisions of sections 192, 192-A, 194-B,194-BB, 194-EE, 194-F, 194-G, 194-N as covered in table above, are equally applicable to Non-Residents as well. In addition to these following sections are specifically applicable to Non-Residents.

It may be noted that the benefit of reduced tax deduction was provided to Residents only and not to Non-Residents.

Also, it should be noted that the no threshold limit means there is no any limit up-to which tds is not required to be deducted. Therefore, even if INR 10 are paid to a Non-Resident, on that as well the liability to deduct tds is there.

TDS rates applicable for Domestic Companies

Note: – The provisions of sections 193, 194, 194-A, 194-B, 194-BB, 194-C, 194-DA, 194-EE, 194-F, 194-G, 194-H, 194-I, 194-IA, A94-IB, 194-IC, 194-J as discussed in table-1 above equally applies to domestic company. However, where different provisions are there, same are mentioned hereunder.

TDS rates applicable for Company other than Domestic Company

Note: – The provisions of sections 194-B, 194-BB, 194-E, 194-G, 194-LB, 194-LBA, 194-LC, 194-LD, 196-C, 196-D are same as covered under table-2 above. Other provisions are tabulated hereunder.

All categories of payer as mentioned above must adhere with these rates applicability to remain compliant with TDS norms.

About Author:

Hi, This insightful article was penned down by Mr. Manpreet S Taneja. Read what he has to say about himself.

Know Me:  One of the torch bearers for an esteemed Institute, I am well liked as CA Manpreet.

I am passionate about managing Finance and Investment and love to explore new avenues. Numbers and formulas have always lured me and now auditing and taxation has become my expertise.

Tax advisory, Financial Reporting, Secretarial compliances and other Managerial considerations are my other prowess one can count on. After working with reputed firms and renowned banks, I have gained rich experience of over 5 years and successfully ventured into practice.

I believe in what Winston Churchill has rightly said “Success is not final; failure is not fatal: it is the courage to continue that counts.” and that is the motivation that drives me towards excellence.

Qualification: Chartered Accountant, B.Com (Hons.)

Specialization: Audit, Taxation, Finance, Bank Audit

Firm Name: Manpreet Taneja & Co.

Mobile No.: 8826953372

Email ID: ms35085@gmail.com

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