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How is TDS (Tax Deducted at Source) Applied?

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Overview on “How is TDS (Tax Deducted at Source) Applied”?

As the new income tax administration system takes effect, employees will have various concerns about their taxation, including the issue of tax deducted at source, which could be complex if a person is not knowledge about taxation and accounting with finance.

The new tax regime is the default from Financial Year 2023-2024, However the old one is still available for those who prefer it.

The CBDT has encouraged companies to tell their employees about their preferred tax regimes and how TDS would apply because there might be confusion among people on how TDS will be applied under the new regime.

As a result, if you’re unclear or confused about Tax Deducted at source (TDS), read this.

What does mean of Tax Deducted at Source?

TDS stands for Tax Deducted at source. TDS was implemented to collect tax from the source of income in order to combat tax evasion and maintain the government’s regular income. For instance, the deductor refers to the person or company who makes a payment under particular categories and is required to deduct tax at source and remit the amount to the govt of India account. The individual whose income Tax Deducted at source was deducted is known as the ‘deductee,’ and the person receives the deducted Tax Deducted at source amount when filing of tax returns.

What is rate of TDS & When do you pay TDS ?

The Government of India has specified various class of income classes for TDS with different rates. Salary, FDs, Rent, etc. these are the income categories which is adopted by Govt of India.

If you are employed, your employer will deduct TDS based on your income tax slab rate. Tax Deducted at source will not be deducted if you report your investment proofs claiming that your income is less than the total taxable income limit.

What are different kind of TDS?

The required Tax Deducted at Source rate is 10 % if the interest income from post offices, bank FDs, etc, is more than Forty Thousand per annum. For above 60 years old, the limit is Fifty thousand. Income from securities, like bonds and debentures beyond the threshold limit, are also subject to 10 % Tax Deducted at source.

In case your income is not in the category of taxable, you can avoid Tax Deducted at source (TDS) by giving Form 15G and if you are above 60 years, Income tax Form 15H to the deductor. So you can give the necessary forms to the post office or bank where you would have these deposits in April itself to avoid Tax deducted at source.

There is no need of Tax Deducted at source (TDS) deduction in Rent payment of up to Rupees Fifty Thousand per month, but if you exceeds that limit than you have to face TDS deduction at the rate of 5 percentage, There is a 10 percentage Tax Deducted at source (TDS) on deduction of more than INR 50,000/- from the employees’ EPF(employees provident fund); it is 20 percentage In case the recipient does not submit Permanent Account Number (PAN) information.

Meaning of Rent’ means any kind of payment, by whatever name called, under any sub-lease, lease, tenancy or any other agreement or arrangement for the use of (either together or separately) any:

Land appurtenant to a building (including factory building) or
Building (including factory building) or
land or
Plant or
Fittings
Machinery or
Furniture or
Equipment or

In addition to the above, there are various income class & type and related Tax Deducted at source rates, for example remuneration paid to directors of a company, crossword puzzle, online gaming, professional fee, consultation fee, the amount from life insurance, contractor payment, transfer of immovable property, winning from lottery, brokerage or commission payment, etc.

What is the TDS limit for 2023

What happen when you pay extra TDS?

You can request a Tax Deducted at source certificate from the deductor or can check the Tax Deducted at source amount in Form 26AS. If extra Tax Deducted at source (TDS) has been applied to your income, you will be eligible to a get a refund on behalf of Form 26AS or the TDS (Tax Deducted at source) Certificate issued by the deductor.

Post Written By : Associates – Tarun Kumar

1 year ago

Rajput Jain & Associates

Rajput Jain & Associates is a Chartered Accountants firm, with it's headquarter situated at New Delhi (the capital of India). The firm has been set up by a group of young, enthusiastic, highly skilled and motivated professionals who have taken experience from top consulting firms and are extensively experienced in their chosen fields has providing a wide array of Accounting, Auditing, Taxation, Assurance and Business advisory services to various clients and their stakeholders. Rajput jain & Associates, a professional firm, offers its clients a full range of services, To serve better and to bring bucket of services under one roof, the firm has merged with it various Chartered Accountancy firms pioneer in diversified fields. We have associates all over India in big cities. All our offices are well equipped with latest technological support with updated reference materials. We have a large team of professionals other than our Core Team members to meet the requirements of our prospective clients including the existing ones. However, considering our commitment towards high quality services to our clients, our team keeps on growing with more and more associates having strong professional background with good exposure in the related areas of responsibility.