TDS on a ₹20 lakh transaction depends heavily on the nature of the payment, as different sections of the Income Tax Act apply. No TDS is generally deducted for cash withdrawals up to ₹20 lakhs (if ITR filed). For other payments, the amount varies based on the applicable section (e.g., salary, contractor payments, or property transactions).
Up to ₹250,000: Nil. ₹250,001 to ₹500,000: 5% of ₹200,000 = ₹10,000.
TDS on Sale of Property by NRI
When an NRI sells property in India, the buyer is responsible for deducting TDS before making payment. If property sold within 2 years (STCG): TDS at 30% on the sale consideration. If property is sold after 2 years (LTCG): TDS at 20% (plus surcharge and cess).
Tax is required to be deducted if goods are purchased for a value or aggregate of value exceeding Rs. 50 lakhs in any previous year. Tax is required to be deducted at the rate of 0.1% of the purchase value exceeding Rs. 50 lakhs.
This means that if you have not filed your ITR for the last 3 years, TDS @2% will be deducted on cash withdrawals exceeding Rs. 20 lakhs instead of Rs. 1 crore. If you frequently withdraw large sums of cash, filing your Income Tax Return (ITR) can help you avoid unnecessary TDS deductions under Section 194N.
Rate of TDS : TDS is to be deducted at the rate of 2 percent on payments made to the supplier of taxable goods and/or services, where the total value of such supply, under an individual contract, exceeds two lakh ifty thousand rupees.
You can claim a TDS refund when the total TDS deducted during the financial year exceeds your actual tax liability. Common scenarios include: Your income is below the basic exemption limit, but TDS was deducted. Banks deduct TDS on fixed deposit interest, yet your total income is not taxable.
The formula for calculating TDS in salary is - Average Income Tax Rate = Income Tax Payable (computed through old/new slab rates) / Estimated Income for the year.
Understanding TDS Refund on Salary
A TDS refund is applicable when the tax deducted at source (TDS) by your employer exceeds your actual tax liability for the financial year. For example, if your total tax payable is ₹20,000 but your employer deducts ₹25,000, you are eligible for a TDS refund of ₹5,000.
When your employer deducts more than the income tax payable: In case your taxable income is below the basic exemption limit, you can avoid TDS deduction from your salary. If the actual tax payable is less than the TDS, you must file Income Tax Return (ITR) to claim TDS refund.
As per the current Income Tax rules, the exemption limits vary based on the age and taxable income of the depositor. The exemption limit for TDS on FDs is ₹ 50,000 for individuals excluding senior citizens. This means TDS will not be deducted if the interest earned on an FD in a financial year is below ₹ 50,000.
TDS will be deducted at 2% on cash withdrawals of more than ₹ 20 lakh and 5% for withdrawals exceeding ₹ 1 crore if the person withdrawing the cash has not filed ITR for any of the preceding three AYs.
All companies, irrespective of government or private, must bear a penalty of Rs. 200/day, under section 234E, for the delay in filing TDS or TCS returns after the specified due date. However, such a penalty will not exceed the amount of TDS for which the statement was required to be filed.
A Non-Resident External (NRE) account helps an NRI deposit their foreign currency savings in an Indian bank. Using an NRE account, an account holder can deposit money in any foreign denomination and withdraw it in INR (Indian Rupees).
If the property's value exceeds ₹50 lakh, the buyer is required to deduct 1% TDS on the total sale consideration and deposit it with the government. This rule applies to residential and commercial properties but excludes agricultural land.
According to the Income Tax Act, 1961, no tax is payable for annual taxable income up to Rs 2.5 lakh. Post that, TDS is 510% for income between Rs 2.5-5 lakh, 20% for Rs 5-10 lakh and 30% if income exceeds Rs 10 lakh.
Effective FY 2025 - 26, the threshold limit for TDS deduction under Section 194J has been revised from ₹30,000 to ₹50,000 in a financial year.