As you are aware, tax is normally deducted when you receive your salary; or the interest on your fixed deposit; or any professional fees, commission, royalty etc.
Known as TDS (Tax Deduction at Source) in the income tax parlance, employers, banks, companies are all supposed to cut a specified percentage and pay you only the net amount.
Different types of incomes or receipts carry different TDS rates.
Listed below are the...
... different types of payments that you may receive
... with the TDS rate applicable on the same
... for an individual person, resident in India
... for the Financial Year 2015-16.
a. Salary Income: As per your Normal Slab Rate.
b. Accumulated Provident Fund (taxable portion): 10% [Yes, even PF is taxable.]
c. Interest income: 10% (subject to certain exemptions e.g. no TDS on interest on bank fixed deposits up to Rs.10,000 or on company fixed deposits up to Rs.5,000)
d. Dividend (other than the dividend on which Dividend Distribution Tax is applicable): 10%
e. Winnings from lottery, card games, crossword puzzles and any other sort of games: 30%
f. Insurance commission: 10%
g. Life insurance policy (except the tax-free maturity proceeds): 2% (only if such amount is Rs.1 lakh or more)
h. Commission or brokerage: 10%
i. Rent on property: 10% (only in certain specific cases and with rent more than Rs.1.80 lakhs / year)
j. Sale of certain immovable property (other than agricultural land): 1% [Buying Property? TDS Deduction Is Compulsory]
k. Professional / technical fees and royalty: 10%
l. Any other income: 10%
Of course, if you are not liable to pay any tax, you can ask the payer not to deduct your TDS. For example, there is a provision to submit Form 15G / Form 15H to your bank for not deducting TDS on your interest income.
Alternatively, for certain receipts you can apply (in Form No. 13) to your Assessing Officer for a certificate authorizing the payer to deduct tax at lower rate or deduct no tax, as applicable. [If lower deduction is applicable, the certificate would be given to you. However, for cases with no-deduction, the certificate is issued directly to the person responsible for deducting your TDS.]
Furnishing PAN is mandatory
The aforesaid CONCESSIONAL rates for tax deduction at source are applicable, only if you have furnished your Permanent Account Number. If your PAN is missing, payers will deduct TDS at the following rates, whichever is the highest:
- At the rate specified in the relevant provision of the Income Tax Act
- At the rate prescribed in the Finance Act
- At the rate of 20%
IMPORTANT
As I have repeatedly warned, contrary to popular misconception Tax Deduction at Source is NOT the full and final payment of your tax liability. It is merely a portion of your total tax liability, collected in advance.
Hence, at year end you have to calculate your total tax liability. You can then net off the TDS already deducted from this, and pay only the balance amount to the tax authorities. In case your tax deducted at source is more than the total tax liability, you can claim a refund in your Income Tax Return.
You can ascertain the details of TDS deducted during the year from your Form 26AS and claim credit for the same. (In cases where only a part of the total TDS deducted is reflected in the Form 26AS, you must take up the issue with the tax deductor and ensure that the discrepancy is rectified.)
Known as TDS (Tax Deduction at Source) in the income tax parlance, employers, banks, companies are all supposed to cut a specified percentage and pay you only the net amount.
Different types of incomes or receipts carry different TDS rates.
Listed below are the...
... different types of payments that you may receive
... with the TDS rate applicable on the same
... for an individual person, resident in India
... for the Financial Year 2015-16.
a. Salary Income: As per your Normal Slab Rate.
b. Accumulated Provident Fund (taxable portion): 10% [Yes, even PF is taxable.]
c. Interest income: 10% (subject to certain exemptions e.g. no TDS on interest on bank fixed deposits up to Rs.10,000 or on company fixed deposits up to Rs.5,000)
d. Dividend (other than the dividend on which Dividend Distribution Tax is applicable): 10%
e. Winnings from lottery, card games, crossword puzzles and any other sort of games: 30%
f. Insurance commission: 10%
g. Life insurance policy (except the tax-free maturity proceeds): 2% (only if such amount is Rs.1 lakh or more)
h. Commission or brokerage: 10%
i. Rent on property: 10% (only in certain specific cases and with rent more than Rs.1.80 lakhs / year)
j. Sale of certain immovable property (other than agricultural land): 1% [Buying Property? TDS Deduction Is Compulsory]
k. Professional / technical fees and royalty: 10%
l. Any other income: 10%
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| Does the Tax Deducted at Source brings tears to your eyes? |
Of course, if you are not liable to pay any tax, you can ask the payer not to deduct your TDS. For example, there is a provision to submit Form 15G / Form 15H to your bank for not deducting TDS on your interest income.
Alternatively, for certain receipts you can apply (in Form No. 13) to your Assessing Officer for a certificate authorizing the payer to deduct tax at lower rate or deduct no tax, as applicable. [If lower deduction is applicable, the certificate would be given to you. However, for cases with no-deduction, the certificate is issued directly to the person responsible for deducting your TDS.]
Furnishing PAN is mandatory
The aforesaid CONCESSIONAL rates for tax deduction at source are applicable, only if you have furnished your Permanent Account Number. If your PAN is missing, payers will deduct TDS at the following rates, whichever is the highest:
- At the rate specified in the relevant provision of the Income Tax Act
- At the rate prescribed in the Finance Act
- At the rate of 20%
IMPORTANT
As I have repeatedly warned, contrary to popular misconception Tax Deduction at Source is NOT the full and final payment of your tax liability. It is merely a portion of your total tax liability, collected in advance.
Hence, at year end you have to calculate your total tax liability. You can then net off the TDS already deducted from this, and pay only the balance amount to the tax authorities. In case your tax deducted at source is more than the total tax liability, you can claim a refund in your Income Tax Return.
You can ascertain the details of TDS deducted during the year from your Form 26AS and claim credit for the same. (In cases where only a part of the total TDS deducted is reflected in the Form 26AS, you must take up the issue with the tax deductor and ensure that the discrepancy is rectified.)
