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Tax Deducted at Source (TDS) is a mechanism under the Income Tax Act, 1961, where a person (deductor) making certain specified payments is required to deduct tax at the source of payment, at the rates prescribed by the government. The person making the payment (deductor) is responsible for depositing the tax to the government.
TDS is applicable to various payments, such as salary, interest, professional fees, rent, commission, etc., and it is a way of collecting tax at the time of the payment rather than at the time of filing the income tax return.
Why us?
Why us?
With over 10 years of experience in providing reliable and efficient tax services, we specialize in TDS e-Filing solutions that ensure compliance and accuracy. Our expert team is committed to simplifying the TDS filing process for individuals, businesses, and tax professionals, offering step-by-step guidance and support.
We understand the importance of timely filing and take the risk of remembering all the TDS filing due dates for you. You can count on us to not only keep track of deadlines but also to promptly intimate you about upcoming due dates.
TDS on Payments Made to Residents - (Sec 192, Sec 193, Sec 194)
TDS on Payments Made to Residents - (Sec 192, Sec 193, Sec 194)
Salary
Deductio to be made under Section : 192
TDS to be Deducted at the Rate of : As per applicable tax slabs
Threshold Limit : If taxable income exceeds minimum exemption limt
2. Interest on Securities (e.g., Debentures, Bonds)
Deductio to be made under Section : 193
TDS to be Deducted at the Rate of : 10%'
Threshold Limit : ₹5,000 (non-residents)
3. Interest other than on Securities
Deductio to be made under Section : 194A
TDS to be Deducted at the Rate of : 10%'
Threshold Limit : ₹40,000 (non-senior citizen)
4. Dividend
Deductio to be made under Section : 194
TDS to be Deducted at the Rate of : 10%'
Threshold Limit : 2500
5. Payment to Contractors (including Subcontractors)
Deductio to be made under Section : 194C
TDS to be Deducted at the Rate of : 1% (Individual/HUF) / 2% (Others)
Threshold Limit : 30000
6. Commission or Brokerage
Deductio to be made under Section : 194H
TDS to be Deducted at the Rate of : 5%'
Threshold Limit : 15000
7. Rent (Land, Building, Machinery, etc.)
Deductio to be made under Section : 194I
TDS to be Deducted at the Rate of : 10% (Land/Building) / 2% (Machinery)
Threshold Limit : 240000
8. Professional or Technical Fees
Deductio to be made under Section : 194J
TDS to be Deducted at the Rate of : 10%'
Threshold Limit : 30000
9. Winnings from Lottery or Game
Deductio to be made under Section : 194B
TDS to be Deducted at the Rate of : 30%'
Threshold Limit : 10000
10. Payment for Purchase of Property (other than agricultural land)
Deductio to be made under Section : 194-IA
TDS to be Deducted at the Rate of : 1%'
Threshold Limit : ₹50 Lakhs (immovable property)
11. Payment of Insurance Commission
Deductio to be made under Section : 194D
TDS to be Deducted at the Rate of : 5%'
Threshold Limit : 15000
12. Payment for Purchase of Goods
Deductio to be made under Section : 194Q
TDS to be Deducted at the Rate of : 0.1%'
Threshold Limit : ₹50 Lakhs
13. Payment of Rent (Corporate Lessors)
Deductio to be made under Section : 194IB
TDS to be Deducted at the Rate of : 5%'
Threshold Limit : 50000
14. Payment to Residents on account of Sale of Immovable Property (TDS on payment for sale of property)
Deductio to be made under Section : 194IA
TDS to be Deducted at the Rate of : 1%'
Threshold Limit : ₹50 Lakhs (for immovable property)
15. Payment of TDS on Contractor and Subcontractor Payments (individuals)
Deductio to be made under Section : 194C
TDS to be Deducted at the Rate of : 1% (Individual/HUF) / 2% (Others)
Threshold Limit : 30000
16. Payment to Directors (fees, salary, remuneration)
Deductio to be made under Section : 194R
TDS to be Deducted at the Rate of : 10%'
Threshold Limit : 5000
17. TDS on Payment to Residents for Insurance Premium
Deductio to be made under Section : 194G
TDS to be Deducted at the Rate of : 10%'
Threshold Limit : 15000
18. TDS on Payment to Banks (Interest on Fixed Deposits, Recurring Deposits)
Deductio to be made under Section : 194A
TDS to be Deducted at the Rate of : 10%'
Threshold Limit : 40000
19. TDS on Payments for Rentals
Deductio to be made under Section : 194I
TDS to be Deducted at the Rate of : 10% (Land/Building) / 2% (Machinery)
Threshold Limit : 240000
20. TDS on Payments under specified provisions (e.g., for award, lottery)
Deductio to be made under Section : 194G
TDS to be Deducted at the Rate of : 10%'
Threshold Limit : 15000
What is Section 195 of Income Tax Act?
What is Section 195 of Income Tax Act?
Section 195 of the Income Tax Act, 1961 lays down provisions for tax deductions for Non-Resident Indians (NRIs). This section focuses on tax rates and deductions on daily business transactions with a non-resident. Any amount generated through these business transactions is chargeable under Income Tax Act, 1961. This amount may or may not be income or profits. The certificate for remittance is compulsory.
Section 195 further mentions guidelines on avoiding a revenue loss arising out of a tax liability from a non-resident by the way of deducting the same amount from their payments at source. The payer, that is, the person remitting payments to a NRI, can any individual, Indians and international companies, Hindu Undivided Family (HUF), person with exempt income in India and juristic person with or without an income that is chargeable to tax in India. The payee, under Section 195, is any non-resident with a residential status that comes under the purview of Section 6 of the Income Tax Act, 1961.
TDS Under Section 195
TDS Under Section 195
The following are the ways for TDS deduction as per Section 195 of Income Tax Act, 1961:
The following are the ways for TDS deduction as per Section 195 of Income Tax Act, 1961:
The buyer should first obtain Tax Deduction Account Number or TAN, as per Section 203A of the Income Tax Act, 1961, before claiming TDS tax deductions. It can be obtained by submission of Form 49B, which is available online and offline. The buyer should have his/her own PAN number as well as the PAN number of the NRI seller to complete the Form 49B submission process.
Under Section 195, TDS should be deducted from source while making payment to the NRI. The details related to TDS deductions and the applicable rate should be mentioned in the sale deed of the transactions made between the buyer and the NRI seller.
The TDS deducted by the buyer as per Section 195 has to be deposited through challan or Form number for TDS payment on or before the 7th of the following month in which TDS deductions have been made.
Under Section 195, the TDS can be deposited by the buyer through banks that have been authorized by the Government of India, or the Income Tax Department to collect Direct Taxes.
After deposition of the TDS as per Section 195, the buyer has to file TDS return through the electronic medium by submitting Form 27Q. TDS returns are filed on a quarterly basis. TDS deductions made in the first quarter, that is, between 1st April and 30th June of a particular financial year must be filed on 15th July of that year. TDS deducted during the second quarter, which is between 1st July and 30th September of a financial year, has to be filed on 15th October. TDS deductions for the third quarter between 1st October and 31st December should be filed on 15thJanuary. TDS deductions for the fourth quarter between 1st January and 31st March have to be filed on 15th May.
After filing the TDS returns, as per Section 195, the buyer can issue a TDS certificate, referred to as the Certificate of Deduction of Tax or Form 16A, to the NRI seller. It is mandatory for the buyer to issue this certificate to the seller within 15 days from the due date of filing for TDS returns for that quarter.
Rate of TDS under Section 195
Rate of TDS under Section 195
TDS rates mentioned under Section 195 of Income Tax Act, 1961 gets increased by adding the applicable education cess and surcharge. For payments made according to DTAA rates, no additional education cess or surcharge is applicable.
The following are the TDS deduction rates applicable under Section 195 of Income tax Act, 1961:
The following are the TDS deduction rates applicable under Section 195 of Income tax Act, 1961:
TDS for Assesses who have no PAN :
TDS for Assesses who have no PAN :
All financial transactions liable for TDS will have tax deduction at a higher rate of 20% if the Permanent Account Number (PAN) of the payees is not available. This is also applicable to all non-residents in respect of payments/remittances liable to TDS.
TDS for Assesses who have no PAN :
TDS for Assesses who have no PAN :
All financial transactions liable for TDS will have tax deduction at a higher rate of 20% if the Permanent Account Number (PAN) of the payees is not available. This is also applicable to all non-residents in respect of payments/remittances liable to TDS.
TDS Rate on Purchase of Property from NRI
TDS Rate on Purchase of Property from NRI
The TDS rate depends on the capital gains tax applicable to the seller (NRI), which is determined based on how long the seller held the property:
Short-Term Capital Gain (STCG) (if Holding Less than 2 years) As per applicable income tax slab of the seller (NRI)
Long-Term Capital Gain (LTCG) (if Hoding More than 2 years) 20% + Surcharge + Cess
Effective TDS Rate for Long-Term Capital Gains
Effective TDS Rate for Long-Term Capital Gains
After adding the surcharge and health & education cess (4%), the effective TDS rate is:
Sale Consideration Up to ₹50 Lakhs - TDS Rate (Including Surcharge & Cess) : 20.80%
Sale Consideration ₹50 Lakhs – ₹1 Crore - TDS Rate (Including Surcharge & Cess) : 22.88%
Sale Consideration Above ₹1 Crore – ₹2 Crore - TDS Rate (Including Surcharge & Cess) : 23.92%
Sale Consideration Above ₹2 Crore – ₹5 Crore - TDS Rate (Including Surcharge & Cess) : 25.04%
Sale Consideration Above ₹5 Crore - TDS Rate (Including Surcharge & Cess) : 28.50%
Here are the key TDS due dates:
Here are the key TDS due dates:
Due date for TDS Payment: 7th of every month (for the previous month's TDS).
Due date for Filing TDS Returns:
Quarter 1 (April to June): July 31
Quarter 2 (July to September): October 31
Quarter 3 (October to December): January 31
Quarter 4 (January to March): May 31
For your convenience, we will also assist in making or suggesting the necessary TDS payments, ensuring a seamless and hassle-free experience. Trust us to handle your TDS filings with the highest level of professionalism and efficiency.
Frequently Asked Questions
Frequently Asked Questions
What is TDS for NRI?
What is TDS for NRI?
Section 195 of the Income Tax Act, 1961 lays down provisions for tax deductions for Non-Resident Indians (NRIs). This section comprises of details about tax rates and deductions on daily business transactions with a non-resident. Any amount earned through these business transactions is chargeable under Income Tax Act, 1961. This amount may or may not be profits or income. Furnishing the remittance certificate is an integral part of the process.
Section 195 also contains guidelines on avoiding revenue losses arising from tax liabilities from a non-resident through the deduction of the same amount from their payments at source. The payer, that is, the person remitting payments to a NRI, any individual or Indians and international companies, Hindu Undivided Family (HUF) or a person with exempt income in India and juristic person, with or without an income that is tax deductible in India. The payee is any non-resident with a residential status that comes under the purview of Section 6 of the Income Tax Act, 1961.
How to deduct TDS under Section 195 of the Income Tax Act, 1961?
How to deduct TDS under Section 195 of the Income Tax Act, 1961?
Section 195 of the Income Tax Act, 1961, comprises of the provisions for tax deductions for Non-Resident Indians (NRIs). It focuses on tax rates and deductions on daily business transactions with a non-resident. As per Section 195, TDS should be deducted from source while making payment to the NRI. The rates have been specified under Section 195 of the Income tax Act, 1961.
What is Section 195?
What is Section 195?
Section 195 of the Income Tax Act, 1961 lays down provisions for tax deductions for Non-Resident eductions on regular business transactions with a non-resident. All business transactions made under this section, irrespective of whether they are a source of income or profit, are chargeable under Income Tax Act, 1961. The certificate for remittance is mandatory.
Section 195 also mentions the guidelines on prevention of revenue loss caused due to tax liability from a non-resident through the deduction of the same amount from their payments at source. The payer, that is, the individual remitting payments to a NRI, another individual, Hindu Undivided Family (HUF), Indians and international companies, person with exempt income in India and juristic person, with or without an income that is taxable in India. The payee can be any non-resident with a residential status as per Section 6 of the Income Tax Act, 1961.
Steps to be followed when deductor Forget User ID:
Steps to be followed when deductor Forget User ID:
Follow the steps as given below:
1. Click on ‘Forgot User Id?’ link in TRACES login page
2. Select ‘Type of User’ as deductor.
3. Enter details in Step-1 and Step-2 of the form.
4. In Step-3, registered mobile number of the deductor as in TRACES profile will be displayed.
5. User can edit the mobile number on the screen. On clicking ‘Proceed’, One-Time Password (OTP) will be sent to the mobile number
6. Enter OTP and submit.
7. If OTP is validated, existing User Id and registered email id of the user will be displayed.
8. User can edit these details, if required.
9. New password must also be entered.
10. On submission, activation link and codes will be sent to the registered email id and mobile number.
11. You can login to TRACES after activating your account.
There is E Tutorial which is provided by TRACES website. The link of the same is given as under – https://contents.tdscpc.gov.in/en/deductor-forgot-userid-etutorial.html
Steps to be followed when deductor Forget Password:
Steps to be followed when deductor Forget Password:
Follow the steps as given below:
1. Click on ‘Forgot Password?’ link in TRACES home page or login page
2. Select ‘Type of User’ as deductor
3. Enter details in Step-1 and Step-2 of the form
4. In Step-3, registered mobile number of the deductor as in TRACES profile will be displayed.
5. User can edit the mobile number on the screen
6. On clicking ‘Proceed’, One-Time Password (OTP) will be sent to the mobile number
7. Enter OTP and submit
8. Enter new password in Step-4 and submit.
9. Password will be changed for your account
10. Email notification will be sent to registered email Id intimating change in password
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