TDS Threshold Limit: Understanding When TDS Applies

S.No.

TDS Section

Nature of Payment

Payer (Deductor)

Payee (Deductee)

Rate of TDS

Threshold Limit (No TDS to be Deducted up to threshold limit mentioned)

1

Section 192

TDS on Salary

Any Person

Employee(Resident or Non- Resident)

Applicable Income Tax Slab Rates

Employers need to calculate the tax liability as per the slab rates applicable after considering the deductions and exemptions.

2

Section 192A

TDS on Payment of accumulated balance due to an employee.

PF Organization

Employee

10% (If no PAN, then MMR, i.e., 30% + applicable Cess and Surcharge )

The Amount is less than Rs.50,000/-

3

Section 193

TDS on Interest on Securities

Any Person

Any Resident Person

10%

Up to Rs.10,000 in a financial year (FY) for Individual/HUF in the case of Debentures and Rs. 10,000 for Individuals in the case of bonds.

4

Section 194

TDS on Dividends

Domestic Company

Resident Person

10%

Up to Rs 10,000/- in a FY

5

Section 194A

TDS on Interest (Other than Interest on Securities)

Any Person(Other than Individual/HUF not liable to tax audit in last PY)

Resident Person

10%

Rs. 1,00,000 for senior citizens

Rs. 50,000 for others when payer is bank, co-operative society, and post office

Rs. 10,000 for others

6

Section 194B

TDS on Winnings from Lotteries or Crossword Puzzles, Card Games etc.

Any Person

Any Person

30%

Up to Rs.10,000/- per transaction

7

Section 194BB

TDS on Winnings from Race Horses

Any Person

Any Person

30%

Up to Rs.10,000/-

8

Section 194C

TDS on Payment to Contractors

Any Person(Other than Individual/HUF not liable to tax audit in last PY)

Any Resident Person

1% (for Individual/HUF) 2% (other person)

Up to Rs.30,000/- for a single payment. Up to Rs.1,00,000 for aggregate amount during a FY.
Payment to a transporter in the course of business where he declares through a PAN that he owns 10 or less goods carriages during the year is also exempt from TDS.

9

Section 194D

TDS on Insurance Commission

Insurance Company / Any person

Resident Agent

5% (for Individual/HUF) 10% (other person)

Up to Rs.20,000/- during Financial Year

10

Section 194DA

TDS on Payment in Respect of Life Insurance Policy

Any Person

Any Resident Person

5%

Up to Rs.1,00,000/- during FY

11

Section 194E

TDS on Payments to Non-Resident Sportsmen or Sports Association

Any Person

NR- -Sports men who is not a citizen of India -Sports Association -Entertainer who is not a citizen of India

20%

No exemption limit.

12

Section 194EE

TDS on Payment for Deposit Under NSS (National Saving Scheme)

Any Person

Any Person

10%

Up to Rs.2,500/- during FY

13

Section 194G

TDS on Commission on Sale of Lottery Tickets

Any Person

Any Person

5%

Up to Rs.20,000/- during FY

14

Section 194H

TDS on Commission or Brokerage

Any Person(Other than Individual/HUF not liable to tax audit in last PY)

Any Resident Person

5%

Up to Rs.20,000/- during FY.

15

Section 194I

TDS on Rent

Any Person(Other than Individual/HUF not liable to tax audit in last PY)

Any Resident Person

2% (on rent paid for the use of machinery, plant, or equipment) 10% (Land or building or furniture or fitting)

Rs.6,00,000 per annum.

16

Section 194IA

TDS on Payment on Transfer of Immovable Property (Not Being an Agricultural Land)

Any Person (Other than person referred to in section-194LA)

Any Resident Person

1%

Less than Rs.50,00,000/-

17

Section 194IB

TDS on Payment of Rent in respect of any land or building.

Individual & HUF(Other than covered u/s 194 I)

Any Resident Person

5%

Upto Rs.50,000/- per month Rent

18

Section 194 IC

TDS on Payment Made Under Joint Development Agreements

Any Person

Any Resident Person

10% at monetary proportion

No exemption limit

19

Section 194J

TDS on Fees for Professional or Technical Services, Royalty, for not carrying out any activity in relation to any business, etc.

Any Person(Other than Individual/HUF not liable to tax audit in last PY)

Any Resident Person

10% 2% in case of fees of technical services (not being a professional service)

2% (in case of payment made to the payee engaged in the business of operating a call centre).

Up to Rs.50,000/- during FY (the separate limit for each kind of payment )

20

Section 194K

TDS on payment of any Income in respect of Units

Any person

Any resident person

10%

Up to Rs.10,000 during FY No TDS by Mutual Funds on income in the nature of capital gains, i.e., TDS is required only on payment of dividend

21

Section 194LA

TDS on Payment of Compensation on Acquisition of Certain Immovable Property

Any Person

Any Resident Person

10%

Up to Rs. 5,00,000 during FY

22

Section 194LB

TDS on Income by way of Interest from Infrastructure Debt Fund

Infrastructure Debt Fund

Non Resident or Foreign Co.

5%

No exemption limit

23

Section 194LBA

TDS on Certain Income from Units of a Business Trust

Business Trust

Unit Holder being Resident or Non resident or Foreign Co.

10% (for resident) 5%/30% ( for non-resident). 5% /40%(for foreign Co.).

No exemption limit

24

Section 194LBB

TDS on Income in Respect of Units of Investment Fund

Investment Fund

Unit Holder being Resident or Non resident or foreign Co.

10% (for resident) 30%(For non-resident) 40%(For Foreign Co.)

No exemption limit For Non-resident or Foreign Company, no deduction of TDS shall be made in respect of any income that is not chargeable to tax under the provisions of the Act.

25

Section 194LBC

TDS on Income in Respect of Investment in Securitisation Trust

Securitisation Trust

Investor being Resident or Non resident or foreign Co.

25%(for resident individuals or HUF) or 30% (for any other person) or Non-resident) 40%(for foreign Co.)

No exemption limit

26

Section 194LC

TDS on Income by way of Interest from Indian Company

Specified Indian company or Business Trust

Non-resident or Foreign Co.

5% 4%(For certain specified borrowings on or after 01st April 2020 but before 01st July, 2023)

No exemption limit

27

Section 194LD

TDS on Income by way of Interest on Certain Bonds and Government Securities

Any Person

Foreign Institutional Investor or Qualified Foreign Investor

5%

No exemption limit

28

Section 194M

TDS on payment of certain sums by certain Individuals or HUF

Individuals/ HUF who are not liable to deduct TDS u/s 194C, 194H, 194J

Any resident person

5%

Payment Up to Rs.50 lakhs during FY

29

Section 194N

TDS on payment of certain amounts in Cash

A banking company, cooperative bank, or a post office

Any person

2%

Upto Rs.1 crore during FY

30

Section 194O

TDS on Payment of certain sums by E-commerce Operator to E-commerce participant

E-commerce participants being resident

E-commerce participant being resident

1%

Up to Rs.5,00,000/- during FY for sale of goods or provision of services or both in case of Individual or HUF and such e-commerce participant has furnished PAN or Aadhaar

31

Section 195

TDS on Other Payments Made to Non-Resident (Not Company) or Foreign Company

Any Person

NonResident or Foreign Company

Rate as specified in Act or DTAA

No exemption limit

32

Section 196A

TDS on Income in respect of units of non-residents

Any person

Non-resident, not being a company or a foreign Company

20%

No exemption limit

33

Section 196B

TDS on Income from units (including LTCG on transfer of such units)

Any person

Offshore fund

10%

No exemption limit

34

Section 196C

TDS on payment of Income from foreign currency bonds or GDR of an Indian company(including LTCG on transfer)

Any person

Non-resident

10%

No exemption limit

35

Section 196D

TDS on payment of Income of FII from securities(not being capital gain arising from such securities)

Any person

FII(Foreign Institutional Investor)

20%

No exemption limit