TDS to be deducted (others)
- Dividends – Old Section 194 → Section 393(1), Table 7
- Life Insurance Policy – Old Section 194DA → Section 393(1), Table 8(i)
- Transfer of Immovable Property – Old Section 194-IA → Section 393(1), Table 3(i)
- Cash Withdrawal – Old Section 194N → Section 393(3), Table 5
- E-commerce Transactions – Old Section 194O → Section 393(1), Table 8(v)
- Payments to Non-Residents – Old Section 195 → Section 393(2), Table 17
1. TDS ON DIVIDENDS:
A domestic company is required to deduct TDS when it pays or declares dividend to a resident shareholder, subject to the applicable conditions and threshold.
Rate of TDS:
TDS at the rate of 10% is applicable where the aggregate dividend paid or likely to be paid to the resident shareholder during the tax year exceeds ₹10,000.
Time of tax deduction at source:
TDS shall be deducted at the time of credit of income to the payee account or at the time of payment, whichever is earlier.
For a non-resident shareholder, the applicable TDS provision is under the non-resident provisions of Section 393(2), subject to the nature of income and applicable DTAA.
Meaning of Certain terms:
Deductor:
The company distributing dividends to the investors of equity shares should deduct TDS on such dividends. The deductor must deposit the TDS and file the TDS Return on TRACES.
Deductee:
Shareholder resident in India earning dividend income on equity shares will receive the amount after TDS. Shareholder residents in India earning dividend income on equity mutual funds will receive the amount after TDS. NRI investors / shareholders, earning dividend income will receive the amount after the deduction of TDS.
Example
- ABC Ltd. declares dividend of ₹50,000 to Mr. Ravi, a resident shareholder.
- TDS: ₹50,000 × 10% = ₹5,000
- Net dividend: ₹45,000
2. PAYMENT UNDER LIFE INSURANCE POLICY
TDS applies to a sum received under a life insurance policy, including bonus, where the amount is not exempt from total income under the relevant exemption provisions.
When to Deduct TDS?
TDS applies where the aggregate amount paid/payable during the tax year exceeds ₹1,00,000.
Rate of TDS:
For ensuring a proper mechanism for reporting of transactions and collection of tax in respect of sum paid under life insurance policies, rate of TDS is 2% on the amount of income comprised therein i.e., after deducting the amount of insurance premium paid by the resident assessee from the total sum received.
3. TDS ON TRANSFER OF IMMOVABLE PROPERTY:
This provision applies to transfer of:
- Land other than agricultural land
- Building
- Part of a building
Who deducts TDS?
The buyer/transferee is responsible for deducting TDS from the amount payable to the resident seller/transferor.
Time of deduction:
The deduction is to be made at the time of credit of such sum to the account of the resident transferor or at the time of payment of such sum to a resident transferor, whichever is earlier.
Threshold limit:
TDS applies where the consideration for transfer is ₹50 lakh or more. The threshold needs to be considered with the consideration and stamp duty value as prescribed under the provision.
Agricultural Land: The provision does not apply to agricultural land falling within the statutory exclusion.
How to deduct TDS on the transfer of Property?
- In the case of the sale of immovable property (other than agricultural land), the buyer can deduct TDS using their PAN.
- Under the Income-tax Act, 2025, the old Form 26QB has been replaced by Form 141 – Schedule B for TDS on transfer of immovable property. Form 141 consolidates the earlier PAN-based challan-cum-statements.
Meaning of consideration for transfer of any immovable property:
Consideration for transfer of any immovable property includes all charges of the nature of club membership fee, car parking fee, electricity or water facility fee, maintenance fee, advance fee or any other charges of similar nature, which are incidental to transfer of the immovable property.
4. TDS ON CASH WITHDRAWAL
TDS on Cash Withdrawal is applicable when the aggregate amount of cash withdrawals is more than Rs 1 crore during a financial year. This section will apply to all the sums of money or an aggregate of sums withdrawn from a particular bank in a financial year.
The following payers shall deduct TDS under this section:
- Any bank (private or public sector)
- A co-operative bank
- A post office
The provisions are not applicable in case payment to the following person:
- Central or State Government Banking Company
- Co-operative Banks
- Business correspondents authorized by RBI
- White-label ATM operators
- Any other person notified by the government
Time of deduction
This deduction is to be made at the time of payment of such sum.
Rate of TDS
Who is responsible for paying any sum, being the amount or aggregate of amounts, as the case maybe, in cash exceeding Rs. 1 crore during the previous year, to any person from one or more accounts maintained by such recipient-person with it, shall deduct tax at source @2% of such sum.
Where the recipient is a co-operative society, the higher threshold limit of Rs. 3 crores is applicable for cash withdrawals.
Threshold limit for withdrawal by a recipient who has not furnished return of income for last 3 years:
If the recipient has not furnished the returns of income for all the three assessment years relevant to the three previous years, for which the time limit for filing return of income has expired, immediately preceding the previous year in which the payment of the sum is made, the sum shall mean the amount or the aggregate of amounts, as the case maybe, in cash > Rs. 20 lakhs during the previous year, and the tax shall be deducted at the rate of –
- 2% of the sum, where the amount or aggregate of amounts, as the case may be, being paid in cash > Rs. 20 lakhs but ≤ Rs. 1 crore (Rs. 3 crores in case the recipient is a co-operative society
- 5% of the sum, where the amount or aggregate of amounts, as the case may be, being paid in cash > Rs. 1 crore (Rs. 3 crores in case the recipient is a co-operative society.
| Cash withdrawal | TDS rate |
|---|---|
| Above ₹20 lakh up to ₹1 crore | 2% |
| Above ₹1 crore | 5% |
5. TDS ON E-COMMERCE TRANSACTIONS:
- The provision applies where an e-commerce operator facilitates the sale of goods or provision of services by an e-commerce participant through its electronic platform.
Who are e-Commerce operators and participants:
- E-Commerce Operator – An e-Commerce operator is a person who owns, operates, or manages a digital / electronic facility for the sale of goods and services. He is responsible for making payments to the e-Commerce participant on such sales. Eg. Amazon, Flipkart
- E-Commerce Participant – An e-Commerce participant is a person who sells goods, services, or both through an electronic facility provided by an e-Commerce operator. He must be a resident of India.
Rate of TDS: 0.1%
E-commerce operators is not required to deduct TDS if
- the e-commerce participant is a resident individual or HUF;
- the participant has furnished PAN/Aadhaar; and
- gross amount of sale of goods/services during the tax year does not exceed ₹5 lakh.
A ceiling limit of Rs 5 lakh is set only for resident individuals and HUF.
In case where the e-Commerce participant does not provide his PAN or Aadhaar, TDS must be deducted at the rate of 5%.
E-Commerce participant being a non-resident
No TDS will be deducted if the e-commerce participant is a non-resident.
Illustration:
Mr. Sriram & Co. (a proprietorship e-commerce participant) is selling its products through Amazon (e-commerce operator). Miss Meera purchased this product online from Mr. Sriram & Co. for Rs. 5,50,000 on 1 October. Amazon credits the account of Mr. Sriram on 12 October. In such a situation, discuss on the applicability of TDS.
In this case, Amazon is required to deduct TDS @0.1% on Rs. 5,50,000 at the time of credit to Mr. Sriram & Co. or making payment, whichever is earlier. In this case, TDS should be deducted on 12 October.
6. TDS ON PAYMENTS TO NON-RESIDENTS
Interest and other sums chargeable to tax under the Act, other than income chargeable under the head Salaries, paid to a non-resident or foreign company.
Applicability:
TDS may apply where a person makes a payment to a:
- Payments made to a NR for services rendered or for sale of goods or merchandise.
- Interest, royalty, technical services fee or any other sum paid to a NR.
- Remittances to a NR outside India.
TDS is required to be deducted at the time of payment to the NR or while crediting the account in the books of accounts by whatever name called, whichever is earlier.
Rate for TDS Deduction:
The rate depends upon the nature of income and applicable provisions.
Where DTAA conditions are satisfied, the treaty rate may be applied where it is more beneficial, subject to documentation and applicable conditions.
Form 145 and Form 146 (Earlier Form 15CA and Form 15CB):
For remittances made on or after 1 April 2026, Forms 145 and 146 under the Income-tax Act, 2025 are applicable.
Form 145
Information to be furnished for payments/remittances to:
- Non-resident, not being a company; or
- Foreign company.
Form 146
Certificate issued by a Chartered Accountant in specified cases where the taxable remittance/aggregate exceeds ₹5 lakh.
QUICK SUMMARY
| Old Section | Income-tax Act, 2025 | Code | Rate / Key Point | Threshold |
|---|---|---|---|---|
| 194 | 393(1), Table 7 | 1029 | Dividend – 10% | ₹10,000 |
| 194DA | 393(1), Table 8(i) | 1030 | Life insurance – 2% on income component | ₹1 lakh |
| 194-IA | 393(1), Table 3(i) | 1010 | Immovable property – 1% | ₹50 lakh |
| 194N | 393(3), Table 5 | 1064/1065 | Cash withdrawal – 2% / 5% | ₹1 crore / ₹20 lakh |
| 194O | 393(1), Table 8(v) | 1035 | E-commerce – 0.1% | ₹5 lakh relaxation for eligible Individual/HUF |
| 195 | 393(2), Table 17 | 1057 | Non-resident – rate depends on nature/DTAA | No general threshold |