BAJAJ BROKING
July 07, 2025
4 mins read
Tax Deducted at Source (TDS) is one of the core mechanisms used by the Indian tax authorities to ensure timely collection of taxes from your income streams. Whether you are a salaried employee, landlord, freelancer, or business owner, TDS can impact your cash flows. Understanding the different types of TDS becomes essential while managing your income tax return filing, tracking tax rebate eligibility, or ensuring timely compliance. This guide provides an in-depth breakdown of each category of TDS under various sections of the Income Tax Act so that you, as a taxpayer, are informed and well-prepared.
Tax Deducted at Source (TDS) refers to the mechanism where tax is deducted at the point of income generation. It applies to your salary, interest income, professional payments, rent, and many other types of receipts. The entity responsible for making the payment deducts tax at prescribed rates before transferring the balance amount to you. TDS ensures regular flow of revenue to the government and widens the tax base. It also facilitates easier income tax return filing by pre-crediting your tax liability against deductions made. You can claim a tax rebate or refund, if applicable, based on TDS recorded in your Form 26AS or AIS.
When you receive a salary from your employer, TDS is deducted under Section 192. This deduction depends on your estimated annual income, investments, exemptions, and applicable tax slab. Your employer is responsible for computing your total taxable income and deducting TDS accordingly each month. If you have declared tax-saving investments, those are also factored into the computation. This type of TDS is dynamic and may vary throughout the year depending on changes to your declared income or deductions. You should submit your proofs on time to avoid higher deductions and maintain compliance with your income tax return filing.
If you earn interest from fixed deposits, recurring deposits, or certain non-banking financial institutions, TDS may be deducted under Section 194A. The threshold for deduction varies depending on the nature of the financial institution. For banks, TDS applies if interest exceeds ₹40,000 in a financial year (₹50,000 for senior citizens). The TDS rate is generally 10%, provided your PAN is furnished. If you fall under a lower tax bracket, you can submit Form 15G or 15H to avoid deduction. Tracking this type of TDS helps you calculate advance tax obligations or tax rebate claims accurately.
Dividend income received by you from Indian companies is subject to TDS under Section 194 if it exceeds ₹5,000 in a financial year. The deduction rate is 10% provided your PAN is available. If PAN is not provided, TDS may be deducted at 20%. These rules apply to dividends distributed by companies post April 2020, after the abolition of Dividend Distribution Tax (DDT). If your total income is below taxable limits, you can claim this deducted TDS as a refund during your income tax return filing. It is important to monitor dividend income from all demat holdings for accurate disclosures.
If you are paying rent exceeding ₹2.4 lakh per year for land, building, plant, or machinery, you are required to deduct TDS under Section 194I. This applies to individuals or HUFs only if subject to tax audit. For others like companies or partnership firms, the deduction is mandatory. The TDS rate is generally 10% for land or building and 2% for plant and machinery. As a tenant, you must deduct and deposit this amount with the government, ensuring the landlord gets credit. You must also issue a TDS certificate to the landlord to help them with their tax filing.
TDS under Section 194J applies when you make payments for professional or technical services. If you are paying doctors, lawyers, chartered accountants, engineers, consultants, or designers, and the payment exceeds ₹30,000 annually, you must deduct TDS. The applicable rate is usually 10%. However, for technical services, the rate can be 2%. This type of TDS is commonly encountered in freelance, contract, or business arrangements. It is your responsibility to deduct the correct rate, deposit it within due timelines, and issue Form 16A to the service provider. Failure to comply may attract penalties and interest for non-deduction.
When you pay commission or brokerage exceeding ₹15,000 in a financial year, TDS is applicable under Section 194H. This applies to payments made for services like marketing, distribution, sales, and referrals. The standard rate is 5%, provided the deductee has submitted a valid PAN. If PAN is not available, a higher rate of 20% may apply. As a business entity, you are required to deduct this TDS before making the final payment. You must also deposit the deducted amount with the tax department and issue a TDS certificate, which the recipient can use for income tax return filing or rebate claims.
TDS under Section 194C is applicable on payments made to contractors or sub-contractors for carrying out work, including supply of labour. The deduction applies when the amount exceeds ₹30,000 per contract or ₹1 lakh in aggregate during a financial year. The TDS rate is 1% for individuals or HUF contractors and 2% for others. If you are awarding contracts for civil work, event management, or supply of goods, you must deduct this TDS. As a deductor, you are responsible for timely deposition and for issuing a certificate to help the contractor claim credit or tax rebate.
When you purchase an immovable property (excluding agricultural land) worth more than ₹50 lakh, TDS at 1% must be deducted under Section 194IA. This applies even if the payment is made in instalments. You, as a buyer, must deduct TDS and deposit it with the government using Form 26QB. The seller will receive credit for the same in their Form 26AS. Non-compliance can lead to penalties, interest, or disallowance of property registration. You should issue Form 16B to the seller for their income tax return filing and reporting obligations.
If you are an insurance agent or intermediary and receive commission income exceeding ₹15,000 in a financial year, the insurance company must deduct TDS under Section 194D. The applicable TDS rate is 5% when PAN is provided. This applies to commission received for procuring or renewing insurance policies. If PAN is not furnished, the TDS rate can go up to 20%. The deducted TDS is reflected in your Form 26AS and must be considered during your income tax return filing. It is essential to retain the TDS certificate issued by the insurer for your tax documentation.
If you win a lottery, crossword puzzle, or any game show and the winnings exceed ₹10,000, TDS at the rate of 30% is deducted under Section 194B. There is no basic exemption or lower deduction limit. The organisation responsible for distributing the winnings must deduct this amount before handing over the prize. Whether the prize is in cash or kind, tax compliance is mandatory. You are required to include this income in your total taxable income for the year. Unlike other income categories, you cannot claim deductions or rebates against lottery income when filing your income tax return.
Section 195 governs TDS on payments made to non-residents, including interest, royalty, technical fees, or business payments. The rate of deduction varies depending on the nature of payment and relevant Double Tax Avoidance Agreements (DTAA) if applicable. As a resident making the payment, you must obtain a Tax Deduction Account Number (TAN) and deduct TDS before remitting funds. The deducted TDS must be deposited with the government and reflected in Form 15CA and 15CB. Non-compliance may result in disallowance of expenses and penalties. Accurate application of Section 195 ensures international payments are fully tax-compliant.
Section 194O was introduced to cover digital transactions through e-commerce platforms. If you are a seller on platforms like Flipkart, Amazon, or other marketplaces, the operator must deduct TDS at 1% on gross sales value. This applies if your total sales exceed ₹5 lakh in a financial year and you have provided your PAN or Aadhaar. The deducted TDS is directly deposited with the government, and you can view it in your Form 26AS. This provision helps ensure tax compliance in the digital ecosystem and must be monitored while claiming tax rebate or preparing income tax return filing.
Before going through the table, you should know that TDS rates differ based on the type of payment, recipient status, and threshold amount. The following table summarises the standard TDS rates as per the current financial year's provisions:
Payment Type | Section | Threshold Amount | TDS Rate |
Salary | 192 | Based on income slab | As per slab rate |
Interest (Bank/FD) | 194A | ₹40,000 (₹50,000 for SCs) | 10% |
Dividend | 194 | ₹5,000 | 10% |
Rent (Land/Building) | 194I | ₹2.4 lakh | 10% |
Rent (Plant/Machinery) | 194I | ₹2.4 lakh | 2% |
Professional Fees | 194J | ₹30,000 | 10% |
Technical Services | 194J | ₹30,000 | 2% |
Commission/Brokerage | 194H | ₹15,000 | 5% |
Contractor (Individual/HUF) | 194C | ₹30,000/₹1 lakh | 1% |
Contractor (Other) | 194C | ₹30,000/₹1 lakh | 2% |
Property Purchase | 194IA | ₹50 lakh | 1% |
Insurance Commission | 194D | ₹15,000 | 5% |
Lottery/Prize Winnings | 194B | ₹10,000 | 30% |
E-commerce Payments | 194O | ₹5 lakh | 1% |
Understanding the different types of TDS applicable to various income streams helps you stay compliant, avoid penalties, and streamline your income tax return filing. From salary and rent to dividends and professional fees, each category has unique provisions under the Income Tax Act. By actively tracking TDS deductions and maintaining proper documentation, you can ensure accurate reporting and claim tax rebate or refunds where applicable. This guide is designed to help you, as an Indian taxpayer, take control of your tax compliance with clarity and confidence.
Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or financial advice. Please consult a qualified professional or refer to official government publications for personalised guidance.
Share this article: 
What is GIFT Nifty?
March 25, 2025 | 6 mins read
Advantages and Disadvantages of Sovereign Gold Bond (SGB) Investment
September 27, 2024 | 9 Min. read
Manufacturing Sector in India
September 27, 2023 | 4 Min. read
Forex Market Hours in India – Know the Best Timings
June 16, 2024 | 6 Min. read
How to Avoid LTCG Tax on Mutual Funds?
December 26, 2024 | 6 Min. read
Gold Price In India Today
May 19, 2025 | 5 Min. read
Why Gold Rate is Increasing?
November 29, 2024 | 3 Min. read
No result found
Different types of TDS include those on salary (Section 192), interest income (194A), dividends (194), rent (194I), professional fees (194J), commission (194H), contractor payments (194C), property transactions (194IA), e-commerce sales (194O), and payments to non-residents (195), among others.
TDS on salary under Section 192 is calculated based on your estimated annual taxable income, declared exemptions, and applicable income tax slabs. Your employer deducts TDS monthly and adjusts it as per your investment declarations or salary changes during the financial year.
TDS on interest income under Section 194A is deducted when interest from fixed deposits or similar sources exceeds ₹40,000 annually (₹50,000 for senior citizens). Banks or financial institutions deduct TDS at 10%, and you can claim credit while filing your tax return.
TDS on rent applies when annual rent paid exceeds ₹2.4 lakh. Individuals are required to deduct TDS only if audited, while businesses must deduct it mandatorily. The rate is 10% for land/building and 2% for plant/machinery, with due deposit and certificate issuance.
Section 194J mandates TDS on fees paid to professionals such as consultants, doctors, or engineers. TDS applies if the annual payment exceeds ₹30,000. It is usually 10%, or 2% for technical services. You must deduct and deposit it while also issuing the relevant certificate.
Yes, TDS at 1% is applicable under Section 194IA if the property’s value exceeds ₹50 lakh. The buyer must deduct this amount at the time of payment and deposit it with the government through Form 26QB, ensuring compliance and helping the seller claim credit.
TDS rates vary based on payment types. For example, 10% for interest income, 5% for brokerage, and 1% for property purchase. Each section of the Income Tax Act specifies applicable rates and thresholds. Monitoring them ensures proper compliance and accurate return filing.
Disclaimer :
The information on this website is provided on "AS IS" basis. Bajaj Broking (BFSL) does not warrant the accuracy of the information given herein, either expressly or impliedly, for any particular purpose and expressly disclaims any warranties of merchantability or suitability for any particular purpose. While BFSL strives to ensure accuracy, it does not guarantee the completeness, reliability, or timeliness of the information. Users are advised to independently verify details and stay updated with any changes.
The information provided on this website is for general informational purposes only and is subject to change without prior notice. BFSL shall not be responsible for any consequences arising from reliance on the information provided herein and shall not be held responsible for all or any actions that may subsequently result in any loss, damage and or liability. Interest rates, fees, and charges etc., are revised from time to time, for the latest details please refer to our Pricing page.
Neither the information, nor any opinion contained in this website constitutes a solicitation or offer by BFSL or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service.
BFSL is acting as distributor for non-broking products/ services such as IPO, Mutual Fund, Insurance, PMS, and NPS. These are not Exchange Traded Products. For more details on risk factors, terms and conditions please read the sales brochure carefully before investing.
Investments in the securities market are subject to market risk, read all related documents carefully before investing. This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
For more disclaimer, check here : https://www.bajajbroking.in/disclaimer
Level up your stock market experience: Download the Bajaj Broking App for effortless investing and trading
Open Your Free Demat Account
Enjoy low brokerage on delivery trades
|
Please Enter Mobile Number
Open Your Free Demat Account
Enjoy low brokerage on delivery trades
|
TRENDING CALCULATORS AND STOCKS ON BAJAJ BROKING
POPULAR STOCKS: Tata Motors Share Price Infosys Share Price IRFC Share Price SBI Card Share Price Cipla Share Price NBCC Share Price IDFC First Bank Share Price IRCTC Share Price PNB Share Price Vodafone Idea Share Price Axis Bank Share Price JSW Steel Share Price Bandhan Bank Share Price SBI Share Price Tata Steel Share Price ONGC Share Price Ashok Leyland Share Price Paytm Share Price Subex Share Price DLF Share Price Reliance Share Price HDFC Bank Share Price Suzlon Share Price IOC Share Price HUL Share Price Asian Paints Share Price Bank Of Baroda Share Price ITC Share Price TCS Share Price HFCL Share Price Icici Bank Share Price Tata Chemicals Share Price CDSI Share Price MRF Share Price Tata Power Share Price Adani Green share price BPCL Share Price Vedanta Share Price Dmart Share Price Hindalco Share Price LIC Share Price SAIL Share Price Adani Port Share Price IEX Share Price Nalco Share Price L&T Share Price Adani Power Share Price BHEL Share Price Bajaj Finance Share Price Canara Bank Share Price Indusind Bank Share Price Gail Share Price Yes Bank Share Price Wipro Share Price Happiest Minds Share Price Coal India Share Price Maruti Share Price Reliance Power Share Price
INDIAN INDICES: Nifty 50 Share Price SENSEX Share Price Nifty Next 50 Share Price BSE100 Share Price Nifty Bank Share Price LRGCAP Share Price Nifty 100 Share Price MIDCAP Share Price Nifty 200 Share Price SMLCAP Share Price Nifty 500 Share Price BSE500 Share Price Nifty Midcap 50 Share Price ALLCAP Share Price NIFTY SMLCAP 50 Share Price BSE200 Share Price India VIX Share Price BSEIPO Share Price
