TDS, abbreviated as Tax Deducted at Source, is a mechanism through which the government collects taxes from various sources of income at the time of making payments. As we step into the Financial Year (FY) 2023-24, it is crucial for taxpayers and businesses to be familiar with the updated TDS rate chart applicable for this period. In this blog post, we'll dive into the TDS rate chart for FY 2023-24 / AY 2024-25, helping you navigate the TDS deductions.
TDS is a system designed to ensure a steady flow of tax revenue to the government. It requires the payer (deductor) to deduct a certain percentage of the payment made to the payee (deductee) and remit it to the government on their behalf. This helps in widening the tax base and increasing compliance.
TDS on salaries is deducted as per the income tax slab rates applicable to the individual taxpayer.
The employer deducts TDS based on the employee's estimated income for the year and factors in exemptions, deductions, and other income sources declared by the employee.
TDS on interest income from banks, post offices, and other financial institutions is deducted at the rate of 10% if the total interest exceeds Rs. 40,000 in a financial year.
For senior citizens aged 60 years and above, TDS is not applicable until the total interest income exceeds Rs. 50,000 in a financial year.
TDS on rent is deducted at the rate of 2% if the annual rent exceeds Rs. 2.40 lakhs.
TDS on professional fees and commission is deducted at the rate of 10% if the total payment to the professional or commission exceeds Rs. 30,000 in a financial year.
TDS on the sale of property is deducted at the rate of 1% by the buyer if the property value exceeds Rs. 50 lakhs.
TDS on winnings from lotteries, crossword puzzles, horse races, etc., is deducted at the rate of 30% for amounts exceeding Rs. 10,000.
TDS rates for payments to non-residents vary depending on the nature of payment, such as interest, royalty, fees for technical services, etc. These rates are prescribed by the Income Tax Act and relevant Double Taxation Avoidance Agreements (DTAAs).
As a taxpayer or a business entity, understanding the TDS rate chart for FY 2023-24 / AY 2024-25 is vital to ensure accurate compliance with tax laws. The TDS rates are subject to change, so it's essential to stay updated with the latest amendments and notifications from the Income Tax Department.
While TDS ensures regular tax collection for the government, taxpayers should also pay attention to their tax liability and file their income tax returns correctly to claim any excess TDS deducted as a refund. Moreover, keeping track of TDS deductions and ensuring timely deposit with the government will help avoid penalties and interest charges.