As a responsible taxpayer, you need to be aware of the tax deduction at source (TDS) rates for different types of income in the financial year (FY) 2023-24. TDS is a mechanism by which the government collects tax revenue in advance from the income that is likely to be generated during the year. It applies to various types of income, such as salary, interest, rent, commission, professional fees, etc. The rates and rules for TDS are specified in the Income Tax Act, 1961, and related notifications.
TDS Rates for Salary Income
If you are a salaried employee, your employer is required to deduct TDS from your salary based on your income tax slab rates. The TDS rates for FY 2023-24 are as follows:
| Income tax slab | TDS rate |
|---|---|
| Up to Rs. 2.5 lakh | Nil |
| Rs. 2.5 lakh to Rs. 5 lakh | 5% |
| Rs. 5 lakh to Rs. 7.5 lakh | 10% |
| Rs. 7.5 lakh to Rs. 10 lakh | 15% |
| Rs. 10 lakh to Rs. 12.5 lakh | 20% |
| Rs. 12.5 lakh to Rs. 15 lakh | 25% |
| Above Rs. 15 lakh | 30% |
TDS Rates for Other Types of Income
For other types of income, the TDS rates depend on the nature and amount of income, as well as the status of the recipient (resident or non-resident) and the payer (individual or company). Here are some examples:
- Interest income: TDS is deducted at the rate of 10% if the interest paid or credited to a resident individual or Hindu Undivided Family (HUF) exceeds Rs. 5,000 in a financial year. For non-residents, the TDS rate may vary depending on the country of residence and the relevant Double Taxation Avoidance Agreement (DTAA).
- Rent income: TDS is deducted at the rate of 7.5% on the rent paid or credited to a resident individual or HUF if the annual rent exceeds Rs. 50,000. For non-residents, the TDS rate is generally higher and may depend on various factors such as the type of property, the location, the duration of the lease, etc.
- Commission and brokerage: TDS is deducted at the rate of 5% on the commission or brokerage paid or credited to a resident individual or HUF if the amount exceeds Rs. 15,000 in a financial year. For non-residents, the TDS rate may be higher and may depend on the nature of the services rendered and the DTAA.
- Professional fees: TDS is deducted at the rate of 10% on the professional fees paid or credited to a resident individual or HUF if the amount exceeds Rs. 50,000 in a financial year. For non-residents, the TDS rate may be higher and may depend on the nature of the services rendered and the DTAA.
TDS Rules and Compliance
Apart from the TDS rates, there are certain rules and compliance requirements that you need to follow as a deductor or deductee of TDS. Some of these are:
- Obtaining a valid Tax Deduction Account Number (TAN) and quoting it in all TDS returns and challans.
- Deducting TDS at the correct rate and on time, and depositing it with the government within the due