TDS rates on salary, interest and other incomes for FY 2021-22

0
973

TDS is applicable on various incomes such as salaries, interest received, the commission received, dividends, etc. However, TDS does not apply to all incomes and persons for all transactions.

TDS stands for ‘Tax Deducted at Source’ and it was introduced to collect tax at the source from where an individual’s income is generated.

Here, the person making the payment is responsible for deducting the tax and depositing the same with the government. This person is known as a ‘deductor’.

On the other hand, the person who receives the payment after TDS is called the ‘deductee’. Form26AS is a statement that shows the amount of tax that has been deducted and deposited in a person’s name/PAN in a particular financial year.

Effective from July 1, 2022, the tax will be deducted on the transfer of crypto assets at the rate of 1% under section 194S of the Income-tax Act. The tax will be deducted if the transfer amount exceeds Rs 50,000 in the case of a specified person (Rs 10,000 in another case).

As per Budget 2022 proposal, in case the payer is an Individual or HUF, having turnover from Business less than or equal to Rs 1 crore or having turnover from Profession less than or equal to Rs 50 lakh

 or having income under any head other than the head ‘Profits and gains of business or profession and the value of consideration transferred to a Resident concerning virtual digital asset is less than Rs.50, 000, there is no liability on such Individual/HUF to deduct tax.

TDS applicable above the threshold

Different threshold levels are specified by the Income Tax department for different payments such as salaries, interest received, etc.

For example, there will be no TDS on the total interest received on FD/FDs from a single bank if it is less than Rs 40,000 in a year from that bank. For senior citizens, TDS on interest received on FD will be applicable if it crosses Rs 50,000 in a single financial year.

How to avoid TDS

If a person expects that his total income in a financial year will be below the exemption limit, he can ask the payer not to deduct TDS by submitting Form 15G/15H.

While receiving payment which is subject to TDS, the deductee is required to provide his PAN details to avoid tax deduction at the higher rates.

Can TDS be avoided?

TDS can be avoided by submitting Form 15G/Form 15H to the deductee.

What is the current TDS rate?

Each income has a different threshold and once that threshold is crossed at the TDS rate specified in the Income-tax Act.

Can TDS be refunded?

TDS that has been deducted can be claimed as a refund provided your tax liability for the financial year is lower than the tax deducted. To claim a TDS refund, you are required to file an income tax return.

Follow and connect with us on Facebook, LinkedIn&Twitter

LEAVE A REPLY

Please enter your comment!
Please enter your name here