Types of TDS: A Quick Guide to Tax Deductions on Income

Tax Deducted at Source (TDS) is not just another tax term—it’s how the government ensures taxes are collected right when income is generated. If you’re receiving a salary, earning interest on FDs, or paying rent, chances are TDS is involved.

It helps reduce tax evasion and eases the filing process by spreading out tax payments across the year. But understanding the different sections and rates is essential to avoid surprise deductions or compliance issues.

Key TDS Sections You Should Know

Section 192 – TDS on Salary

Employers deduct TDS based on the employee's income tax slab rates after considering declarations.

Section 194C – TDS on Contractor Payments

Applicable when businesses make payments to contractors or sub-contractors.

• 1% TDS for individuals
• 2% TDS for other entitiesDeduction applies if payments exceed the prescribed limits.

Section 194I – TDS on Rent

If rent paid exceeds Rs. 2.4 lakh in a year, TDS applies:

• 10% for land/building
• 2% for plant/machineryThis applies to individuals and HUFs under tax audit as well.

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Section 194A – TDS on Interest Income

One of the most common deductions for depositors.

• Rs. 50,000 threshold for regular citizens
• Rs. 1,00,000 for senior citizensTDS is not applicable on savings account interest but applies to FDs and other deposits.

Pro Tip: Want to avoid unnecessary TDS on your FD returns? Invest in a Bajaj Finance Fixed Deposit and submit Form 15G/15H if eligible. Open an FD now!

Section 194J – TDS on Professional Fees

If you’re paying consultants, doctors, architects, or engineers, and the fees cross Rs. 30,000 in a year, a 10% TDS applies.

Section 194H – TDS on Commission and Brokerage

TDS at 5% is deducted if payments exceed Rs. 15,000. Applies to sales commission, referral incentives, and similar payouts.

Section 194 – TDS on Dividends

10% TDS if dividend income from an Indian company (other than income in the nature of sub-clause (e) of clause (22) of section 2) exceeds Rs. 5,000 in a financial year paid to a resident.

Looking for predictable, tax-efficient earnings? Lock in high interest rates with a Fixed Deposit and avoid TDS surprises. Check FD rates provided by Bajaj Finance FD (up to 7.95% p.a.).

Section 195 – TDS on Payments to Non-Residents

Cross-border transactions attract TDS based on Double Taxation Avoidance Agreements (DTAA) rates. This section covers interest, royalty, and other payments made to non-residents.

Section 194B – TDS on Lottery & Prize Winnings

Won a game show or lottery above Rs. 10,000? 30% TDS is deducted before you even see the prize.

Section 192A – TDS on EPF Withdrawals

10% TDS on premature EPF withdrawals (before 5 years of continuous service) if the amount exceeds Rs. 50,000. If PAN is not provided, the rate can be higher (maximum marginal rate). Submission of Form 15G/15H can avoid TDS if eligible.

Also Read: TDS on EPF Withdrawals

List Recap: Top 10 TDS Sections for Quick Reference

1. Section 192 – Salary
2. Section 194C – Contractor Payments
3. Section 194I – Rent
4. Section 194A – Interest
5. Section 194J – Professional Fees
6. Section 194H – Commission/Brokerage
7. Section 194 – Dividend
8. Section 195 – Payments to Non-Residents
9. Section 194B – Lottery/Prizes
10. Section 192A – PF Withdrawals

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Conclusion

Understanding how TDS applies to different income streams helps you stay tax-compliant and avoid unnecessary deductions. Whether it’s salary, rent, interest, or professional fees—being aware of applicable TDS sections empowers you to plan better and file smoother returns. For those seeking tax-efficient investment options, Fixed Deposits stand out as a stable, secure choice—especially when backed by smart planning and timely declarations.

Also Read: What is TDS?

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