What is TDS, and Why It Matters?

Tax Deducted at Source is a crucial component of India's tax compliance system. It is mandated under the Income Tax Act and ensures that tax is collected at the source of income itself, helping the government maintain a steady revenue flow while reducing leakage and improving discipline in reporting.

Whether you're a business, professional, or salaried individual, understanding TDS is essential for accurate deduction, cleaner books, timely filing, and avoiding unnecessary notices or penalties.

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Who Needs to Deduct TDS in India?

TDS obligations apply across businesses, professionals, and notified bodies depending on payment type and threshold.

Companies

Companies making salary, rent, professional fee, commission, and contractor payments generally deduct TDS on specified transactions.

Individuals and HUFs

When tax audit applicability under Section 44AB is triggered, individuals and HUFs must deduct TDS on specified payments.

Government and Local Bodies

Government departments, local authorities, and notified institutions deduct TDS while releasing eligible payments.

Freelancers and Startups

Based on thresholds, turnover, and payment nature, freelancers and startups may also need to comply with TDS deduction rules.

TDS Applicability and Rate Snapshot

Reference view for common sections. Rates can vary based on PAN availability and filer status.

Section

Payment Type

Threshold

Rate

Section

192

Payment Type

Salary

Threshold

Basic exemption as per applicable slab

Rate

Slab rate

Section

194A

Payment Type

Interest payments

Threshold

INR 40,000 or INR 50,000

Rate

10 percent

Section

194C

Payment Type

Contractor payments

Threshold

INR 30,000 or INR 1,00,000 annual

Rate

1 percent or 2 percent

Section

194H

Payment Type

Commission and brokerage

Threshold

INR 15,000 annual

Rate

5 percent

Section

194I

Payment Type

Rent

Threshold

INR 2,40,000 annual

Rate

2 percent or 10 percent

Section

194J

Payment Type

Professional services

Threshold

INR 30,000 annual

Rate

2 percent or 10 percent

Section

194Q

Payment Type

Purchase of goods

Threshold

INR 50,00,000 annual

Rate

0.1 percent

Compliance Challenges vs. BUSY Solutions

Managing TDS can be error-prone and time-consuming. Here's how traditional challenges are resolved with automated accounting.

Traditional Workflow

The Challenges

Risk of penalties due to late payment or missed deadlines.

Complicated rate structure and constant legislative changes.

High dependency on third-party consultants or external CPAs.

Errors in deduction amounts or PAN mismatches leading to notices.

Manual, tedious TDS reconciliation with the TRACES / 26AS portal.

Automated Workflow

How BUSY Helps

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Automatic calculation of TDS directly during transaction entry.

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Pre-set sections and customizable thresholds mapped correctly.

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Instant TDS return preparation and discrepancy report generation.

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Automated TDS certificate (Form 16A) distribution to parties.

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Seamless GST & TDS integration for unified corporate compliance.

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What is TDS, and Why It Matters?

Simplify TDS Compliance with BUSY

Who Needs to Deduct TDS in India?

Companies

Individuals and HUFs

Government and Local Bodies

Freelancers and Startups

TDS Applicability and Rate Snapshot

Compliance Challenges vs. BUSY Solutions

The Challenges

How BUSY Helps

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