Salary, Rent, and Income: How Much Tax Will the Government Deduct? Know the Latest TDS Rates
A major change in tax rules is coming, which will impact salary, rent, mutual funds, and other income sources. This change will directly affect your finances. If you fall under the taxpayer category this year, read this article to understand how much TDS (Tax Deducted at Source) will be deducted from your earnings.
What is TDS and Why is it Important?
TDS (Tax Deducted at Source) is a system under income tax laws where the payer deducts tax at the time of making a payment and deposits it with the government. This mechanism ensures timely tax collection and helps in reducing tax evasion.
TDS is applicable to various types of payments, including:
✔ Salary
✔ Interest & Dividends
✔ Rent & Commission
✔ Brokerage & Contract Payments
✔ Online Gaming & Lottery Winnings
If a transaction falls under TDS provisions, the payer is required to deduct tax at a specified rate and deposit it with the government.
TDS Rates for Financial Year 2024-25 (Assessment Year 2025-26)
The government has mandated PAN (Permanent Account Number) for TDS deduction. If PAN is not provided, tax will be deducted at 20% under Section 206AA.
Here’s a breakdown of the latest TDS rates applicable for FY 2024-25:
1. Salary & Provident Fund Withdrawals
| Section | Payment Type | TDS Rate (%) |
|---|---|---|
| 192 | Salary | As per slab rates |
| 192A | Provident Fund (Taxable Withdrawal) | 10% |
2. Interest & Dividend Income
| Section | Payment Type | TDS Rate (%) |
|---|---|---|
| 193 | Interest on securities | 10% |
| 194 | Dividend Income | 10% |
| 194A | Interest (other than securities) | 10% |
3. Income from Gaming, Lottery, & Horse Racing
| Section | Payment Type | TDS Rate (%) |
|---|---|---|
| 194B | Lottery, Puzzles, Card Games, etc. | 30% |
| 194BA | Online Gaming Income | 30% |
| 194BB | Horse Race Winnings | 30% |
4. Contract, Commission & Brokerage Payments
| Section | Payment Type | TDS Rate (%) |
|---|---|---|
| 194C | Payment to Contractors (Individuals/HUF) | 1% |
| 194C | Payment to Contractors (Others) | 2% |
| 194D | Insurance Commission | 5% |
| 194H | Commission or Brokerage | 5% (From 01-10-2024: 2%) |
5. TDS on Rent & Property Transactions
| Section | Payment Type | TDS Rate (%) |
|---|---|---|
| 194-I | Rent for Plant & Machinery | 2% |
| 194-I | Rent for Land, Building, Furniture, etc. | 10% |
| 194-IA | Transfer of Immovable Property (except agricultural land) | 1% |
| 194-IB | Rent Paid by Individuals/HUF (not liable for tax audit) | 5% (From 01-10-2024: 2%) |
6. Mutual Fund & Other Investment-Related TDS
| Section | Payment Type | TDS Rate (%) |
|---|---|---|
| 194F | Buyback by Mutual Fund/UTI | 20% |
| 194K | Income from Mutual Fund Units | 10% |
7. Cash Withdrawals from Bank
| Section | Payment Type | TDS Rate (%) |
|---|---|---|
| 194N | Cash withdrawal above ₹1 crore | 2% |
| 194N | Cash withdrawal above ₹20 lakh (for non-ITR filers) | 5% |
8. E-Commerce & Digital Asset Transactions
| Section | Payment Type | TDS Rate (%) |
|---|---|---|
| 194O | Payment by E-commerce Operators | 1% (From 01-10-2024: 0.1%) |
| 194S | Transfer of Virtual Digital Assets (e.g., Crypto) | 1% |
What Happens If TDS is Not Paid?
✔ If TDS is not deducted, interest will be charged at 1% per month under Section 201(1A).
✔ Non-filing of TDS returns may attract a penalty of ₹200 per day.
✔ Not providing PAN can lead to TDS deduction at 20% or more.
✔ Non-compliance for a long period can lead to legal consequences.
What Should You Do?
✅ Keep your PAN updated to avoid higher TDS deduction.
✅ Be aware of TDS rates applicable to your earnings.
✅ Submit Form 15G/15H, if applicable, to avoid unnecessary deductions.
✅ Consult a tax expert for effective tax planning.
Conclusion
The latest TDS changes will have a direct impact on your salary, rent, commissions, and other income. Understanding these tax rules is essential for better financial planning and compliance. Make sure you stay updated and plan your taxes wisely.
(Disclaimer: The information provided is for general reference only. Please consult a tax advisor for specific tax-related queries.)
