Are you aware of the latest TDS rates and provisions applicable for the Financial Year 2023-24? If not, then you should read this blog post carefully, as it will help you understand the TDS implications for your income and payments.
TDS stands for Tax Deducted at Source. It is a method of collecting tax on income in the form of salary, rent, interest, dividends, etc., by requiring the payer to deduct tax at source and deposit it to the government on behalf of the payee. TDS ensures that tax is collected at the source of income generation, reduces tax evasion, and facilitates easy compliance and administration.
In this blog post, we will present the TDS rate chart for FY 2023-24, which covers the period from 01.04.2023 to 31.03.2024. We will also explain the changes proposed in Budget 2023 concerning TDS and how they will affect you. Also, we will provide some tips and suggestions for TDS compliance and planning.
TDS Rate Chart for FY 2023-24
The following table shows the various TDS rates applicable for different types of payments and deductions for FY 2023-24. The table also indicates the threshold limit for each payment, above which TDS is applicable. The rates are based on the Income Tax Act, 1961 and the Finance Act, 2023.
| Section | Nature of payment | Threshold limit | TDS rate for resident deductee | TDS rate for non-resident deductee |
|---|---|---|---|---|
| 192 | Salary | As per income tax slab | As per income tax slab | As per income tax slab |
| 192A | Premature withdrawal from EPF | ₹50,000 | 10% | 10% |
| 193 | Interest on securities | ₹10,000 | 10% | 20% |
| 194 | Dividend | ₹5,000 | 10% | 20% |
| 194A | Interest other than interest on securities | ₹40,000 (₹50,000 for senior citizens) | 10% | 10% |
| 194B | Winnings from lottery or crossword puzzle | ₹10,000 | 30% | 30% |
| 194BB | Winnings from horse race | ₹10,000 | 30% | 30% |
| 194C | Payment to contractor or sub-contractor | ₹30,000 per contract or ₹1,00,000 per year | 1% for individual/HUF, 2% for others | 2% |
| 194D | Insurance commission | ₹15,000 | 5% | 10% |
| 194DA | Payment in respect of life insurance policy | ₹1,00,000 | 5% | 10% |
| 194E | Payment to non-resident sportsmen or sports association | - | - | 20% |
| 194EE | Payment in respect of deposit under National Savings Scheme | ₹2,500 | 10% | 10% |
| 194F | Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India | - | 20% | 20% |
| 194G | Commission, etc., on sale of lottery tickets | ₹15,000 | 5% | 5% |
| 194H | Commission or brokerage | ₹15,000 | 5% | 5% |
| 194I | Rent | ₹2,40,000 | 10% for land, building or furniture, 2% for plant or machinery | 10% for land, building or furniture, 2% for plant or machinery |
| 194IA | Payment on transfer of certain immovable property other than agricultural land | ₹50,00,000 | 1% | 1% |
| 194IB | Payment of rent by certain individuals or HUF | ₹50,000 per month | 5% | 5% |
| 194IC | Payment of monetary consideration under Joint Development Agreement | - | 10% | 10% |
| 194J | Fees for professional or technical services | ₹30,000 | 10% | 10% |
| 194K | Income in respect of units | ₹5,000 | 10% | 10% |
| 194LA | Payment of compensation on acquisition of certain immovable property | ₹2,50,000 | 10% | 10% |
| 194LBA | Certain income from units of a business trust | - | 10% | 5% for interest, 10% for other income |
| 194LBB | Income in respect of units of investment fund | - | 10% | 30% |
| 194LBC | Income in respect of investment in securitisation trust | - | 25% for individual/HUF, 30% for others | 30% |
| 194M | Payment of commission (not being insurance commission), brokerage, contractual fee, professional fee to a resident person by an Individual or a HUF who are not liable to deduct TDS under section 194C, 194H, or 194J | ₹50,00,000 | 5% | - |
| 194N | Cash withdrawal in excess of ₹20 lakh | ₹20,00,000 | 2% | - |
| 194O | Payment of certain sums by e-commerce operator to e-commerce participant | ₹5,00,000 | 1% | 1% |
| 194P | Payment of certain sums to specified senior citizen | ₹50,000 | - | - |
| 194Q | Purchase of goods | ₹50,00,000 | 0.10% | - |
| 195 | Payment of any other sum to a non-resident | - | - | As per DTAA or income tax slab |
| 196A | Income in respect of units of non-residents | - | - | 20% |
| 196B | Income from units (including long-term capital gain on transfer of such units) to an offshore fund | - | - | 10% |
| 196C | Income from foreign currency bonds or GDR of an Indian company (including long-term capital gain on transfer of such bonds or GDR) | - | - | 10% |
| 196D | Income of foreign Institutional Investors from securities (not being dividend or capital gain arising from such securities) | - | - | 20% |
Note: The above rates are subject to surcharge, education cess, and health and education cess as applicable. The rates may vary depending on the residential status, nature of income, and other factors of the deductee. The deductor should also obtain the PAN of the deductee and verify the same with the original PAN card. In case of non-furnishing of PAN by the deductee, the TDS rate will be 20% or the applicable rate, whichever is higher.
Changes in TDS Provisions in Budget 2023
The Finance Minister of India, Ms. Nirmala Sitharaman, presented the Union Budget 2023 on February 1, 2023. The Budget proposed several changes in the TDS provisions, which are as follows:
Section 194Q
A new section 194Q has been inserted to provide for TDS on the purchase of goods. The buyer will have to deduct TDS at the rate of 0.1% on the purchase of goods exceeding ₹50,00,000 in a year from a seller. However, this provision will not apply if the seller is already covered under** section 194O** (TDS on e-commerce transactions) or if the buyer is required to deduct TDS under any other provision on the same amount.
Section 194P
A new section 194P has been inserted to provide for TDS on payment of certain sums to specified senior citizens. The specified bank or post office will have to deduct TDS at the applicable rate on the payment of interest and dividend exceeding ₹50,000 in a year to a resident senior citizen who is of the age of 75 years or more and has furnished a declaration to the bank or post office.
The declaration should contain the PAN, Aadhaar number, and details of income other than interest and dividends. The bank or post office will then file the return of income on behalf of the senior citizen and pay the tax due after considering the deduction under Chapter VI-A and rebate under Section 87A.
Section 194N
The existing section 194N provides for TDS on cash withdrawals exceeding ₹1 crore in a year from a bank, post office, or cooperative bank. The Budget has proposed to reduce the threshold limit to ₹20 lakh for non-filers of income tax return. A non-filer is a person who has not filed the return of income for the three previous years and the due date of filing the return under section 139(1) has expired. The TDS rate will be 2% on the amount exceeding ₹20 lakh for non-filers and 2% on the amount exceeding ₹1 crore for others.
Section 194O
The existing section 194O provides for TDS on payment of certain sums by e-commerce operators to e-commerce participants. The Budget has proposed to exempt the following transactions from the purview of this section:
-
Transactions in which the e-commerce operator is an individual making payment to an e-commerce participant for the sale of goods or services through its digital or electronic facility or platform, and the gross amount of sales or services during the previous year does not exceed ₹5 lakhs.
-
Transactions in which the e-commerce participant is an individual providing services, other than professional services, through the e-commerce operator, and the gross amount of services during the previous year does not exceed ₹5 lakh.
Section 206AB and 206CCA:
Two new sections 206AB and 206CCA have been inserted to provide for higher rates of TDS and TCS for non-filers of income tax returns. The TDS or TCS rate will be the higher of the following:
- Twice the rate specified in the relevant provision of the Act; or
- Twice the rate or rates in force; or
- 5% However, this provision will not apply where the tax is required to be deducted or collected under sections 192, 192A, 194B, 194BB, 194LBC or 194N.
Tips and Suggestions for TDS Compliance and Planning
TDS is an important aspect of tax compliance and planning. It helps in ensuring timely payment of tax, avoiding interest and penalty, and reducing the tax liability at the end of the year.
Here are some tips and suggestions for TDS compliance and planning:
Check Your TDS Credit in Form 26AS
Form 26AS is a consolidated annual tax statement that shows the details of tax deducted, collected, and deposited on your behalf by various deductors and collectors. You can access your Form 26AS online through the income tax e-filing portal, net banking facility, or TRACES website. You should verify the TDS credit in Form 26AS with the TDS certificates issued by the deductors and collectors. If there is any mismatch or discrepancy, you should report it to the concerned deductor or collector and get it rectified.
Claim TDS Refund
If the tax deducted at source is more than the tax payable on your total income, you can claim the excess amount as a TDS refund. You can file your income tax return online and claim the TDS refund. The refund will be processed and credited to your bank account after verification by the income tax department.
Submit Form 15G or 15H
If your total income is below the taxable limit, you can submit Form 15G or 15H to the deductor to avoid TDS on interest income from bank deposits, post office deposits, etc. Form 15G is for individuals below the age of 60 years and Form 15H is for senior citizens above the age of 60 years. You should submit these forms at the beginning of the financial year and renew them every year.
Apply for a Lower or Nil Deduction Certificate
If your income is subject to a lower rate of tax or is exempt from tax, you can apply for a lower or nil deduction certificate from the income tax department under section 197. This certificate will enable you to receive income without any TDS or at a lower rate of TDS. You should apply for this certificate online through the income tax e-filing portal and submit it to the deductor.
Deduct TDS on Time and Deposit it to the Government
If you are liable to deduct TDS on any payment, you should deduct it on time and deposit it to the government within the due date. The due date for depositing TDS is generally the 7th of the next month, except for March when it is the 30th of the same month. You should also file the TDS return online within the due date and issue the TDS certificates to the deductees. The due date for filing the TDS return is generally the 31st of the month following the quarter, except for the last quarter when it is the 31st of May. You should also comply with the other provisions and obligations related to TDS, such as obtaining TAN, maintaining TDS registers and records, etc.
We hope that this blog post has helped you understand the TDS rate chart for FY 2023-24, the changes in TDS provisions in Budget 2023, and the tips and suggestions for TDS compliance and planning. TDS is an integral part of the income tax system and it is essential to comply with its rules and regulations. By following the TDS provisions and planning your tax liability, you can save tax, avoid interest and penalty, and claim a refund.
