The Indian tax system provides for the deduction of tax at source (TDS) on certain types of income. TDS is deducted by the payer of the income and is deposited with the government. The liability to deduct TDS arises when the amount payable to a person exceeds a certain threshold limit, and the payer is required to deduct TDS at the prescribed rate and deposit it with the government.
 
Who all are liable for deducting TDS in India? Resident individuals, non-resident individuals, Hindu Undivided Families, companies, and firms are all liable for deducting TDS in India. The rates of TDS vary depending on the type of income, and the exemption limit for TDS also varies depending on the type of income.
 
TDS is deducted on salary, commission, professional fees, rent, and interest. The rates of TDS on these incomes vary from 2% to 10%. The exemption limit for TDS on salary is Rs 2.5 lakh per annum, for commission it is Rs 15000 per annum, for professional fees it is Rs 30000 per annum, for rent it is Rs 2.4 lakh per annum, and for interest it is Rs 5000 per annum.
 

Who is liable for deducting TDS in India?

 

» Resident individuals

All resident individuals are liable for deducting TDS in India. This includes any person who is a resident of India for the purpose of the Income Tax Act, 1961. A resident individual is typically defined as someone who has stayed in India for at least 182 days during the financial year. However, there are certain exceptions to this rule, such as if an individual is employed by the government or is a student studying abroad.
 

» Non-resident individuals

Non-resident individuals are also liable for deducting TDS in India if they have income from sources in India. This income can be in the form of salary, commission, professional fees, rent, or interest. Non-resident individuals must file a tax return in India if their total income from all sources exceeds the exemption limit (more on this later).
 

» Hindu Undivided Families

Hindu Undivided Families (HUFs) are also liable for deducting TDS in India if they have income from sources in India. This income can be in the form of salary, commission, professional fees, rent, or interest. HUFs must file a tax return in India if their total income from all sources exceeds the exemption limit (more on this later).
 

» Companies

Companies are required to deduct TDS on payments made to residents as well as non-residents, unless it is exempt under the Income Tax Act or any other law for the time being in force. The most common examples of payments subject to TDS are salaries, commissions, professional fees, and interest payments.
 

» Firms

Firms are required to deduct TDS on payments made to residents as well as non-residents, unless it is exempt under the Income Tax Act or any other law for the time being in force. The most common examples of payments subject to TDS are salaries, commissions, professional fees, and interest payments.
 

When is TDS deducted?

 

» TDS on salary

TDS is deducted on salary at the time of payment of salary. The employer deducts TDS from the employee's salary and pays it to the government.
 

» TDS on commission

TDS is deducted on commission at the time of payment of commission. The payer deducts TDS from the amount of commission and pays it to the government.
 

» TDS on professional fees

TDS is deducted on professional fees at the time of payment of professional fees. The payer deducts TDS from the amount of professional fees and pays it to the government.
 

» TDS on rent

TDS is deducted on rent at the time of payment of rent. The payer deducts TDS from the amount of rent and pays it to the government.
 

» TDS on interest

TDS is deducted on interest at the time when interest is earned or received. The payer deducts TDS from the amount of interest and pays it to the government.
 

Rates of TDS

 

» TDS on salary

The rates of TDS on salary vary depending on the amount of income earned by the employee. For example, if an employee earns a monthly salary of Rs. 30,000, the TDS rate would be 10% (3,000). However, if the employee's monthly salary is Rs. 1,50,000, the TDS rate would be 20% (30,000).
 

» TDS on commission

The rates of TDS on commission vary depending on the amount of income earned by the employee. For example, if an employee earns a monthly salary of Rs. 30,000 and receives a commission of Rs. 6,000, the total income would be Rs. 36,000 and the TDS rate would be 10% (3,600). However, if the employee's monthly salary is Rs. 1,50,000 and they receive a commission of Rs. 30,000, the total income would be Rs. 1,80,000 and the TDS rate would be 20% (36,000).
 

» TDS on professional fees

The rates of TDS on professional fees vary depending on the amount of income earned by the professional. For example, if a lawyer charges a fee of Rs. 5 lakhs for their services rendered in a court case lasting one month's duration then they will have to deduct 2% TDS from their fee which comes to Rs. 50 thousand as per Income Tax Act 1961 Section 194
 

» TDS on Rent

The rates of TDS on rent vary depending on the amount of income earned by the tenant. For example, if a tenant pays rent of INR 12500 per month, then he will have to deduct 10 percent TDS from his rent i e INR 1250 as per Income Tax Act 1961 Section 194I(1)(i).
 

» TDS exemption limit

In India, TDS exemption limit is the maximum amount of money that can be earned without having to pay taxes. This limit is set by the government and is updated every year. For the 2018-2019 financial year, the TDS exemption limit is Rs 2.5 lakh. This means that any money earned above this amount will be subject to taxes. The government has set this limit in order to ensure that all citizens pay their fair share of taxes.  


» TDS on salaried individuals

The TDS exemption limit for salaried individuals is Rs. 2,50,000 per annum. This means that if your total income from salary is less than Rs. 2,50,000 in a financial year, you are not liable for TDS deduction.
 

» TDS on Interest

The TDS exemption limit for interest income is Rs. 10,000 per annum. This means that if your total interest income from all sources is less than Rs. 10,000 in a financial year, you are not liable for TDS deduction.
 
The conclusion of the blog post 'Who all are liable for deducting TDS in India?' is that resident individuals, non-resident individuals, Hindu Undivided Families, companies and firms are all liable for deducting TDS in India. TDS is deducted on salary, commission, professional fees, rent and interest. The rates of TDS vary depending on the type of income. There is also an exemption limit for TDS on salary and other incomes.