The Finance Act, 2024, has introduced a new Tax Deducted at Source (TDS) rate for the financial year 2024-25 (from April 1, 2024, to March 31, 2025). Using the correct TDS rate is important for businesses to ensure proper tax compliance and avoid penalties.
New TDS chart – Financial Year 2024-25
| Section | Nature of Payment | Threshold | Individual’s Tds | Others-Tds |
| 194C | Payments to the contractor – Aggregate Payment | Rs. 30,000 | 1% | 2% |
| 194C | Payments to contractor – Aggregate Payment | Rs. 1,00,000 | 1% | 2% |
| 194I | Rent of land, building, or furniture | Rs. 2,40,000 | 10% | 10% |
| 194I | Rent of plant and machinery | Rs. 2,40,000 | 2% | 2% |
| 194IA | Payment for transfer of immovable property other than agricultural land | Rs. 50,00,000 | 1% | 1% |
| 194IB | Rent payment that is made by an individual or HUF not covered under payment 194I | Rs. 50,000 (per month) | 5% | NA |
| 194J | Fees paid for professional services | Rs. 30,000 | 10% | 10% |
| 194J | Amount paid for technical services | Rs. 30,000 | 2% | 2% |
| 194Q | Payments made for the purchase of goods | Rs. 50,00,000 | 0.10% | 0.10% |
| 194H | Commission or brokerage | Rs. 15,000 | 5% | 5% |
| 192 | Salary tax/Tds depends as per income-slab | Income-Slab | Old-Rate | New-Rate |
| 192 | Salary Income | from 2,50,001 to 3,00,000 | 5% | NIL |
| 192 | Salary Income | from 3,00,001 to 5,00,000 | 5% | 5% |
| 192 | Salary Income | from 5,00,001 to 6,00,000 | 20% | 5% |
| 192 | Salary Income | from 6,00,001 to 7,50,000 | 20% | 10% |
| 192 | Salary Income | from 7,50,001 to 9,00,000 | 20% | 10% |
| 192 | Salary Income | from 9,00,001 to 10,00,000 | 20% | 15% |
| 192 | Salary Income | from 10,00,001 to 12,00,000 | 30% | 15% |
| 192 | Salary Income | from 12,00,001 to 12,50,000 | 30% | 20% |
| 192 | Salary Income | from 12,50,001 to 15,00,000 | 30% | 20% |
| 192 | Salary Income | above 15,00,000 | 30% | 30% |
| 192 | Zero-tax on Salary Income | Rebate (zero tax) | Upto 5Lac | upto 7.27 Lac |
| 192A | Premature PF withdrawal* | Rs. 50,000 | 10% | 10% |
| 193 | – TDS on interest on securities*** | Rs. 10,000 | 10% | 10% |
| 194 | Payment of dividend | Rs. 5,000 | 10% | 10% |
| 194A | Interest from Bank, post office’s FD | Rs. 40,000 | 10% | 10% |
| Rs. 50,000 (For senior citizens) | ||||
| 194A | Interest by others apart from on securities | Rs. 5,000 | 10% | 10% |
| 194B | Amounts you won through lotteries or games | Aggregate of Rs. 10,000** | 30% | 30% |
| 194BB | Amounts you won from horse races | Rs. 10,000 | 30% | 30% |
| 194DA | Maturity of Life Insurance Policy | Rs. 1,00,000 | 5% | 5% |
| 194EE | Payment of an amount standing to the credit of an individual under National Savings Scheme | Rs. 2500 | 10% | 10% |
| 194IC | Payment that are made under Joint Development Agreement (JDA) to Individual/HUF | No Limit | 10% | 10% |
| 194J | Amounts paid as royalty for sale/distribution/exhibition of cinematographic films | Rs. 30,000 | 2% | 2% |
| 194K | Payment of income for units of a mutual fund, for example- dividends | Rs. 5,000 | 10% | 10% |
| 194LA | Payment made for compensation for acquiring certain immovable property | Rs. 2,50,000 | 10% | 10% |
| 194LB | Payment of interest on infrastructure bonds to Non-Resident Indians | NA | 5% | 5% |
| 194N | cash withdrawal over 1 Cr, and ITR is filed | Rs. 1,00,00,000 | 2% | 2% |
| 194N | Cash withdrawal 20 Lakh & 1 Cr and ITR not filed | Rs. 20 Lac to 1 Cr | 5% | 5% |
| 194O | Amount paid for the sale of products/services by e-commerce service providers via their digital platform | Rs. 5,00,000 | 1% | 1% |
| 194S | TDS on the payment of any crypto or other virtual asset | NA | 1% | 1% |
| 206AA | TDS for non-availability of PAN | NA | At a rate higher of | 20% |
| 1. Specified rate as per the act | ||||
| 2. 20% | ||||
| 3. Rate in force | ||||
| 206AB | TDS on non-filers of Income tax return | NA | Rate higher of: | |
| 1. 5% | ||||
| 2. Twice the mentioned rate in provision | ||||
| 3. Rate in force |
why using the right TDS rate matters
TDS Compliance: The government relies on TDS as a way to collect taxes at the source of income. Using the correct rate ensures you meet your tax obligations and avoid the hassle of dealing with notices or penalties from the Income Tax department
Accuracy in Tax Payment: Applying the appropriate TDS rate helps you deduct the right amount of tax from your payments, like salaries, rent, or professional fees. This ensures you pay the correct amount of tax to the government and reduces any potential tax liability at the end of the year.
Benefits for Businesses: Businesses that deduct and deposit TDS accurately can claim tax credits on their tax returns. This can lead to tax savings and improved cash flow.
Using the correct TDS Rate
So, how do you ensure you're using the correct TDS rate?
- Refer to the TDS Chart: The Finance Act publishes a TDS chart outlining the applicable rates for various types of transactions. You can find this chart above or consult a tax professional.
- Identify the Transaction Type: The TDS rate depends on the nature of your payment. For example, the TDS rate for rent payments differs from the rate for salary payments.
- Consider Taxpayer Details: Some rates may vary depending on the recipient’s tax status (individual, company, etc.).
- Stay Updated: TDS rates are subject to change in subsequent Finance Acts. Make sure you consult the latest chart for the applicable financial year.
Tds Compliance and Legal Obligations
- Deducting TDS at the correct rates is a legal obligation imposed by the Income Tax Department.
- Timely TDS Remittance: The TDS deducted needs to be deposited with the government by the prescribed due date. Generally, the due date falls on the 7th of the month following the month of deduction, except for the last quarter of the financial year.
- Quarterly TDS Return Filing: Businesses are required to file quarterly TDS returns with the Income Tax department. These returns summarize the TDS deducted and deposited during the quarter.
- Non-compliance can lead to penalties, fines, and legal proceedings, impacting the financial health and reputation of businesses and individuals.
Accurate Tax Deductions
- Using the correct TDS rates ensures accurate deduction of taxes at the source, aligning with the provisions of the Income Tax Act, 1961.
- It prevents under or over-deduction of taxes, avoiding discrepancies in tax payments and subsequent adjustments.
Financial Impact of Wrong TDS Rates
- Incorrect TDS rates can result in underpayment or overpayment of taxes, affecting cash flow and financial planning.
- Underpayment may lead to interest charges and penalties, while overpayment could result in unnecessary financial strain until refunds are processed.
Importance of TDS Rate Guidance
- Seek guidance from tax experts to determine the appropriate TDS rates applicable to specific transactions.
- Consultation with legal and tax advisors can help navigate complex tax regulations and ensure compliance with the latest provisions.
Utilizing of Tds Resources
- Leverage online resources, such as TDS rate charts provided by government authorities or reputable financial platforms, to verify applicable rates.
- Stay updated with changes in TDS rates through official notifications and circulars issued by the Income Tax Department.
Maintaining TDS Documentation
- Maintain comprehensive records of TDS deductions, including transaction details, TDS certificates, and supporting documents.
- Proper documentation facilitates smooth audits and inquiries by tax authorities, demonstrating diligent compliance with TDS regulations.
- Adhering to the correct TDS rates is paramount for fulfilling tax obligations and maintaining financial integrity.
For assistance in navigating TDS regulations and ensuring compliance with tax obligations, Team IN Filings. offers expert TDS advisory services tailored to your needs.
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