Which payments need TDS, at what rate, from what limit — and what it costs to be late.
| Section | Payment | Rate | Threshold |
|---|---|---|---|
| 194C | Contractor | 1% / 2% | ₹30,000 single, ₹1,00,000 a year |
| 194J | Professional fees | 10% | ₹50,000 a year |
| 194J | Technical services | 2% | ₹50,000 a year |
| 194I | Rent — building | 10% | ₹50,000 a month |
| 194I | Rent — machinery | 2% | ₹50,000 a month |
| 194H | Commission | 2% | ₹20,000 a year |
| 194A | Interest (bank) | 10% | ₹50,000 (₹1,00,000 seniors) |
| 194Q | Purchase of goods | 0.1% | Above ₹50 lakh a year |
TDS = Payment (excluding GST) × rate once the threshold is crossed. A ₹1,00,000 contract payment to a company: 2% = ₹2,000 TDS, net payment ₹98,000. When a payment makes the year's total cross an annual limit, TDS applies to the whole year's amount.
If the payee has not given a valid PAN, deduct at the higher of 20% or twice the applicable rate (5% for 194Q).
Deposit TDS by the 7th of the following month (30 April for March deductions). Quarterly returns (24Q for salary, 26Q for others) are due 31 July, 31 October, 31 January and 31 May.
Interest is 1% a month for not deducting and 1.5% a month for deducting but depositing late. Late returns attract ₹200 a day under section 234E (capped at the TDS amount), and the expense can be partly disallowed in your own tax computation.
