What is Tax Deducted at Source (TDS) in India?

How is Tax deducted at source on Salary?

The employer takes a huge chainsaw… and well..not really… The tax deducted at source by the employer is actually the tax that is payable by the employee in any case. Instead of the employee paying it, the employer deducts it from his salary and then pays the government. The tax can only be cut at the time of salary payment and is calculated as per the income tax slab the employee falls under. To get a certificate of lower or no tax deduction, an employee can make an application, using Form no. 13 to the assessing officer. If an employee has other sources of income, he can disclose those incomes to his employer although he has no obligation to do so. Also, the only negative income that can be declared to the employer is the loss under the head “Income from House Property”.

How is tax deducted at source from interest?

Any person who gets his books of accounts audited is liable to deduct tax at source on interest paid to any resident person. Tax is deducted at the time of payment or when interest is credited to your books of accounts, whichever is earlier. The maximum amount which can be paid without any tax deduction is Rs.10000 in case of bank interest and Rs. 5,000/- in case of other interests. The rate at which tax is deducted at source is 10%.

How is tax deducted at source on rent?

Any person who gets his books of accounts audited is liable to deduct tax at source on rent paid to any resident person. Maximum amount that can be paid as rent without any Tax deducted at source is Rs. 1,80,000/-. On any amount over that, tax is deducted at 2% for rent payable on plant and machinery and at 10% for rent payable on land, building and furniture.

Payments, other than salary, to Non Resident Indians are also liable for TDS. The rate is as specified in the DTAA applicable or the rate specified in the Income tax act, whichever is lesser.

Also Read:-Income from Other Sources Under Section 56(1)

Also Read:-Pay rent to parents and claim tax deduction

Also Read:-Income Tax Section 80EE: Deduction on Home Loan Interest

Also Read:-Tax Deducted At Source (TDS) Under Section 192