TDS is a tax collection mechanism where tax is deducted by the payer at the time of making certain payments such as salary, rent, or professional fees, and is directly deposited with the Income Tax Department. This system ensures timely tax collection and helps reduce tax evasion.
| Transaction Type | Current Threshold | Proposed Threshold (FY 25-26) |
|---|---|---|
| Rent | ₹2.4 lakh | ₹6 lakh |
| Interest (other than securities) – Senior Citizen | ₹50,000 | ₹1 lakh |
| Interest (other than securities) – Others | ₹40,000 (bank, co-op, post office) ₹5,000 (others) | ₹50,000 (bank, co-op, post office) ₹10,000 (others) |
| Interest on Securities | – | ₹10,000 |
| Remittance (LRS for education through loan) | 0.5% over ₹7 lakh | – |
| Remittance (LRS and overseas tour) | ₹7 lakh | ₹10 lakh |
| Dividend for individual shareholder | ₹5,000 | ₹10,000 |
| Income from mutual funds | ₹5,000 | ₹10,000 |
| Winnings (lottery, puzzles, horse race) | ₹10,000 combined/year | ₹10,000 per transaction |
| Professional/technical services fee | ₹30,000 | ₹50,000 |
| Enhanced compensation income | ₹2.5 lakh | ₹5 lakh |
| Event | Interest/Penalty | Details |
|---|---|---|
| Late Deposit of TDS | Interest @ 1.5% per month from deduction date | Until actual deposit |
| Late Filing of TDS Return | ₹200/day (max up to total TDS amount) | From due date till actual filing |
| Non-Filing of TDS Return | ₹10,000 to ₹1,00,000 | If return not filed at all |
| Non-Deduction of TDS | Disallowance of related expense under Sec 40(a)(i) | Entire expense will be disallowed for tax |
| Non-Payment of TDS | 1.5% per month on unpaid TDS | From due date of payment till actual payment |
Late Payment Interest:
Rate: 1.5% per month (or part month).
Period: From deduction date to payment date.
Example: TDS deducted on 15th June, paid on 10th Sept = 3 months interest.
Late Filing Penalty:
₹200/day delay (not exceeding TDS amount).
Example: If return due 31st May, filed on 15th June = ₹3,000 penalty.
Non-Filing Penalty:
₹10,000 to ₹1,00,000 if return not filed at all.
Non-Deduction of TDS:
Expense disallowed in tax calculation if TDS not deducted.
| Event | Due Date |
|---|---|
| Payment of TDS (monthly) | 7th of the following month |
| Quarterly TDS Return Filing (24Q, 26Q) | 15th of the month after quarter |
| Annual TDS Return (FY 2024-25) | 30th June, 2025 |
Late filing attracts ₹200/day penalty plus interest.
Higher TDS Rate: If PAN not provided, TDS is deducted at 20%.
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