Applicable TDS Rate

The Applicable TDS Rate refers to the specific percentage of tax that must be deducted at source from certain types of payments, as mandated under the Income Tax Act, 1961.
The rate varies depending on the nature of payment and the status of the recipient (individual, company, resident, non-resident, etc.).

TDS ensures that tax is collected in advance at the point of income generation.

 Factors Determining the Applicable TDS Rate

 Example

If a person receives interest on fixed deposits from a bank:

• If annual interest exceeds ₹40,000 (₹50,000 for senior citizens),

• TDS @ 10% is deducted by the bank.

 This 10% is the Applicable TDS Rate for FD interest under Section 194A