What Is The Rule Of TDS Deduction?

When should TDS be deducted?

When should TDS be deducted and by whom.

Any person making specified payments mentioned under the Income Tax Act are required to deduct TDS at the time of making such specified payment.

But no TDS has to deducted if the person making the payment is an individual or HUF whose books are not required to be audited..

Where Is TDS applicable?

TDS is applicable to the various incomes received by an individual such as salaries, interest on fixed deposits etc. It is deducted when income is paid rather than at a later date. For FY 2020-21, the government has reduced the TDS rates on non-salaried payments.

How can I save TDS?

However, for those earning more, following pointers could help them avoid paying excess TDS:Submit all investment proofs for deduction under Section 80C. … Housing loan repayment (principal) … Leave Travel Allowance. … Public Provident Fund (PPF) … Sukanya Samriddhi account. … Benefits under Section 80EE for first-time homebuyers.More items…•

What is the minimum amount for TDS deduction?

Rs. 30,000Minimum Amount of Payment for Deduction of TDS under Section 194C. If the payment that is being made to the contractor does not exceed Rs. 30,000, No TDS on payment to contractor is required to be deducted. However, if the total of all such payments made or to be made during a financial year exceeds Rs.

What is TDS example?

TDS stands for Tax Deducted Source. In TDS system, persons responsible for making payment for specified services such as commission, brokerage, professional consultancy etc are required to deduct a fixed percentage from the amount. … For example, ABC Pvt Ltd have to make payment of Rs 1,00,000 to Mr.

Is TDS and income tax same?

Income tax: It is paid on the annual income where taxes are computed for a particular financial year. TDS: It is deducted at source on a periodic basis in the particular year.

In which cases TDS is not applicable?

TDS is not applicable in the following cases:When the amount is paid to government or any government body and Reserve Bank of India.Amount is paid to notified mutual funds under Section 10(23D).When deductee has certificate of no-deduction under Section 192 of the Income Tax Act.More items…•

What is TDS and how it is calculated?

The employer deducts TDS based on the employee’s net taxable income, i.e., gross taxable income minus tax-saving deductions (as declared by the employee) under sections 80C to 80U.

What is the percentage of TDS to be deducted?

The TDS rates to be applicable on income for the current year is updated in the TDS rates chart for FY 2020-21. TDS stands for Tax Deducted at Source….TDS Deduction Rate.Taxable IncomeTax RateUp to Rs. 2,50,000NilRs. 2,50,000 to Rs. 5,00,0005%Rs. 5,00,000 to Rs. 10,00,00020%Above Rs. 10,00,00030%

What is the formula to calculate TDS?

For example, if you are under 60 and your total taxable income is Rs. 5 lakh, you must pay 5% of Rs 2.5 lakh as tax (income up to Rs 2.5 lakh is not taxable). Please note, TDS is deducted every month by your employer. So, your expected tax liability over the year is divided by 12 and collected every month.

What is the TDS rate?

TDS Rates Applicable for Resident of IndiaTDS Rate (%)TDS Rates from 01.04.2020 to 13.05.2020TDS Rates from 14.05.2020 to 31.03.20211 5 (w.e.f from 01.06.2017) (If payment of Rent exceeds Rs. 50,000/- per month. ) 101 5 100.75 3.75 7.510 210 27.5 1.510107.510107.522 more rows

Can TDS be refunded?

You can claim the credit in respect of taxes deducted at source and claim refund in the return of income. Please ensure that the TDS is reflected in your Form 26AS. Once the return of income is processed, you will be entitled to receive the refund of TDS.