After the Budget 2023, what are the latest TDS Rates Chart for FY 2023-24 (AY 2024-25) applicable? Are there any rate changes from the last Financial Year to the current Financial Year based on Budget 2023?
When we receive income through different ways like Salary, Dividend income from mutual funds or stocks, commission, rent, interest on Bank Fixed Deposits / Securities, etc., the providers of this income like the Bank or your employer deduct the tax before transferring such income.
TDS or tax deducted at source is a process of collecting Income Tax at the source. It is a process of deducting the tax from the original source of income.
TDS is calculated and levied on the basis of a certain threshold limit, which is the maximum level of income after which TDS will be deducted from your future income/payments. It is deducted as per the Indian Income Tax Act, 1961.
As I told earlier, apart from salary income and Bank FD earnings, there are many ways TDS is deducted like interest income from the post office, insurance commission, rent payment, early EPF withdrawals, the sale of immovable property, rent payments on the property, etc.,
Basics of TDS (Tax Deducted at Source)
The concept of TDS was introduced with the aim to collect tax from the very source of income. As per this concept, a person (deductor) who is liable to make a payment of specified nature to any other person (deductee) shall deduct tax at source and remit the same into the account of the Central Government. The deductee from whose income tax has been deducted at source would be entitled to get a credit of the amount so deducted on the basis of Form 26AS or TDS certificate issued by the deductor.
Let us take an example you deposited Rs.10,00,000 FD for a year at 8% interest. After a year, you earn an interest of Rs.80,000. Now the bank will deduct TDS on this Rs.80,000 interest at the rate of 10% and deposit the same with Income Tax Department and issue you the TDS certificate which reflects this transaction.
Suppose your income (along with this Bank FD interest of Rs.80,000) is below the basic exemption limit of Rs.2,50,000, then you can file income tax returns and claim the TDS of Rs.8,000 deducted by the Bank and you will get the refund of this.
However, assume that your tax slab is 30%, then you have to pay the remaining 20% tax (30%-10% TDS already deducted) on such interest income of Rs.80,000. Thus you have to pay the tax of Rs.16,000 (Rs.24,000 Total Tax-Rs.8,000 TDS).
Many people to avoid such procedural issues submit Form 15G/H and think that they avoided the tax. By submitting Form 15G/H, one can avoid the TDS. But one can’t escape from tax liability.
TDS changes in Budget 2023
Let us now discuss on what are the changes introduced during the budget 2023.
# In order to give relief to the co-operative societies, the limit of Rs.1 Crore has been proposed to be enhanced to Rs.3 Crores in the Finance Bill 2023, which means that if the Co-operative society cash withdrawal from a bank exceeds Rs. 3 Crores, then TDS @ 2% shall be deducted from the Co-operative society. However, this is not applicable to individuals.
# As per the current law, TDS is applicable to winnings made from online gaming. Winnings are required to be reported under the head ‘Income from other sources while filing ITR. TDS becomes applicable if the winnings made from each online game exceed Rs 10,000. Further, TDS on winnings is deducted at 30%. This threshold limit of deducting the TDS is removed. Hence, no matter what may be your gain, a TDS of 30% is applicable for you.
# Earlier during the withdrawal of EPF (within 5 years), if you do not provide a PAN number, then the TDS was at 30%. Now it is reduced to 20%. Refer to our earlier post on this aspect at “EPF Withdrawal Taxation-New TDS (Tax Deducted at Source) Rules“.
# It was proposed in Budget 2023 to omit clause ix of the proviso to Section 193 of the Act, thereby removing the exemption from TDS on payment of any income to a resident by way of interest on listed debentures with effect from 01-04-2023. Now the TDS is applicable on such debentures at the rate of 10%.
Latest TDS Rates Chart for FY 2023-24 (AY 2024-25)
Based on the above Budget 2023 changes, I have prepared the latest TDS Rates Chart for FY 2023-24 (AY 2024-25).
| Section | For Payment of | Threshold limit | TDS Rate % |
|---|---|---|---|
| 192 | Salary Income | Income Tax Slab | Slab rates (Based on old or new tax regimes) |
| 192 A | EPF – Premature withdrawal | Rs 50,000 | 10% (If no PAN, then @20%) |
| 193 | Interest on Securities | Rs. 2,500 | 10% |
| 194 | Dividend | Rs 5,000 | 10% |
| 194 A | Interest on Bank Deposit/Post Office Deposit/Banking Co-Society Deposit (Interest other than “Interest on securities” ) |
Rs. 40,000 (Rs 50,000 for Senior Citzens) |
10% |
| 194 A | Interest other than “Interest on securities” (Other Than Bank Deposit/Post Office Deposit/Banking Co-Society Deposit) |
Rs. 5,000 | 10% |
| 194 B | Winnings from lotteries, crossword puzzles, card games and other games of any sort (Aggregate winnings during FY and excludes online gaming). | Rs. 10,000 | 30% |
| 194 B | Winnings from online games | Nil | 30% |
| 194 BB | Winnings from horse races (Aggregate winnings during FY) | Rs. 10,000 | 30% |
| 194 D | Payment of Insurance Commission (Form 15G/H can be submitted) |
Rs. 15,000 | 5% (Individuals) 10% (Companies) |
| 194DA | Payment in respect of Life Insurance Policy | Rs 1,00,000 | 5% |
| 194E | Payment to non-resident sportsmen/sports association | – | 20% |
| 194 EE | Payment of NSS Deposits | Rs 2,500 | 10% |
| 194 G | Commission on the Sale of lottery tickets | Rs 15,000 | 5% |
| 194 H | Commission or Brokerage | Rs 15,000 | 5% |
| 194 IA | Rent of Plant & Machinery | Rs. 2,40,000 | 2% |
| 194 IB | Rent of Land or building or furniture or fitting | Rs 2,40,000 | 10% |
| 194 IA | Payment on transfer of certain immovable property other than agricultural land | Rs. 50 lakh | 1% (TDS is to be deducted at the rate of 1% of such sum paid or credited to the resident or the stamp duty value of the such property, whichever is higher.) |
| 194 IB | Payment of rent by individual or HUF not liable to tax audit | Rs.50,000 per month | 5% |
| 194IC | Payment of monetary consideration under Joint Development Agreements | – | 10% |
| 194J | Fees for professional or technical services | Rs 30,000 | 2% (for technical services) (or) 10% (payable towards royalty in the nature of consideration for sale, distribution or exhibition of cinematographic films;) |
| 194LA | Payment of compensation on acquisition of certain immovable property | Rs 2,50,000 | 10% |
| 194 LB | Interest from Infrastructure Bond to NRI | NA | 5% |
| 194 M | Payment of commission (not being insurance commission), brokerage, contractual fee, or 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. | Rs.50,00,000 | 5% |
| 194N | Cash withdrawal during the previous year from one or more account maintained by a person with a banking company, co-operative society engaged in business of banking or a post office: | > Rs 1cr (if the person withdrawing the cash has filed income tax return for any or all three previous AYs.). > Rs.20 lakh (if the person withdrawing the cash has not filed ITR for any of the preceding three AYs.) > Rs.3 Cr for cooperative banks |
2% and 5% (cash withdrawals exceeding Rs.1 Cr if the person withdrawing the cash has not filed ITR for any of the preceding three AYs.) |
| 194Q | Purchase of goods (applicable w.e.f 01.07.2021) | Rs 50 lakh | 0.10% |
| 195 | Payment of any other sum to a Non-resident (NRI) | – | 20% (Income in respect of investment made by a Non-resident Indian Citizen). 10% (Income by way of long-term capital gains referred to in Section 115E in case of a Non-resident Indian Citizen, Income by way of long-term capital gains referred to in sub-clause (iii) of clause (c) of sub-Section (1) of Section 112, Income by way of long-term capital gains as referred to in Section 112A). 15% (Income by way of short-term capital gains referred to in Section 111A) 20% (Any other income by way of long-term capital gains [not being long-term capital gains referred to in clauses 10(33), 10(36) and 112A, Income by way of interest payable by Government or an Indian concern on moneys borrowed or debt incurred by Government or the Indian concern in foreign currency (not being income by way of interest referred to in Section 194LB or Section 194LC)) 30% on any other income |
| 206AB | TDS on non-filers of ITR at higher rates (applicable w.e.f 01.07.2021) |
– | Higher of – 5% – Twice the rate in act – Twice the rate or rate in force |
| 194P | TDS on Senior Citizen above 75 Years (No ITR filing cases) | – | Slab Rates |
| 206AA | TDS rate in case of Non-availability of PAN |
– | Higher of – As per act Twice the rate or rate in force 20% |
| 194R | TDS on benefit or perquisite of a business or profession | Rs.20,000 | 10% |
| 194S | TDS on payment for Virtual Digital Assets |
“Specified Person” Payer– 50,000 Other Payers – 10,000 |
1% |
Misconceptions about TDS (Tax Deducted at Source)
# Avoiding TDS does not mean avoiding Tax. You just avoid the deduction of tax. However, you have to pay the tax as per the applicable rules and tax rate even if you avoided TDS. For example, in the case of FDs, one can give Form 15G or Form 15H and avoid TDS. But it does not mean that such FD interest income is tax-free. You have to pay the tax on such interest as per applicable tax rates.
Hence, never rush to submit Form15G/H or any method just to avoid TDs.
# If you paid the TDS, then your tax liability does not end there. You have to file an IT return and if anything more than TDS is payable, then you have to pay it.
# All are not eligible to submit Form 15G or Form 15H. Because only those individuals are eligible to submit Form 15G or Form 15H whose total taxable income is NIL and also and the total aggregate of your income for which form 15 G can be submitted should not exceed the basic exemption limit. But sadly neither individuals care about such rules the Banks who accept the forms.
Hope this information is enough for you to understand the latest TDS Rates Chart for FY 2023-24 (AY 2024-25).