Zero-TDS on Certain Payments

Under the Income Tax Act, Tax Deducted at Source (TDS) is not required to be deducted on certain payments up to specified thresholds. This ensures small amounts of income, like savings interest or small payments, are not unnecessarily taxed at source, reducing the compliance burden for both payers and recipients. Common examples include: Interest on savings accounts up to ₹40,000 (₹50,000 for senior citizens) under Section 80TTA/80TTB. Dividend income up to ₹5,000. Insurance proceeds or small contractual payments below specific limits. If the payment does not exceed the threshold, the payer does not deduct TDS, though the recipient is still required to include the income in their ITR if applicable.

Example: A bank pays ₹35,000 interest on a savings account. Since this is below the ₹40,000 threshold, no TDS is deducted at the source.