What is TDS?
- TDS is a system where tax is deducted at the time of payment by the payer.
- Applies to payments like salary, interest, rent, professional fees, commission, etc.
- Deducted amount is deposited with the government on behalf of the payee.
Objectives of TDS
- Ensures steady revenue collection for the government.
- Reduces chances of tax evasion.
- Brings more people into the tax net.
- Promotes advance collection of tax.
Key TDS Rates for FY 2024–25
| Payment Type | Section | Threshold | TDS Rate |
| Salary | 192 | Based on slab | As per slab |
| FD Interest (Bank) | 194A | ₹40,000 (₹50K for seniors) | 10% |
| Rent (land/building) | 194I | ₹2,40,000/year | 10% |
| Professional fees | 194J | ₹30,000/year | 10% |
| Contractor (Individual) | 194C | ₹30,000 per job | 1% |
| Commission/Brokerage | 194H | ₹15,000/year | 5% |
| Property Purchase | 194-IA | ₹50 lakh | 1% |
| Crypto/VDAs | 194S | ₹10,000/year | 1% |
No PAN = TDS @ 20% or more (Sec 206AA)
What’s New in TDS (2025)
- Crypto/Virtual Digital Assets (VDAs): TDS @ 1% on sale value u/s 194S.
- New TDS Return Utility: TRACES portal has improved return filing features.
- AIS Monitoring: TDS entries now appear in AIS/TIS – auto cross-verified with ITR.
- Rent by Individuals: 5% TDS if monthly rent > ₹50,000 (Section 194IB).
- Form 16/16A automation: Faster issue via new e-filing integration.
TDS Compliance Checklist
- ✅ Deduct TDS at correct rate.
- ✅ Deposit TDS by 7th of next month.
- ✅ File quarterly TDS returns (24Q, 26Q, 27Q).
- ✅ Issue TDS certificates (Form 16, 16A, 16C).
- ✅ Match with Form 26AS & AIS.
Common Mistakes to Avoid
- ❌ Deducting wrong rate (e.g., 10% instead of 5%)
- ❌ Missing PAN = higher TDS
- ❌ Late payment → interest & penalty
- ❌ Not filing returns → ₹200/day late fee u/s 234E
For Recipients (Payees)
- Check TDS in Form 26AS or AIS.
- Claim TDS in ITR under Schedule TDS.
- File ITR to get refund of excess TDS, if any.
Penalties for Non-Compliance
| Default | Section | Penalty / Interest |
| Non-deduction of TDS | 201 | 1% per month |
| Deducted but not paid | 201 | 1.5% per month |
| Late TDS return | 234E | ₹200/day |
| Late TDS certificate | 272A | ₹100/day (Max ₹1L) |
Final Takeaway
- TDS applies to all types of payments — salary, rent, crypto, interest, etc.
- Ensure accurate deduction, timely deposit, and regular filing.
- Always match TDS data with Form 26AS & AIS while filing ITR.
TDS may seem like a small deduction — but missing it causes big penalties and refund delays!
