The following changes in TDS-related provisions were amended/inserted by Finance ACT 2023:-
1. Introduction of section 194BA: TDS provision for income from online gaming (w.e.f. 1.4.2023)
TDS @ 30% is required to deducted by payer on the ‘net winnings’ in the user account at the end of the Financial Year (FY) or at the time of withdrawal by the user/ online game winner. The method for computing the net winnings is yet to be prescribed. As per original budget 2023, This section was to come into effect w.e.f. 1.7.2023 but in amended Finance Act 2023, date of applicability of this section changed to 1.4.2023.
2. Section 196A – Benefit of tax treaty rate extended to income earned from units of mutual funds by non-residents
For income earned from units of mutual funds by non-residents in India, tax is required to be deducted at the rate of 20%. W.e.f. 1 April 2023, a non-resident can avail the beneficial rate provided in the tax treaty by furnishing a Tax Residency Certificate.
3. Section 192A – Tds rate reduced to 20% from MMR if employee not having PAN
W.e.f. 1 April 2023, If PAN is not furnished by an employees to receive accumulated balance of provident fund, Now tds rate of 20% will be applied, as against the existing Maximum Marginal Rate in case PAN is not furnished
4. Section 193 – Tax to be deducted on interest on specified listed securities in dematerialized form
Exemption of TDS on interest from listed debentures has been removed. Therefore, tax has to be deducted on interest on such listed securities isted securities in dematerialized form w.e.f. 1 April 2023 which was previously excluded from the ambit of this Section
5. Section 194B and 194BB – Threshold limit of Rs. 10000/- for winning income from lottery, crossword puzzle and horse racing is clarified to be the limit per FY leaving no scope for spliting the winning income in many transactions upto 10000/-.
6. Section 194N – W.e.f 1-4-2023, Cash withdrawals by a co-operative society, the threshold limit for TDS is now proposed at Rs. 3 crores instead of Rs. 1 crore.
7. Section 206AB & 206CCA – Exclusion of specified category from non-filers of tax return w.e.f 1st April 2023
These sections provide for Higher TCS/TDS rate for non-filer of ITR but there are certain persons who are not obliged to file tax return in India i.e. non-resident with no PAN and persons notified by the government. W.e.f. 1 April 2023 it is proposed to exclude such persons from the ambit of this Section and provide relief from a higher TDS/TCS rate.
A complete list of TDS (tax deducted at source) rates along with related transactions and budget proposals for the financial year 2023-24 (AY-2024-25) is provided in the table given below.-
TDS Rate Chart for FY 2022-23 (AY 2023-24)
|Payment Type||Threshold Limit (Rs)||Resident -TDS Rate (%)||Non-Resident -TDS Rate (%) (including EC & SHEC)|
|Section 192: Payment of salary||Basic exemption limit||Normal Slab Rate (as opted by employee)||Normal Slab Rate (as opted by employee)|
|Section 192A: Payment of accumulated balance of provident fund which is taxable in the hands of an employee||50, 000||10 (w.e.f. 1.4.23, if no PAN then 20% earlier it was MMR)||10.40(Not applicable for Foreign Companies)|
|Section 193: Interest on securities|||||||
|a) any debentures or securities for money issued by or on behalf of any local authority or a corporation established by a Central, State or Provincial Act;||–||10||–|
|b) any debentures issued by a company where such debentures are listed on a recognised stock exchange in accordance with the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and any rules made thereunder;||5000||10||–|
|c) any security of the Central or State Government;[i.e. 8% Savings (Taxable) Bonds, 2003 and 7.75% Saving (Taxable) Bonds, 2018||10, 000||10||–|
|d) interest on any listed demat security or other security||–||10||–|
|Section 194: Dividend||5, 000 (w.e.f. 1/4/2020)||10||–|
|Section 194A: – Interest other than interest on securities – Others||5, 000||10||–|
|Section 194A: Banks / Co-operative society engaged in business of banking / Post Office||40, 000||10||–|
|Section 194A: Senior citizenThe interest amount should be earned from the following:-Deposits with banks;-Deposits with post offices-Fixed deposit schemes-Recurring deposit schemes||50, 000||10||–|
|Section 194B: Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort||10, 000 (for whole year as clarified in finance act 2023)||30||31.20|
|Section 194BA: Income from online gaming (w.e.f. 01.04.2023)||–||30||–|
|Section 194BB: Income by way of winnings from horse races||10, 000 (for whole year as clarified in finance act 2023)||30||31.20|
|Section 194C: Payment to contractor / sub-contractor||Rs 30, 000 per contract or Rs 1, 00, 000 for aggregate amount during the year|||||
|a) HUF/ Individuals||||1||–|
|Section 194D: Insurance commission||15, 000||5||–|
|Section 194DA: Payment in respect of life insurance policy w.e.f. 1/9/2019, the tax shall be deducted on the amount of income comprised in insurance pay-out||1, 00, 000||5||–|
|Section 194E: Payment to non-resident sportsmen /sports association||–||–||20.80|
|Section 194EE: Payment in respect of deposit under National Savings scheme||2, 500||10||10.40(Not applicable for Foreign Companies)|
|Section 194F: Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India||–||20||20.80(Not applicable for Foreign Companies)|
|Section 194G: Commission, etc., on sale of lottery tickets||15, 000||5||5.20|
|Section 194H: Commission or brokerage||15, 000||5||–|
|Section 194I: Rent||2, 40, 000|||||
|a) Plant & Machinery||||2||–|
|b) Land or building or furniture or fitting||||10||–|
|Section 194-IA: Payment on transfer of certain immovable property other than agricultural land||50, 00, 000||1||–|
|Section 194-IB: Payment of rent by individual or HUF not liable to tax audit||Rent for the month or part of the month exceeds Rs 50, 000||5||–|
|Section 194-IC: Payment of monetary consideration under Joint Development Agreements||–||10||–|
|Section 194J: Payment for fees for Technical services, Professional services or royalty etc.||Rs 30, 000 p.a|||||
|a) Cases, wherein, the payee is engaged in the business of the operation of Call Centre only (effective from 1st June 2017)||||2||–|
|b) In case of fees for technical services (not being a professional royalty where such royalty is in the nature of consideration for sale, distribution or exhibition of cinematographic film) (effective from 1st April 2020)||||2||–|
|c) Professional royalty where such royalty is in the nature of consideration for sale, distribution or exhibition of cinematographic film||||10||–|
|d) In case of fees for any other professional services||||10||–|
|e) In case the payee fails to furnish PAN||||20||–|
|Section 194K: Payment of any income in respect ofa) Units of a Mutual Fund as per Section 10(23D)b) Units from the administratorc) Units from specified company(This Section is inserted by Finance Act, 2020 which is applicable from 01/04/2020)||–||10||–|
|Section 194LA: Payment of compensation on acquisition of certain immovable property||2, 50, 000||10||–|
|Section 194LB: Payment of interest on infrastructure debt fund||–||–||5.20|
|Section 194LBA(1): Business trust shall deduct tax while distributing, any interest received or receivable by it from a SPV or any income received from renting or leasing or letting out any real estate asset owned directly by it, to its unit holders.||–||10||–|
|Section 194LBA(2): Payment of the nature referred to in Section 10(23FC)(a)||–||–||5|
|Section 194LBA(2): Payment of the nature referred to in Section 10(23FC)(b)||–||–||10|
|Section 194LBA(3): Business trust shall deduct tax while distributing any income received from renting or leasing or letting out any real estate asset owned directly by it to its unit holders.||–||–||For Non Resident Individual – 31.20 For Foreign Company – 41.6|
|Section 194LBB: Investment fund paying an income to a unit holder [other than income which is exempt under Section 10(23FBB)]||–||10||For Non Resident Individual – 31.20.For Foreign Company – 41.6|
|Section 194LBC: Income in respect of investment made in a securitisation trust (specified in Explanation of section 115TCA)||–||25% in case of Individual or HUF30% in case of other resident person10% in case of Domestic Companies||For Non Resident Individual – 31.20 For Foreign Company – 41.6|
|Section 194LC: Payment of interest by an Indian Company or a business trust in respect of money borrowed in foreign currency under a loan agreement or by way of issue of long-term bonds (including long-term infrastructure bond)Note: Now TDS at concessional rate of 5% will be applicable for borrowings made after April 1, 2020 but before July 1, 2023.||–||–||5.20[In case where interest is payable in respect of Long-term Bond or Rupee Denominated Bond listed on recognised stock exchange located in IFSC then rate will be 4.16%]|
|Section 194LD: Payment of interest on rupee denominated bond of an Indian Company or Government securities to a Foreign Institutional Investor or a Qualified Foreign InvestorNote: Now TDS at concessional rate of 5% will be applicable for borrowings made after April 1, 2020 but before July 1, 2023.||–||–||5.20|
|Section 194M: Payment of commission (not being insurance commission), brokerage, contractual fee, professional fee to a resident person by an Individual or a HUF who are not liable to deduct TDS under section 194C, 194H, or 194J.Tax shall be deducted under section 194M with effect from 1/09/2019.||50 Lakhs||5||–|
|Section 194N:a) Filed the returns of income for all of the three assessment years relevant to the three previous years and cash withdrawals exceeding 1 cr (W.e.f. 1-4-2023, limit is Rs. 3 crore for co-operative society)|| Co-operative society= Rs. 3 Crores|
Others = 1 crore
|b) Not Filed the returns of income for all of the three assessment years relevant to the three previous years: (This provision is applicable w.e.f. 01 July, 2020)|
– Cash withdrawals from 20 Lakhs to 1 Cr (W.e.f. 1-4-2023, limit is Rs. 3 crore for co-operative society)
| Co-operative society= Rs. 3 Crores|
Others = 1 crore
|2(w.e.f. 01 July, 2020)||–|
|– Cash withdrawals exceeding 1 cr (W.e.f. 1-4-2023, limit is Rs. 3 crore for co-operative society)|| Co-operative society= Rs. 3 Crores|
Others = 1 crore
|Section 194O: Applicable for E-Commerce operator for sale of goods or provision of service facilitated by it through its digital or electronic facility or platform.(In case the E-commerce participant does not furnish PAN or Aadhar Number to the e-commerce operator, TDS shall be deducted at the rate of 5% under section 206AA of the Act)(This Section is inserted by Finance Act, 2020 which is applicable from 01/10/2020)||Rs. 500000||1(w.e.f. 01st October, 2020)||–|
TDS on Senior Citizen above 75 Years
|Refer note 3||Refer note 3|
Purchase of goods (applicable w.e.f 01.07.2021)
|Rs. 50 Lakh|
(refer note 1 below)
|Section 194R- |
Any person (excluding individual & HUF whose turnover does not exceed Rs. 1 cr. in case of business or Rs. 50 lakh) in case of profession) providing benefits or perquisites (whether in kind or cash) to any resident. (applicable w.e.f 01.07.2022)
Any Person making payment (whether in kind or cash) to any resident for transfer of virtual digital assets. (applicable w.e.f 01.07.2022)
|Rs. 50000 for specified person (Rs. 10000 for others) Refer note 4||1%|
|Section 195: Payment of any other sum to a Non-resident|||||||
|a) Income in respect of investment made by a Non-resident Indian Citizen||–||–||20.80|
|b) Income by way of long-term capital gains referred to in Section 115E in case of a Non-resident Indian Citizen||–||–||10.40|
|c) Income by way of long-term capital gains referred to in sub-clause (iii) of clause (c) of sub-Section (1) of Section 112||–||–||10.40|
|d) Income by way of long-term capital gains as referred to in Section 112A||–||–||10.40|
|e) Income by way of short-term capital gains referred to in Section 111A||–||–||15.60|
|f) Any other income by way of long-term capital gains [not being long-term capital gains referred to in clauses 10(33), 10(36) and 112A||–||–||20.80|
|g) Income by way of interest payable by Government or an Indian concern on moneys borrowed or debt incurred by Government or the Indian concern in foreign currency (not being income by way of interest referred to in Section 194LB or Section 194LC)||–||–||20.80|
|h) Income by way of royalty payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern where such royalty is in consideration for the transfer of all or any rights (including the granting of a licence) in respect of copyright in any book on a subject referred to in the first proviso to sub-section (1A) of Section 115A of the Income-tax Act, to the Indian concern, or in respect of any computer software referred to in the second proviso to sub-section (1A) of Section 115A of the Income-tax Act, to a person resident in India||–||–||10.40|
|i) Income by way of royalty [not being royalty of the nature referred to point g) above E] payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy||–||–||10.40|
|j) Income by way of fees for technical services payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy||–||–||10.40|
|k) Any other income||–||–||31.20|
|Section 196B: Income from units (including long-term capital gain on transfer of such units) to an offshore fund||–||–||10.40|
|Section 196C: Income from foreign currency bonds or GDR of an Indian company (including long-term capital gain on transfer of such bonds or GDR)||–||–||10.40|
|Section 196D: Income of foreign Institutional Investors from securities (not being dividend or capital gain arising from such securities)||–||–||20.80|
TDS on non-filers of ITR at higher rates
(applicable w.e.f 01.07.2021)
|Refer note 2||Refer note2||–|
(1) Section 194Q inserted by budget 2021:-
- This section is applicable from 1st July 2021.
- TDS @0.1% on purchase of goods if the value of goods purchased in exceeding Rs. 50 Lakh in the previous year.
- TDS Rate of this section will be 5% if PAN of seller is not available.
- This TDS @0.1% is deductible only on sum exceeding 50 Lakhs.
- This TDS is deductible by any person (being buyer with turnover exceeding Rs. 10 crores in preceding FY) making payment to any Resident.
- This TDS is not applicable where tax is deductible under any other provisions of Income tax Act or where TCS is collectible under section 206C of income tax Act. (If seller turnover is less than 10 Crore then 206C is not applicable as for TCS u/s 206C limit of seller turnover is checked but for TDS u/s 194Q limit of buyer’s turnover is checked.)
- Hence in case of both sections 206C & 194Q, limit of turnover is 10 crore, TDS/TCS rate is 0.1% for transaction above 50 lakh only on value exceeding 50 lakh But 194Q is for buyer point of view for deducting TDS and 206C is for seller point of view for collecting TCS.
- In case both seller & buyer have turnover above 10cr. then 194Q will be given preference hence buyer is required to deduct TDS, and seller will not be liable to deposit TCS. Hence 194Q will be preferred over 206C.
- If TDS under this section is not deducted , then 30% of the amount of on which TDS was deductible will be disallowed u/s 40(a)(ia).
(2) Section 206AB inserted by budget 2021:-
- Section 206AB provides special provision for deduction of tax at source for non-filer of income tax return at higher of the following TDS rate which is applicable for non-filer of ITR –(a) twice the rate specified in the relevant provision of the Act; or (b) twice the rate or rates in force; or (c) the rate of 5%.
- Upto FY 21-22,The provision of 206AB is applicable to a person who has not filed the returns of of income for both of the two assessment years relevant to two previous years immediately prior to the previous year in which tax is required to deducted, for which the time limit of filing return of income under section section (1) of section 139 has expired. AND aggregate of TDS & TCS in his case is Rs 50000 or more in each of these two previous years. The specified person shall not include a non-resident who does not have a permanent establishment in India.
- (W.e.f 1st April 2022, specified person” shall mean a person who has not furnished the return of income for the assessment year relevant to the previous year immediately preceding the financial year in which tax is required to be deducted, for which the time limit for furnishing the return of income under sub-section (1) of section 139 has expired and the aggregate of tax deducted at source and tax collected at source in his case is Rs. 50000/- or more in the said previous year)
- (W.e.f 1st April 2023, e certain persons who are not obliged to file tax return in India i.e. non-resident with no PAN and persons notified by the government, are proposed to be excluded from the ambit of this Section (ie. 206CCA & 206AB) and provide relief from a higher TDS/TCS rate.)
- Section 206AB is not applicable to case tds of deductible under section 192, 192A, 194B, 194BB, 194LBC, 194N and (194IA, 194IB and 194M are included w.e.f. 1st April 2022)
(3) Section 194P inserted by budget 2021:-
- IF declaration of eligibility is furnished by a senior citizen of 75 years or above, the specified bank would be required to compute the income of such senior citizen after giving effect to the deduction allowable under Chapter VI-A and rebate allowable under section 87A of the Act, for the relevant assessment year and deduct income tax on the basis of rates in force. Once this is done, there will not be any requirement of furnishing return of income by such senior citizen for this assessment year.
(4) Section 194S inserted by Budget 2022
TDS @ 1% on transfer or exchange of virtual digital assets is to be deducted w.e.f. FY 2022-23. where the consideration for transfer of virtual digital asset is (a) wholly in kind or in exchange of another virtual
digital asset, where there is no part in cash; or (b) partly in cash and partly in kind but the part in cash
is not sufficient to meet the liability of deduction of tax in respect of whole of such transfer, the person responsible for paying such consideration shall, before releasing the consideration, ensure that tax has been paid in respect of such consideration for the transfer of virtual digital asset. Nno tax shall be deducted in a case, where-
(a) the consideration is payable by a specified person and the value or aggregate value of such consideration does not exceed Rs. 50000/- during the financial year; or
(b) the consideration is payable by any person other than a specified person and the value or aggregate value of such consideration does not exceed Rs. 10000/- during the financial year.
For the purposes of this section “specified person” means a person,–
(a) being an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the
business carried on by him or profession exercised by him does not exceed Rs. 1 crore in case of business or Rs. 50 Lakh in case of profession, during the financial year immediately preceding the financial year in which such virtual digital asset is transferred;
(b) being an individual or a Hindu undivided family, not having any income under the head “Profits and gains of business or profession”.
(5) Surcharge on TDS:-
- Surcharge not deductible at source in case of resident individual/ HUF /Firm/LLP/ AOP / BOI/Domestic Company in respect of payment of income other than salary.
- Surcharge @ 10% (if total income exceeds Rs. 50 Lakhs but does not exceed Rs. 1 crore) or @15% (if total income exceeds Rs. 1 crore) is deductible along with TDS on Salary income.
- In case of Non-resident & Foreign company, Surcharge is deductible along with TDS at the following rates.
Non Residents other than company (if income exceeds Rs. 50 Lakh but not exceeds Rs. 1 Crore) 10% Non Residents other than company (if income exceeds Rs. 1 Crore) 15% Non Resident companies if income is between Rs. 1 Crore and 10 Crore 2% Non Resident companies if income is greater than Rs. 10 Crore 5% Surcharge on Co-operative Society & Firms in case of Non-Residents (if income exceeds Rs. 1 crore) 12%
(6) Education Cess & SHEC on TDS:-
- Resident;- EC & SHEC is not deductible at source in case of resident Individual/HUF/Firm/ AOP/ BOI/ Domestic Company in respect of payment of income other than salary.
- Education Cess @ 2% & SHEC @ 1% is deductible along with TDS on Salary income.
- Non-Resident:- Education Cess @ 2% & SHEC @ 1% is deductible at source in case of non-residents and foreign company.
(7) As per circular no. 1/2014 dated 13-01-2014, No TDS is to be deducted on service tax component included in the payments made to residents.
(8) If PAN of deductee is not intimated to the deductor, TDS will be deducted either at the rate given in above table or 20%, whichever is higher (Sec. 206AA). Also in case of section 192A (TDS on Employees Provident fund balance) TDS @ 20% is deducted if valid PAN is not available in place of MMR as amended by Finance Act 2023.
(9) Interest on late payment of TDS:
If TDS is not deducted then interest @ 1% per month or part thereof, for the period from the date on which TDS is deductible/collectible to the date on which TDS/TCS is actually deducted/collected. But if TDS is deducted but not paid then Interest @ 1.5% per month or part thereof, for the period from the date on which TDS is actually deducted/collected to the date on which such TDS/TCS is actually paid.
(10) W.e.f. 1st April 2022, The value for propose of section 194-IA is higher of consideration for the transfer of an immovable property OR the stamp duty value of such property.