TCS / TDS Services

TDS and TCS are two of the most significant sources of income for the government. And, it’s crucial for businesses to make such on-time tax payments to avoid penalties and staying compliant.

What is TDS & TCS?

TDS is a mechanism where the government collects tax at the source of income generation. It is applicable to various payments such as salaries, interest, rent, commissions, professional fees, etc. The deductor (payer) deducts a certain percentage of tax before making the payment to the deductee (payee). The deducted amount is then deposited with the government on behalf of the payee.

TCS is a mechanism similar to TDS but in reverse. Here, the seller collects tax at the source from the buyer when selling specific goods and services. The collected tax is then deposited with the government. TCS is commonly applied to transactions involving goods such as scrap, timber, minerals, or the sale of a motor vehicle above a certain value.

Benefits of TDS:

• It prevents people from evading taxes.
• The burden of responsibility of the Tax Collection Agencies and the Deductor are lessened.
• TDS is deducted at the time of payment, it ensures timely collection of taxes, reducing the delay in revenue collection.
• It is convenient for the deductee as Tax is automatically deducted.

Below is table of Revised TDS rates applicable from 1 October 2024:

Section	Present TDS Rate	Proposed TDS Rate	With Effect From
Section 194D – Payment of insurance commission (in case of person other than company)	5%	2%	01-04-2025
Section 194DA – Payment in respect of life insurance policy	5%	2%	01-10-2024
Section 194G – Commission etc on sale of lottery tickets	5%	2%	01-10-2024
Section 194H – Payment of commission or brokerage	5%	2%	01-10-2024
Section 194-IB – Payment of rent by certain individuals or HUF	5%	2%	01-10-2024
Section 194M – Payment of certain sums by certain individuals or Hindu undivided family	5%	2%	01-10-2024
Section 194-O – Payment of certain sums by e-commerce operator to e-commerce participant	1%	0.1%	01-10-2024
Section 194F – Payments on account of repurchase of units by Mutual Fund or Unit Trust of India	Proposed to be omitted	N/A	01-10-2024

Complete TDS Rates Chart applicable for F.Y. 2024-25 & AY 2025-26 with changes

1. In the case of a person other than a company

1.1 where the person is resident in India-

Particulars	TDS Rates (in %)
Section 192: Payment of salary	Normal Slab Rate
Section 192A: Payment of accumulated balance of provident fund which is taxable in the hands of an employee.	10
Section 193: Interest on securities	10
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;	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
d) interest on any other security	10
Section 194: Income by way of dividend	10
Section 194A: Income by way of interest other than “Interest on securities”	10
Section 194B: Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort, or from gambling or betting of any form or nature whatsoever.	30
Section 194BA: Income by way of winnings from any online game	30
Section 194BB: Income by way of winnings from horse races	30
Section 194C: Payment to contractor/sub-contractor
a) HUF/Individuals	1
b) Others	2
Section 194D: Insurance commission	5% till 31 March 2025 (2% from 1 April 2025)
Section 194DA: Payment in respect of life insurance policyw.e.f. 1/9/2019, the tax shall be deducted on the amount of income comprised in insurance pay-out	5% till 30 September 2024 (2% from 1October 2024)
Section 194EE: Payment in respect of deposit under National Savings scheme	10
Section 194F: Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India	20 (Omitted from 1 October 2024)
Section 194G: Commission, etc., on sale of lottery tickets	5% till 30 September 2024 (2% from 1October 2024)
Section 194H: Commission or brokerage	5% till 30 September 2024 (2% from 1October 2024)
Section 194-I: Rent
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	1
Section 194-IB: Payment of rent by individual or HUF not liable to tax audit	5% till 30 September 2024 (2% from 1October 2024)
Section 194-IC: Payment of monetary consideration under Joint Development Agreements	10
Section 194J: Fees for professional or technical services:i) sum paid or payable towards fees for technical servicesii) sum paid or payable towards royalty in the nature of consideration for sale, distribution or exhibition of cinematographic films;iii) Any other sumNote: With effect from June 1, 2017 the rate of TDS would be 2% in case of payee engaged in business of operation of call center	2210
Section 194K: Income in respect of units payable to resident person	10
Section 194LA: Payment of compensation on acquisition of certain immovable property	10
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	10
Section 194LBB: Investment fund paying an income to a unit holder [other than income which is exempt under Section 10(23FBB)]	10
Section 194LBC: Income in respect of investment made in a securitisation trust (specified in Explanation of section 115TCA)	25 in case of Individual or HUF, 30 in case of other person
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 when aggregate of sum credited or paid during a financial year exceeds Rs. 50 lakh.	5% till 30 September 2024 (2% from 1October 2024)
Section 194N: Cash withdrawal during the previous year from one or more account maintained by a person with a banking company, co-operative society engaged in business of banking or a post office:i) in excess of Rs. 1 crore#ii) in excess of Rs. 20 lakhs** for those persons who have not filed return of income (ITR) for three previous years immediately preceding the previous year in which cash is withdrawn, and the due date for filing ITR under section 139(1) has expired. The deduction of tax under this situation shall be at the rate of:a) 2% from the amount withdrawn in cash if the aggregate of the amount of withdrawal exceeds Rs. 20 lakhs during the previous year; orb) 5% from the amount withdrawn in cash if the aggregate of the amount of withdrawal exceeds Rs. 1 crore during the previous year.# The threshold limit of Rs. 1 crore is increased to Rs. 3 croresif the withdrawal of cash is made by co-operative society.	22/5
Section 194-O: Payment or credit of amount by the e-commerce operator to e-commerce participant	1% till 30 September 2024 (0.1% from 1October 2024)
Section 194P: Deduction of tax by specified bank in case of senior citizen having age of 75 or more	Tax on total income as per rate in force
Section 194Q: Payment for purchase of goods of the aggregate value exceeding Rs. 50 lakhsNote: TDS is deductible on sum exceeding Rs. 50 lakhs	0.1
Section 194R: Deduction of tax in case any benefit or perquisite is provided and aggregate value of such benefit/perquisite exceeds Rs. 20,000Note: Benefit or perquisite should be arising from business or the exercise of a profession by such resident.	10
Section 194S: Payment on transfer of Virtual Digital AssetNote: No tax shall be deducted under this provision in the following circumstance:• If the consideration is payable by any person (other than a specified person) and its aggregate value does not exceed Rs. 10,000 during the financial year.• if the consideration is payable by a specified person and its aggregate value does not exceed Rs. 50,000 during the financial year.Specified person means:(a) An individual or a HUF, whose total sales, gross receipts or turnover does not exceed Rs. 1 crore in case of business or Rs. 50 lakhs in case of a profession, during the financial year immediately preceding the financial year in which virtual digital asset is transferred;(b) An individual or a HUF who does not have any income under the head profits and gains of business or profession.	1
Any Other Income	10

1.2 where the person is not resident in India-

Particulars	TDS Rates (in %)
Section 192: Payment of salary	Normal Slab Rate
Section 192A: Payment of accumulated balance of provident fund which is taxable in the hands of an employee.	10
Section 194B: Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort or from gambling or betting of any form or nature whatsoever.	30
Section 194BA: Income by way of winnings from any online game	30
Section 194BB: Income by way of winnings from horse races	30
Section 194E: Payment to non-resident sportsmen/sports association	20
Section 194EE: Payment in respect of deposits under National Savings Scheme	10
Section 194F:Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India	20
Section 194G: Commission, etc., on sale of lottery tickets	5
Section 194LB: Payment of interest on infrastructure debt fund	5
Sec. 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): Payment of the nature referred to in section 10(23FCA) by business trust to unit holders	30
Section 194LBB: Investment fund paying an income to a unit holder [other than income which is exempt under Section 10(23FBB)].	30
Section 194LBC: Income in respect of investment made in a securitisation trust (specified in Explanation of section115TCA)	30
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)	5 or 4* or 9*** In case where interest is payable in respect of Long-term Bond or Rupee Denominated Bond listed on recognised stock exchange located in IFSC** Where money borrowed from a source outside India by issuing a long-term bond or rupee-denominated bond on or after 01-04-2023, which is listed only on a recognised stock exchange located in an IFSC
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 Investor	5
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
b) Income by way of long-term capital gains referred to in Section 115E in case of a Non-resident Indian Citizen	10
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
d) Income by way of long-term capital gains as referred to in Section 112A	10
e) Income by way of short-term capital gains referred to in Section 111A	15
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
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
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	20
i) Income by way of royalty [not being royalty of the nature referred to point h) above] 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	20
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	20
Section 194K: Income in respect of units payable to resident person	10
k) Any other income	30
Section 196B: Income from units (including long-term capital gain on transfer of such units) to an offshore fund	10
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
Section 196D: Income of foreign Institutional Investors from securities (not being dividend or capital gain arising from such securities)Note: Tax shall be deducted at the rate provided under DTAA if same is lower than the existing TDS rate of 20%.	20

2. In the case of a company-

2.1 where the company is a domestic company-

Particulars	TDS Rates (in %)
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;	10
c) any security of the Central or State Government;[i.e. 8% Saving (Taxable) Bonds, 2003 and 7.75% Saving (Taxable) Bonds, 2018]	10
d) interest on any other security	10
Section 194: Dividend	10
Section 194A: Income by way of interest other than “Interest on securities”	10
Section 194B: Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort or from gambling or betting of any form or nature whatsoever.	30
Section 194BA: Income by way of winnings from any online game	30
Section 194BB: Income by way of winnings from horse races	30
Section 194C: Payment to contractor/sub-contractor
a) HUF/Individuals	1
b) Others	2
Section 194D: Insurance commission	10
Section 194DA: Payment in respect of life insurance policyw.e.f. 1/9/2019, the tax shall be deducted on the amount of income comprised in insurance pay-out	5
Section 194EE: Payment in respect of deposit under National Savings scheme	10
Section 194F: Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India	20
Section 194F: Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India	20
Section 194G: Commission, etc., on sale of lottery tickets	5
Section 194H: Commission or brokerage	5
Section 194-I: Rent
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	1
Section 194-IC:Payment of monetary consideration under Joint Development Agreements	10
Section 194J: Fees for professional or technical services:i) sum paid or payable towards fees for technical servicesii) sum paid or payable towards royalty in the nature of consideration for sale, distribution or exhibition of cinematographic films;iii) Any other sumNote: With effect from June 1, 2017 the rate of TDS would be 2% in case of payee engaged in business of operation of call center	2210
Section 194K: Income in respect of units payable to resident person	10
Section 194LA: Payment of compensation on acquisition of certain immovable property	10
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	10
Section 194LBB: Investment fund paying an income to a unit holder [other than income which is exempt under Section 10(23FBB)]	10
Section 194LBC: Income in respect of investment made in a securitisation trust (specified in Explanation of section 115TCA)	10
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 when aggregate of sum credited or paid during a financial year exceeds Rs. 50 lakh.	5
Section 194-O: Payment or credit of amount by the e-commerce operator to e-commerce participant	1
Section 194P: Deduction of tax by specified bank in case of senior citizen having age of 75 or more	Tax on total income as per rate in force
Section 194Q: Payment for purchase of goods of the aggregate value exceeding Rs. 50 lakhsNote: TDS is deductible on sum exceeding Rs. 50 lakhs	0.1
Section 194R: Deduction of tax in case any benefit or perquisite is provided and aggregate value of such benefit/perquisite exceeds Rs. 20,000Note: Benefit or perquisite should be arising from business or the exercise of a profession by such resident.	10
Section 194S: Payment on transfer of Virtual Digital AssetNote: No tax shall be deducted under this provision in the following circumstance:• If the consideration is payable by any person (other than a specified person) and its aggregate value does not exceed Rs. 10,000 during the financial year.• if the consideration is payable by a specified person and its aggregate value does not exceed Rs. 50,000 during the financial year.Specified person means:(a) An individual or a HUF, whose total sales, gross receipts or turnover does not exceed Rs. 1 crore in case of business or Rs. 50 lakhs in case of a profession, during the financial year immediately preceding the financial year in which virtual digital asset is transferred;(b) An individual or a HUF who does not have any income under the head profits and gains of business or profession.	1
Any Other Income	10

1.2 where the company is not a domestic company-

Particulars	TDS Rates (in %)
Section 192: Payment of salary	Normal Slab Rate
Section 194B: Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort or from gambling or betting of any form or nature whatsoever.	30
Section 194BA: Income by way of winnings from any online game	30
Section 194BB: Income by way of winnings from horse races	30
Section 194E: Payment to non-resident sportsmen/sports association	20
Section 194G: Commission, etc., on sale of lottery tickets	5
Section 194LB: Payment of interest on infrastructure debt fund	5
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): Payment of the nature referred to in section 10(23FCA) by business trust to unit holders	40
Section 194LBB: Investment fund paying an income to a unit holder [other than income which is exempt under Section 10(23FBB)].	40
Section 194LBC: Income in respect of investment made in a securitisation trust (specified in Explanation of section115TCA)	40
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)	5 or 4* or 9*** In case where interest is payable in respect of Long-term Bond or Rupee Denominated Bond listed on recognised stock exchange located in IFSC** Where money borrowed from a source outside India by issuing a long-term bond or rupee-denominated bond on or after 01-04-2023, which is listed only on a recognised stock exchange located in an IFSC
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 Investor	5
Section 195: Payment of any other sum
a) 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
b) Income by way of long-term capital gains as referred to in Section 112A	10
c) Income by way of short-term capital gains referred to in Section 111A	15
d) 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
e) 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
f) 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 after the 31st day of March, 1976 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	20
g) Income by way of royalty [not being royalty of the nature referred to in point f) above] 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—
A. where the agreement is made after the 31st day of March, 1961 but before the 1st day of April, 1976	50
B. where the agreement is made after the 31st day of March, 1976	20
h) 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—
A. where the agreement is made after the 29th day of February, 1964 but before the 1st day of April, 1976	50
B. where the agreement is made after the 31st day of March, 1976	20
i) Any other income	40
Section 196B: Income from units (including long-term capital gain on transfer of such units) to an offshore fund	10
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
Section 196D: Income of foreign Institutional Investors from securities (not being dividend or capital gain arising from such securities)Note: Tax shall be deducted at the rate provided under DTAA if same is lower than the existing TDS rate of 20%.	20

* The rate of TDS shall be increased by applicable surcharge and Health & Education cess.