Tax Deducted at Source (TDS) Rates & Statutory Thresholds
Tax Deducted at Source (TDS) under Chapter XVII-B of the Income-tax Act, 1961 is a mechanism to collect income tax at the very point of origin of income. Deductors must deduct the statutory percentage before remitting payments to contractors, professionals, landlords, or employees.
Common Commercial TDS Sections & Thresholds
| Section | Nature of Payment | Exemption Threshold | Standard TDS Rate |
|---|---|---|---|
| 194C | Payments to Contractors / Sub-contractors | ₹30,000 single / ₹1,00,000 aggregate | 1% (Ind/HUF) / 2% (Others) |
| 194J | Fees for Professional Services / Royalty | ₹30,000 per financial year | 10% (Prof.) / 2% (Technical) |
| 194I(a) | Rent on Plant, Machinery & Equipment | ₹2,40,000 per financial year | 2% |
| 194I(b) | Rent on Land, Building or Furniture | ₹2,40,000 per financial year | 10% |
| 194H | Commission or Brokerage | ₹15,000 per financial year | 2% (Budget 2024 reduced from 5%) |
| 194A | Interest other than Interest on Securities (Banks) | ₹40,000 (₹50,000 for Seniors) | 10% |
Consequence of Non-Furnishing of PAN (Section 206AA)
Under Section 206AA, if the deductee fails to furnish their valid Permanent Account Number (PAN) to the deductor, tax must be deducted at the higher of the following rates: the statutory rate, or 20%.