Saturday, February 24, 2018

What is TDS? FY 2018-19 TDS Information and Calculation rates chart

What is TDS ? Types of TDS and its rates for FY 2018-19 
Every information regarding the TDS are mentioned below with applicable chart rates.
Tax Deducted at Source (TDS) is a means of collecting income tax in India, under the Indian Income Tax Act of 1961. Any payment covered under these provisions shall be paid after deducting prescribed percentage. It is managed by the Central Board for Direct Taxes (CBDT) and is part of the Department of Revenue managed by Indian Revenue Service ..

What is TDS? TDS is simply Tax Deducted at Source. As per the Income Tax Act – persons responsible for making payments are required to deduct tax at source at prescribed rates. Instead of receiving tax on your income from you at a later date, the govt wants the payers to deduct tax before hand and deposit it with the govt.

Tax Deducted at Source (TDS) is a system of Indirect Tax Collection by Income Tax Department, where an individual is responsible for making specified payments such as
salary, 
commission, 
professional fees, 
interest, 
rent, etc.
is liable to deduct a certain percentage of tax before making payment in full to the receiver of the payment. As the name suggests, the concept of TDS is to deduct tax at its source and it is an indirect tax collection with the concept of “pay as you earn” and collect as it is being earned”.

The recipient of income receives the net amount (after deducted of tax at source). The recipient will add the gross amount to his income and the amount deducted at source is adjusted against his final tax liability. Basically take credit of the amount already deducted and paid on his behalf.

TDS is deducted at the time of payment in cash or cheque or credit to the payee’s account whichever happens earlier.

TDS is deducted on salaries, interest payment by banks, payment of commission, while paying rent, payments made to consultants, payments to lawyers or freelancers. (Some of these requirements to deduct tax are not applicable to individuals – for e.g. individuals are not expected to deduct TDS while paying rent or while paying fees to doctors or lawyers).

Your employer deducts TDS at the income tax slab rates applicable. Banks deduct TDS @10%. Or they may deduct @ 20% if they do not have your PAN information. For most payments rates of TDS are set in the income tax act and TDS is deducted by payer basis these specified rates.

If you submit investment proofs (for claiming deductions) to your employer and your total taxable income is below the taxable limit – you do not have to pay any tax. And therefore no TDS should be deducted on your income. Similarly you can submit Form 15G and Form 15H to the bank if your total income is below taxable limit so that they don’t deduct TDS on your interest income. In case you have not been able to submit proofs to your employer or if your employer or bank has already deducted TDS and your total income is below the taxable limit) – you can file a Return and claim a refund of this TDS.

TDS & PAN Its important to understand how TDS is linked to your PAN. 
TDS deductions are linked to PAN numbers for both the deductor and deductee. If TDS has been deducted from any of your income you must go through the Tax Credit Form 26AS. This form is a consolidated tax statement which is available to all PAN holders. Since all TDS is linked to your PAN, this form lists out the details of TDS deducted on your income by each deductor for all kinds of payments made to you – whether those are salaries or interest income – all TDS linked to your PAN is reported here. This form also has income tax directly paid by you – as advance tax or self assessment tax. Therefore, it becomes important for you to mention your PAN correctly, wherever TDS may be applicable on your income.

The deduction of TDS varies based on the source of your income and it ranges between 1% to 30%. The person on whom the responsibility of deducting tax is imposed has to deduct tax at source at appropriate rates and the deducted sum is deposited to the credit of government of India.

TDS Rate on Salary:
Any employer has the authority to deduct tax at source while making the actual payment to the employee. The employers deduct tax from salaries only at the time of payment. TDS is deducted if the total income of the employee is taxable. TDS will not be deducted if your total income is Rs. 2, 50,000. This amount is applicable for men and women below the age of 60 years. Normally, TDS deduction rate on salary ranges from 10% to 30%.

TDS Rates Chart for FY 2018-19:
TDS rates chart for income tax on select categories for the financial year 2017-2018 are listed below. These rates are applicable for resident Indians.

Nature of payment% of TDS
Payment of salary (Section 192)Normal slab rate
Payment of accrued due of EPF Scheme, to Employees which is taxable in their hand (Section 192A)10%
Interest on securities (Section 193)10%
Dividend excluding the dividends mentioned in section 115-O (Section 194)10%
Income received from interest other than “interest on securities” (Section-194A)10%
Income received from winning lotteries, crosswords, and games, etc. ( Section-194B / Section 194BB)30%
Payment to contractors / sub-contractors (Section 194C)2% for payments made to contractors who are not HUFs/individuals and 1% for payments made to contractors/sub-contractors who are HUFs/individuals
Insurance commission (Section-194D)5%
Payment for life insurance policy (Section 194DA)1%
Rent (Section 194-I)
For plant and machinery – 2%
Land, furniture, fitting and furniture-10%
Payment on transfer of immovable property excluding agricultural land ( Section (194- IA)1%
Income Tax TDS Rates Applicable for NRIs are Mentioned Below:

Nature of Payment% of TDS
Payment of salary (Section 192)Normal slab rate
Payment of accumulated balance of provident fund (Section 192A)10%


Income received from winnings lotteries, crossword puzzles, card games and other games of any sort (Section 194B)
30%
Income received from winnings from horse races (Section 194BB).30%
Payment on deposit under National Savings scheme (section- 194EE)20%
Payment on repurchase of Mutual Fund or Unit Trust of India ( Section 194F)20%
Commission on sale of lottery tickets (Section 194G)10%
Interest on infrastructure debt fund (Section 194LB)5%
Interest income distribution by a Business Trust (Section 194LBS(3))30%
Distribution of income by an Investment Fund under Section 115UB of the Income Tax Act (Section 194LBB)30%
Distribution of income by a Securitisation Trust under Section 115TCA of the Income Tax Act (Section 194LBC)30%
Interest income from Indian company on funds borrowed in international currency (Section 194LC)5%
Income by way of interest on certain government securities and rupee-denominated bonds (Section 194LD)5%
TDS Deduction Rate: TDS deduction rates are dependent on your taxable income. TDS deduction rate for the financial year 2017-18 are mentioned below. These rates are applicable for general taxpayers, both men and women.

Taxable IncomeTax Rate
Up to Rs. 2,50,000Nil
Rs. 2,50,000 to Rs. 5,00,0005%
Rs. 5,00,000 to Rs. 10,00,00020%
Above Rs. 10,00,00030%
A surcharge of 10% is applicable when total income is between Rs.50 lakh and Rs.1 crore, and 15% when total income is above Rs.1 crore. 3% Education Cess.

TDS Slab Rates:
TDS deduction rates are different for senior citizens and super senior citizens. The below mentioned TDS slab rates are applicable for senior citizens aged between 60 to 80 years:

Income SlabsTax Rate
Up to Rs. 3,00,000Nil
Rs. 3,00,000 - Rs. 5,00,00010%
Rs. 5,00,000 - Rs. 10,00,00020%
Above Rs. 10,00,00030%
A surcharge of 10% is applicable when total income is between Rs.50 lakh and Rs.1 crore, and 15% when total income is above Rs.1 crore.
3% Education Cess.
For super senior citizens aged 80 years and above, the following rates are applicable:

Income SlabsTax Rate
Up to Rs. 5,00,000Nil
Rs. 5,00,000 - Rs. 10,00,00020%
Above Rs. 10,00,00030%
A surcharge of 15% when total income is above Rs.1 crore. 3% Education Cess.

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