April 18, 2023 1

Presentation by : CA Jaikumar TejwaniPresentation by : CA Jaikumar Tejwani Partner : JKT & Co., Chartered AccountantsPartner : JKT & Co., Chartered Accountants

E-Mail : info@jktco.comE-Mail : info@jktco.comNew DelhiNew Delhi

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Chapter XVIICollection & Recovery of Taxes

A. Chapter XVII contains Machinery provisions in the aid of the substantive provisions of sections 4, 5, 28, 145 laying down the charge of income tax.

B. 4(1) Income Tax shall be charged in respect of the total income of the previous year.

4(2) In respect of Income chargeable u/s 4(1), income tax shall be deducted at source.

C. Credit for tax deducted u/s 199 TDS shall be treated as payment of tax on behalf of the

person from whose income the deduction was made.

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D. Credit shall be given to him for the Assessment Year for which D. Credit shall be given to him for the Assessment Year for which such income is assessablesuch income is assessable

E. Section 191 - Where no provision for TDS or where TDS has not E. Section 191 - Where no provision for TDS or where TDS has not been deducted. Obligation to pay directly by the assessee. been deducted. Obligation to pay directly by the assessee.

Section 205 – Where TDS applicable and deducted, then Section 205 – Where TDS applicable and deducted, then assessee can not be called upon to pay tax himself.assessee can not be called upon to pay tax himself.

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IntroductionIntroduction

What is Tax Deducted at source ?What is Tax Deducted at source ?

Income – Tax is Collected/recovered at two stages, namely pre-Income – Tax is Collected/recovered at two stages, namely pre-assessment stage and post assessment stage. The method by which assessment stage and post assessment stage. The method by which pre-assessment tax are collected is in the following manner at different pre-assessment tax are collected is in the following manner at different stages namely,stages namely,

Advance Tax.Advance Tax. Tax Deducted at source.Tax Deducted at source. Tax Collected at Source.Tax Collected at Source.

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Objectives of introduction of Tax Objectives of introduction of Tax Deducted at Source.Deducted at Source.

It helps in reporting the correct Incomes.It helps in reporting the correct Incomes. It helps in checking Tax evasion.It helps in checking Tax evasion. Early collection of revenue by the Government.Early collection of revenue by the Government. It is the cheapest mode of collection of tax.It is the cheapest mode of collection of tax. It helps to widen the tax base as more and more people are It helps to widen the tax base as more and more people are

covered.covered.

TDS is only on the payments which are specified under Chapter TDS is only on the payments which are specified under Chapter XVII B, hence it is exhaustive in nature. Therefore only those XVII B, hence it is exhaustive in nature. Therefore only those payments which are covered in the above chapter are liable for payments which are covered in the above chapter are liable for deduction of tax at source. deduction of tax at source.

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Need for Tax Deducted at Need for Tax Deducted at SourceSource

To comply with the mandatory provisions of the ActTo comply with the mandatory provisions of the Act

To avoid disallowance of certain expenditure under the Income To avoid disallowance of certain expenditure under the Income tax act 1961.tax act 1961.

To avoid penalty and mandatory Interest for not deducting/short To avoid penalty and mandatory Interest for not deducting/short deduction/non payment/delay in payment of Tax Deducted at deduction/non payment/delay in payment of Tax Deducted at Source.Source.

To avoid Prosecution under Sec.278B of the Income Tax Act To avoid Prosecution under Sec.278B of the Income Tax Act 1961.1961.

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Important Provisions of TDSImportant Provisions of TDS SectionSection Type of PaymentType of Payment

192192 Payment of Salaries.Payment of Salaries.

193193 Interest on SecuritiesInterest on Securities

194194 DividendsDividends

194A194A Payment of Interest ( other than interest on securities).Payment of Interest ( other than interest on securities).

194B194B Winning from Lottery or Crossword puzzlesWinning from Lottery or Crossword puzzles

194C194C Payment to any contractor or Sub-Contractor.Payment to any contractor or Sub-Contractor.

194D194D Insurance commissionInsurance commission

194E194E Payment to Resident Sportsman or Sports AssociationPayment to Resident Sportsman or Sports Association

194EE194EE Payment in respect of deposits under N.S.SPayment in respect of deposits under N.S.S

194F194F Payment on Account of repurchase of Units by Payment on Account of repurchase of Units by National Funds or U.T.I National Funds or U.T.I

194G194G Commission etc. on Sale of LotteryCommission etc. on Sale of Lottery

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194H194H Payment of Commission or Brokerage.Payment of Commission or Brokerage.

194I194I Payment of Rent.Payment of Rent.

194J194J Payment of any Professional fees.Payment of any Professional fees.

195195 Payment to Non Residents.Payment to Non Residents.

196196 Non – Deduction of TDS in certain cases.Non – Deduction of TDS in certain cases.

197197 Obtaining a certificate of Lower rate from the Obtaining a certificate of Lower rate from the Assessing OfficerAssessing Officer

206AA206AA Requirement to furnish PAN for TDS eligible Requirement to furnish PAN for TDS eligible payments.payments.

201 & 276B201 & 276B Consequences of DefaultConsequences of Default

278B278B Offences by CompaniesOffences by Companies

Rule 30Rule 30 Due date for payment of TDS.Due date for payment of TDS.

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203 & Rule 31203 & Rule 31 Certificate of Tax Deducted at source to the Certificate of Tax Deducted at source to the payeepayee

203A Read with 203A Read with Rule 114ARule 114A

Tax Deduction Account Number – (TAN)Tax Deduction Account Number – (TAN)

Sec. 206 & Rule Sec. 206 & Rule 31A31A

Filing of Returns of tax deducted at SourceFiling of Returns of tax deducted at Source

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TDS RATES CHARTTDS RATES CHART

SectionSection Nature of paymentsNature of paymentsup to up to

30.06.1030.06.10w.e.f w.e.f

01.07.1001.07.10

Rate in %Rate in %IndividualsIndividuals

& HUF& HUF OthersOthers

194194 Deemed DividendDeemed Dividend 25002500 25002500 1010 1010

194A194A Interest From BankInterest From Bank 1000010000 1000010000 1010 1010

194A194A Other InterestOther Interest 50005000 50005000 1010 1010

194B194B Winning from LotteriesWinning from Lotteries 50005000 1000010000 3030 3030

194BB194BBwinning from Horse winning from Horse racesraces 25002500 50005000 3030 3030

194C194C

Payment to Contractors, Payment to Contractors, Pay to Sub Contractor , Pay to Sub Contractor , Payment to TransporterPayment to Transporter

20000 20000 (50000 in (50000 in a year)a year)

30000 30000 (75000 in (75000 in

year)year) 11 22

194D194D Insurance CommissionInsurance Commission 50005000 2000020000 1010 1010

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NOTE 1NOTE 1. Payment made to transporter . Payment made to transporter **, TDS is not required if PAN is , TDS is not required if PAN is provided by the Transporter.provided by the Transporter.

NOTE 2NOTE 2. Surcharge and Cess is not applicable on TDS from 1.04.09 . Surcharge and Cess is not applicable on TDS from 1.04.09 on any payment made to resident.on any payment made to resident.

NOTE 3NOTE 3. If PAN is not provided by the deductee then rate as per . If PAN is not provided by the deductee then rate as per above table or 20% whichever is higher is to be charged (effective above table or 20% whichever is higher is to be charged (effective from 1.04.10 section 2006AA)from 1.04.10 section 2006AA)

* Engaged in the business of plying ,hiring or leasing goods carriages* Engaged in the business of plying ,hiring or leasing goods carriages

SectionSection Nature of paymentsNature of paymentsup to up to

30.06.1030.06.10w.e.f w.e.f

01.07.1001.07.10

Rate in %Rate in %

IndividuaIndividuals& HUFls& HUF OthersOthers

194H194H Commission/BrokerageCommission/Brokerage 25002500 50005000 1010 1010

194I194I Rent-propertyRent-property 120000120000 180000180000 1010 1010

194I194I Rent-Plant/ MachineryRent-Plant/ Machinery 120000120000 180000180000 22 22

194J194J Professional FeesProfessional Fees 2000020000 3000030000 1010 1010

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TIME OF TAX DEDUCTIONTIME OF TAX DEDUCTION

TAX DEDUCTEDTAX DEDUCTED SECTIONSSECTIONSAT THE TIME OF PAYMENTAT THE TIME OF PAYMENT 192,194,194B,194BB,194EE,192,194,194B,194BB,194EE,

194F194F

AT THE TIME OF PAYMENT AT THE TIME OF PAYMENT OR CREDITOR CREDIT

193,194A,194C,194D,194E,194G, 193,194A,194C,194D,194E,194G, 194H, 194I,194J,195194H, 194I,194J,195

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Sec. – 192 – Payment of SalariesSec. – 192 – Payment of Salaries Tax is to be deducted on income chargeable under Salaries and paid by Tax is to be deducted on income chargeable under Salaries and paid by

the employerthe employer

The liability to deduct the tax arises only at the time of The liability to deduct the tax arises only at the time of payment of salarypayment of salary. . It means if provision for salary has been made and the same has not It means if provision for salary has been made and the same has not been paid then deduction of tax does not arisebeen paid then deduction of tax does not arise**. .

Any person responsible for payment of salary, is liable to deduct the tax. Any person responsible for payment of salary, is liable to deduct the tax. The status of the employer is not relevant for deduction of tax. The The status of the employer is not relevant for deduction of tax. The liability to deduct the tax arises even if the person carries on business or liability to deduct the tax arises even if the person carries on business or not. not.

Where an employee is in employment of more than one employer, tax will Where an employee is in employment of more than one employer, tax will be deducted at source by the employer, which the employee chooses or be deducted at source by the employer, which the employee chooses or the present employer.the present employer.

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The employee may furnish to the employer details of income chargeable to tax under other heads of income (not being loss except loss under the head Income from House Property and tax deducted on the same). In such a case employer shall deduct tax due on total income. However, total amount of tax deducted should not be less than the amount of tax deductible from salary except where the loss under the head Income from House Property has been taken into account.

* No deduction on mere accrual of salary- (CIT v. Tej Quebecor Printing Ltd[2006]151 Taxman 210) (Del)(CIT v. Tej Quebecor Printing Ltd[2006]151 Taxman 210) (Del)

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Rates of Taxes for IndividualRates of Taxes for Individual

The above amount has to be increased by education cess at The above amount has to be increased by education cess at 2%2%

RatesRates WomenWomen Senior Senior CitizenCitizen

OthersOthers

NilNil Rs. Rs. 1,90,0001,90,000

Rs.2,40,00Rs.2,40,0000

Rs.1,60,00Rs.1,60,0000

10%10% Rs.1,90,00Rs.1,90,000 to 0 to 5,00,0005,00,000

Rs.2,40,00Rs.2,40,000 to 0 to 5,00,0005,00,000

Rs. Rs. 1,60,000 to 1,60,000 to 5,00,0005,00,000

20%20% Rs.5,00,00Rs.5,00,000 to 0 to 8,00,0008,00,000

Rs.5,00,00Rs.5,00,000 to 0 to 8,00,0008,00,000

Rs.5,00,00Rs.5,00,000 to 0 to 8,00,0008,00,000

30%30% More than More than Rs Rs 8,00,0008,00,000

More than More than Rs Rs 8,00,0008,00,000

More than More than Rs Rs 8,00,0008,00,000

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Section 193 – Interest on SecuritiesSection 193 – Interest on Securities

(A.) Any person responsible for paying an interest on securities to a (A.) Any person responsible for paying an interest on securities to a resident is required to deduct tax at source at the rates in force on resident is required to deduct tax at source at the rates in force on amount of interest payable.amount of interest payable.

(B.) The Tax is required to be deducted at the time of credit of such (B.) The Tax is required to be deducted at the time of credit of such income to the payees account or at the time of payment of interest income to the payees account or at the time of payment of interest on securities whichever is earlier.on securities whichever is earlier.

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Section 194 – DividendsSection 194 – Dividends The Principal Officer of the Indian Company or a company, which has The Principal Officer of the Indian Company or a company, which has

made prescribed arrangements for declaration and payment of dividend made prescribed arrangements for declaration and payment of dividend in India is responsible for deducting tax at source from dividend payable in India is responsible for deducting tax at source from dividend payable to a shareholder, who is resident in India.to a shareholder, who is resident in India.

No tax is to be deducted at source u/s 194 from Dividend payable to No tax is to be deducted at source u/s 194 from Dividend payable to any individual shareholder if the dividend is paid by the company by an any individual shareholder if the dividend is paid by the company by an account payee cheque and the aggregate amount of dividend account payee cheque and the aggregate amount of dividend distributed/paid or likely to be distributed/paid during the financial year distributed/paid or likely to be distributed/paid during the financial year does not exceed Rs.2,500/.does not exceed Rs.2,500/.

Dividend paid by domestic companies u/s 115O are exempt from tax in Dividend paid by domestic companies u/s 115O are exempt from tax in the hands of the recipients’ w.e.f. April 1, 2003.the hands of the recipients’ w.e.f. April 1, 2003.

Deemed dividend under section 2(22)(e) is taxable at the rate of 10% in Deemed dividend under section 2(22)(e) is taxable at the rate of 10% in the hands of shareholders.the hands of shareholders.

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Sec 194A – InterestSec 194A – Interest other than other than Interest on SecuritiesInterest on Securities

Any person (except on individual or a HUF) responsible for paying Any person (except on individual or a HUF) responsible for paying interest other than interest on securities to a resident is required to interest other than interest on securities to a resident is required to deduct tax at Source at the rate of 10% for the Financial year 2010-11.deduct tax at Source at the rate of 10% for the Financial year 2010-11.

However, w.e.f. 1st June, 2002, an Indian or a HUF whose total sales, However, w.e.f. 1st June, 2002, an Indian or a HUF whose total sales, gross receipts or turnover from business or profession exceeds Rs. 40 gross receipts or turnover from business or profession exceeds Rs. 40 lakhs (Rs. 60 lakhs w.e.f. 01.04.2011) or Rs.10 lakhs (Rs. 15 Lakhs lakhs (Rs. 60 lakhs w.e.f. 01.04.2011) or Rs.10 lakhs (Rs. 15 Lakhs w.e.f. 01.04.2011) respectively, during the financial year immediately w.e.f. 01.04.2011) respectively, during the financial year immediately preceding the financial year in which such interest is credited or paid preceding the financial year in which such interest is credited or paid shall be liable to deduct tax at source.shall be liable to deduct tax at source.

TDS is required to be deducted either at the time of credit of such income TDS is required to be deducted either at the time of credit of such income to the payees account or at the time of payment, whichever is earlier. to the payees account or at the time of payment, whichever is earlier.

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No tax is deducted in case where the aggregate amount of interest No tax is deducted in case where the aggregate amount of interest does not exceed Rs.5,000/-. In case of term deposits with banks or does not exceed Rs.5,000/-. In case of term deposits with banks or Cooperative Society and Housing Finance Companies, no tax is Cooperative Society and Housing Finance Companies, no tax is required to be deducted upto an aggregate interest of Rs.10,000/-.required to be deducted upto an aggregate interest of Rs.10,000/-.

No tax is required to be deducted in case of interest paid/credited to No tax is required to be deducted in case of interest paid/credited to any banking company/financial corporation, LIC, UTI, etcany banking company/financial corporation, LIC, UTI, etc

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Section 194B – Winning from Section 194B – Winning from Lottery or Crossword PuzzlesLottery or Crossword Puzzles

Any person responsible for paying income by way of winning from Any person responsible for paying income by way of winning from Lottery/crossword puzzle or card game or any other game is required Lottery/crossword puzzle or card game or any other game is required to deduct tax at source at the rate of 30%. to deduct tax at source at the rate of 30%.

No tax is deductible if the amount of payment is Rs.5,000/- (No tax is deductible if the amount of payment is Rs.5,000/- (Rs. Rs. 10,000 from July 1,201010,000 from July 1,2010) or less.) or less.

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SECTION 194BB – WINNING SECTION 194BB – WINNING FROM HORSE RACESFROM HORSE RACES

Any person responsible for paying income by way of winning from Any person responsible for paying income by way of winning from Horse Races is required to deduct tax at source at the rate of 30%.Horse Races is required to deduct tax at source at the rate of 30%.

No tax is deductible if the amount of payment is Rs.2,500/- (No tax is deductible if the amount of payment is Rs.2,500/- (Rs. 5,000 Rs. 5,000 from July 1,2010from July 1,2010) or less.) or less.

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Sec. 194C – Payment to Sec. 194C – Payment to ContractorsContractors

Any person (other than individual and HUF) paying any sum to any Any person (other than individual and HUF) paying any sum to any resident contractors for carrying out any work (including supply of labour resident contractors for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the resident for carrying out any work) in pursuance of a contract between the resident contractor and specified person is required to deduct tax at source. contractor and specified person is required to deduct tax at source.

TDS rate is 1% if recipient is individual/ HUF or 2% for any other person.TDS rate is 1% if recipient is individual/ HUF or 2% for any other person.

No Tax is deducted on credit or payment on account of contractor during No Tax is deducted on credit or payment on account of contractor during the course of business of plying, hiring or leasing goods carriages on the course of business of plying, hiring or leasing goods carriages on furnishing PAN to the person paying or crediting such sum.furnishing PAN to the person paying or crediting such sum.

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However, an individual or a HUF whose total sales or gross receipts or However, an individual or a HUF whose total sales or gross receipts or turnover from business exceeds Rs. 40 lakhs (60 Lakhs w.e.f. turnover from business exceeds Rs. 40 lakhs (60 Lakhs w.e.f. 1.04.2011) or whose gross receipts from profession exceeds Rs.10 1.04.2011) or whose gross receipts from profession exceeds Rs.10 lakhs (15 Lakhs w.e.f. 1.04.2011) during the financial year immediately lakhs (15 Lakhs w.e.f. 1.04.2011) during the financial year immediately preceding the financial year which such sum is credited or paid to the preceding the financial year which such sum is credited or paid to the account of contractor shall be liable to deduct tax at source.account of contractor shall be liable to deduct tax at source.

Tax is required to be deducted either the time of credit of the sum paid Tax is required to be deducted either the time of credit of the sum paid to the account of the payee or at the time of payment in cash or by to the account of the payee or at the time of payment in cash or by cheque or by any other mode, whichever is earlier.cheque or by any other mode, whichever is earlier.

With effect from 1st October, 2004, Section 194C has been amended to With effect from 1st October, 2004, Section 194C has been amended to provide that tax will be required to be deducted at source where the provide that tax will be required to be deducted at source where the amount credited or paid to the contractor or a sub-contractor exceeds amount credited or paid to the contractor or a sub-contractor exceeds Rs.20,000 (Rs.20,000 (Rs. 30,000 from July 1, 2010Rs. 30,000 from July 1, 2010) in a single payment or ) in a single payment or Rs.50,000 (Rs.50,000 (Rs. 75,000 from July 1, 2010Rs. 75,000 from July 1, 2010) in the aggregate during the ) in the aggregate during the financial year.financial year.

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“Work” shall include –

(a) Advertising

(b) Broadcasting and telecasting including the production of programmes for such broadcasting or telecasting including production of programmes for such broadcasting or telecasting;

(c) Carriage of goods or passengers by any mode of transport other than by railways;

(d) Catering

(e) Manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customers,

but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchase from a person, other than such customer.

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Section 194D – Insurance Section 194D – Insurance CommissionCommission

Any person responsible for paying insurance commission to a resident Any person responsible for paying insurance commission to a resident is required to deduct tax at source at the rate of 10%. is required to deduct tax at source at the rate of 10%.

No tax is deductible if the amount of insurance commission or No tax is deductible if the amount of insurance commission or aggregate of the amount of such income credited/paid during the aggregate of the amount of such income credited/paid during the financial year does not exceed Rs.5,000/-(financial year does not exceed Rs.5,000/-(Rs.20,000 from Rs.20,000 from July,1,2010July,1,2010).).

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Section 194E – Payment to Non-Section 194E – Payment to Non-Resident Sportsman/Sports Resident Sportsman/Sports

AssociationAssociation Any person responsible for paying any income to a non-resident Any person responsible for paying any income to a non-resident

sportsman including an athlete who is not a Citizen of India or a non-sportsman including an athlete who is not a Citizen of India or a non-resident Sports Association or Institution is required to deduct tax at resident Sports Association or Institution is required to deduct tax at source at the rate of 10%.source at the rate of 10%.

The tax is required to be deducted at the time of credit of such The tax is required to be deducted at the time of credit of such income to the account of payee or at the time of payment in cash or income to the account of payee or at the time of payment in cash or by issue of cheque or draft or by any other mode whichever is by issue of cheque or draft or by any other mode whichever is earlier.earlier.

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Section 194EE – Payment in Section 194EE – Payment in respect of deposits under respect of deposits under

NationalNationalSavings SchemeSavings Scheme

Any person responsible for paying to any person any amount referred Any person responsible for paying to any person any amount referred to in Section 80CCA(2) is required to deduct Income Tax at the rate of to in Section 80CCA(2) is required to deduct Income Tax at the rate of 20% at the time of payment.20% at the time of payment.

No deduction is required to be made where the amount of such No deduction is required to be made where the amount of such payment or the aggregate amount of such payments during the payment or the aggregate amount of such payments during the financial year is less than Rs.2,500/-.financial year is less than Rs.2,500/-.

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Section 194F – Payment on Section 194F – Payment on account of Repurchase of Units by account of Repurchase of Units by

MutualMutualFunds or UTIFunds or UTI

Any person responsible for paying to any person any amount referred Any person responsible for paying to any person any amount referred

to into in Section 80CCB(2) is required to deduct tax at Section 80CCB(2) is required to deduct tax at source at the time of payment without any source at the time of payment without any exemption at the rate of 20%exemption at the rate of 20%..

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Section 194G – Commission etc. Section 194G – Commission etc. on the sale of Lottery Ticketson the sale of Lottery Tickets

Any person who is responsible for paying commission, remuneration Any person who is responsible for paying commission, remuneration or prize to any person who is or has been stocking, distributing, or prize to any person who is or has been stocking, distributing, purchasing or selling lottery tickets is required to deduct tax at source purchasing or selling lottery tickets is required to deduct tax at source at the rate of 10% on such tickets on an amount exceeding at the rate of 10% on such tickets on an amount exceeding Rs.1,000/-.Rs.1,000/-.

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Section 194H – Commission or Section 194H – Commission or BrokerageBrokerage

Any person other than an individual or Hindu Undivided Family who is Any person other than an individual or Hindu Undivided Family who is responsible for paying on or after 1st June, 2001, to a resident, any responsible for paying on or after 1st June, 2001, to a resident, any income by way of commission (other than insurance commission income by way of commission (other than insurance commission referred to in section 194D), or brokerage, is required to deduct tax at referred to in section 194D), or brokerage, is required to deduct tax at the rate of 10%.the rate of 10%.

No deduction is required to be made where the amount of such No deduction is required to be made where the amount of such income or the aggregate of the amounts of such income credited/paid income or the aggregate of the amounts of such income credited/paid during the financial year does not exceed Rs.2,500/-(during the financial year does not exceed Rs.2,500/-(Rs. 5,000 from Rs. 5,000 from July 1,2010July 1,2010))

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SSection ection 194 I – Rent194 I – Rent

Any person (other than an individual or Hindu Undivided Family) Any person (other than an individual or Hindu Undivided Family) responsible for paying rent to resident any income by way of rent is responsible for paying rent to resident any income by way of rent is required to deduct tax.required to deduct tax.

‘‘Rent’ means any payment by whatever nature called, under any lease, Rent’ means any payment by whatever nature called, under any lease, sublease, tenancy or any other agreement or arrangement for the use of sublease, tenancy or any other agreement or arrangement for the use of (either separately or together) any:(either separately or together) any:

(i) land, or(i) land, or (ii) building (including factory building), or(ii) building (including factory building), or (iii) land appurtenant to a building (including a factory building), or(iii) land appurtenant to a building (including a factory building), or (iv) machinery, or(iv) machinery, or (v) plant, or(v) plant, or

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(vi) equipment, or(vi) equipment, or

(vii) furniture, or(vii) furniture, or

(viii) fittings(viii) fittings

From 1st June, 2002 an individual or a Hindu Undivided Family whose total sales or gross receipts or turnover from business exceeds Rs.40 lacs (60 Lakhs w.e.f. 1.04.2011) (60 Lakhs w.e.f. 1.04.2011) or whose gross receipts from profession exceeds Rs.10 lacs (15 Lakhs w.e.f. 1.04.2011)(15 Lakhs w.e.f. 1.04.2011) during the financial year immediately preceding the financial year in which such sum is credited or paid shall be liable to deduct tax at source.

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Rate of deduction of tax – Sec 194IRate of deduction of tax – Sec 194I

33

Asset on which Asset on which payment is madepayment is made

Payee being – Payee being – Individual.Individual.

Payee being –other Payee being –other than Individual.than Individual.

Land or building or furniture or fixtures.

10% if Payment or Credit exceeds or likely to exceed Rs.1,20,000/- (Rs.1,80,000 from July1,2010) in aggregate in the previous year.

10% if Payment or Credit exceeds or likely to exceed Rs.1,20,000/- (Rs.1,80,000 from July1,2010) in aggregate in the previous year.

Machinery or plant or equipment

2% if Payment or Credit exceeds or likely to exceed Rs.1,20,000/- (Rs.1,80,000 from July1,2010) in aggregate in the previous year.

2% if Payment or Credit exceeds or likely to exceed Rs.1,20,000/- (Rs.1,80,000 from July1,2010) i n aggregate in the previous year.

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Circular No. 4/2008 dated 28/04/2008.Circular No. 4/2008 dated 28/04/2008. Service tax charged by the Landlord shall not be included for Service tax charged by the Landlord shall not be included for

calculating the amount of tax to be deducted from the rent.calculating the amount of tax to be deducted from the rent.

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Sec-194J – Fees for Professional Sec-194J – Fees for Professional or Technical Services.or Technical Services.

Any person (other than individual or HUF) responsible for Any person (other than individual or HUF) responsible for paying to a resident fee for professional services or fee for paying to a resident fee for professional services or fee for technical services is required to deduct tax on the income technical services is required to deduct tax on the income comprised therein at the rate of 10% for financial year 2010-11.comprised therein at the rate of 10% for financial year 2010-11.

““Professional services” means services rendered by a person in Professional services” means services rendered by a person in the course of carrying on legal, medical, engineering or the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the such other profession as is notified by the Board for the purpose of section 44AA or of this section.purpose of section 44AA or of this section.

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““Fees for technical services” shall have the same meaning as in Fees for technical services” shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9 – Explanation 2 to clause (vii) of sub-section (1) of section 9 – For the For the purpose of this clause “Fees for technical services” means: any purpose of this clause “Fees for technical services” means: any consideration (including any lump sum consideration) for the consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services rendering of any managerial, technical or consultancy services (including the provisions of services of technical or other (including the provisions of services of technical or other personnel), but does not include consideration for any personnel), but does not include consideration for any construction, assembly, mining or like product undertaken by the construction, assembly, mining or like product undertaken by the recipient or consideration which would be income of the recipient recipient or consideration which would be income of the recipient chargeable under the head ‘salaries’.chargeable under the head ‘salaries’.

The tax is required to be deducted at the time of credit of such income The tax is required to be deducted at the time of credit of such income to the account of the payee or at the time of payment in cash or by issue to the account of the payee or at the time of payment in cash or by issue of cheques or drafts or by any other mode whichever is earlier. No tax is of cheques or drafts or by any other mode whichever is earlier. No tax is required to be deducted in case amount of such sum or aggregate of required to be deducted in case amount of such sum or aggregate of amount of such sums credited or paid during the financial year does not amount of such sums credited or paid during the financial year does not exceed Rs.20,000/-( exceed Rs.20,000/-(Rs. 30,000 from July 1, 2010Rs. 30,000 from July 1, 2010).).

April 18, 2023 37

With effect from 1st June, 2003 no individual or HUF With effect from 1st June, 2003 no individual or HUF shall be liable to deduct tax on fees for professional shall be liable to deduct tax on fees for professional services in case such sum is credited or paid services in case such sum is credited or paid exclusively for personal purposes of such individual exclusively for personal purposes of such individual or any member of HUF.or any member of HUF.

April 18, 2023 38

Sec 195 – Payment to Non Sec 195 – Payment to Non ResidentsResidents

Any sum paid to Non Resident is subject to deduction of Tax at Any sum paid to Non Resident is subject to deduction of Tax at sourcesource

Rate of tax is prescribed in the Finance Act. However if the rates Rate of tax is prescribed in the Finance Act. However if the rates indicated in relevant DTAA is lower such lower rates are applicable.indicated in relevant DTAA is lower such lower rates are applicable.

Application can be made by payee to the Assessing Officer for Nil or Application can be made by payee to the Assessing Officer for Nil or lower rate deduction of tax at sourcelower rate deduction of tax at source

April 18, 2023 39

Exemption from deduction of tax Exemption from deduction of tax at source in respect of at source in respect of

payments made to certain payments made to certain persons (Section 196)persons (Section 196)

GovernmentGovernment Reserve Bank of IndiaReserve Bank of India Corporation established by or under a Central Act whoseCorporation established by or under a Central Act whose

income is exempt from Income Taxincome is exempt from Income Tax Mutual Fund u/s 10(23D)Mutual Fund u/s 10(23D)

April 18, 2023 40

Section 197 – Obtaining a Section 197 – Obtaining a Certificate of Lower Rate fromCertificate of Lower Rate from

the Assessing Officethe Assessing Office For tax-deductible u/s 192, 193, 194, 194A, 194C, 194D, 194G, 194H, For tax-deductible u/s 192, 193, 194, 194A, 194C, 194D, 194G, 194H,

194-I, 194J, 194K, 194LA or 195.194-I, 194J, 194K, 194LA or 195.

The recipient can apply in Form No.13 to the Assessing Officer to get aThe recipient can apply in Form No.13 to the Assessing Officer to get a certificate authorizing the payer to deduct tax at lower or deduct no tax certificate authorizing the payer to deduct tax at lower or deduct no tax

as may be appropriate.as may be appropriate.

The certificate of lower rate shall be issued through the ITD application The certificate of lower rate shall be issued through the ITD application i.e. computer system of the department. i.e. computer system of the department. Issue of manual certificates is Issue of manual certificates is not permitted.not permitted.

April 18, 2023 41

Certificate has to be issued individually to each deductor. Only a copy of Certificate has to be issued individually to each deductor. Only a copy of

the certificate is to be given to the applicant/assessee for information.the certificate is to be given to the applicant/assessee for information.

Only the original certificate addressed to the deductor and signed by Only the original certificate addressed to the deductor and signed by AO can be acted upon by deductor and photocopy is not valid.AO can be acted upon by deductor and photocopy is not valid.

As per CBDT circular no 774 dated 17/03/99 certificate u/s 197 is valid As per CBDT circular no 774 dated 17/03/99 certificate u/s 197 is valid for the payments made after the date of issue of certificate. for the payments made after the date of issue of certificate.

However in the case of entities covered by Rule 28AB, the Assessing However in the case of entities covered by Rule 28AB, the Assessing Officer may issue a certificate to the recipient authoring payment of Officer may issue a certificate to the recipient authoring payment of income without deduction of tax at source. The recipient may furnish income without deduction of tax at source. The recipient may furnish copies of such certificate to the person responsible for paying the copies of such certificate to the person responsible for paying the income for the purpose of no deduction of tax at source.income for the purpose of no deduction of tax at source.

April 18, 2023 42

No deduction of tax at source in No deduction of tax at source in certain cases – Section 197Acertain cases – Section 197A

PPayment u/s 193, 194A and 194Kayment u/s 193, 194A and 194K

– – Form No: 15G by everybody (not being a company or a firm) and Form No: 15G by everybody (not being a company or a firm) and Form No: 15H by Senior Citizens. This benefit is not applicable if Form No: 15H by Senior Citizens. This benefit is not applicable if the total amount paid/payable is in excess of the maximum amount the total amount paid/payable is in excess of the maximum amount not chargeable to tax.not chargeable to tax.

April 18, 2023 43

SECTION 206(AA)SECTION 206(AA)

Furnishing PAN is compulsory for all TDS eligible payments covered Furnishing PAN is compulsory for all TDS eligible payments covered under under Chapter XVII-BChapter XVII-B , failing to which, Deductor will be deducting TDS , failing to which, Deductor will be deducting TDS at a higher rate.at a higher rate.

For such case, the rate of TDS should be determined at For such case, the rate of TDS should be determined at higher ofhigher of below conditions:below conditions: 1.TDS rate prescribed in the Act ;1.TDS rate prescribed in the Act ; 2.Rate of Tax in force ;2.Rate of Tax in force ; 3.At 20% 3.At 20%

The section is applicable for all payments made on or after April 1, The section is applicable for all payments made on or after April 1, 2010.2010.

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Declaration under Section sub-section (1) or sub-section (1A) or sub-Declaration under Section sub-section (1) or sub-section (1A) or sub-section (1C) of section 197A shall be valid only if PAN is furnished.section (1C) of section 197A shall be valid only if PAN is furnished.

No certificate under section 197 shall be granted unless the No certificate under section 197 shall be granted unless the application made under that section contains the PAN of the applicant. application made under that section contains the PAN of the applicant. TAN of the deductor is mandatory without which certificate cannot be TAN of the deductor is mandatory without which certificate cannot be generated from the system.generated from the system.

The deductee shall furnish his PAN to the deductor and both shall The deductee shall furnish his PAN to the deductor and both shall indicate the same in all the correspondence, bills, vouchers and other indicate the same in all the correspondence, bills, vouchers and other documents which are sent to each other.documents which are sent to each other.

April 18, 2023 45

Consequences of DefaultConsequences of Default

Liability u/s 201Liability u/s 201 Interest & PenaltyInterest & Penalty – – Assessee in default u/s 221 equal to the amount of tax in arrears.Assessee in default u/s 221 equal to the amount of tax in arrears. Interest @ 1% per month (1.5% w.e.f. 01.07.2010, in case tax deducted Interest @ 1% per month (1.5% w.e.f. 01.07.2010, in case tax deducted

but deposited late).but deposited late).

Both the above are consequences of Not deducting or Deducted and not Both the above are consequences of Not deducting or Deducted and not paying to the Central Government.paying to the Central Government.

After deducting not paying also leads to a charge being credited on the After deducting not paying also leads to a charge being credited on the assets of the payer.assets of the payer.

Section 271CSection 271C Penalty for failure to deduct tax at source as required or under the Penalty for failure to deduct tax at source as required or under the

provisions of Chapter XVII-B. provisions of Chapter XVII-B. Penalty Equal to Tax.Penalty Equal to Tax.

April 18, 2023 46

Section 276BSection 276B

If a person fails to pay to the credit of Central Government, tax If a person fails to pay to the credit of Central Government, tax deducted at source by him as required by or under the provisions of deducted at source by him as required by or under the provisions of Chapter XVII-B.Chapter XVII-B.

Imprisonment Period 3 months to 7 years and with fine.Imprisonment Period 3 months to 7 years and with fine.

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Every person who at the time of offence was in charge of and was responsible to the company for the conduct of business of the company as well as the company shall be liable to be proceeded against.

If it is established that the offence was committed with the connivance of director, manager, secretary or other officer – such persons shall also be liable to be punished

In the case of imprisonment and the offence being committed by company, apart from fine on the company, officers responsible shall be liable to be proceeded against.

Section 278B – Prosecution - Offences by Companies

April 18, 2023 48

Due dates for Payment of Tax deducted at Source – Rule30.

Sl.NSl.No.o.

Nature of PaymentNature of Payment Due DateDue Date

1 All Payments or Credits during the year

Within one week from the end of the month in which payment is made

2 Provision by way of credit to the account of person on 31st March of the Previous year.

Within 2 months from the end of the month in which such amount is credited.

April 18, 2023 49

Certificate of Tax Deducted at Certificate of Tax Deducted at source to the payee – Sec203 and source to the payee – Sec203 and

rule 31.rule 31. In respect of cases where Salaries exceeds Minimum threshold limit in In respect of cases where Salaries exceeds Minimum threshold limit in

Form No. 16 and in other cases Form No. 16AAForm No. 16 and in other cases Form No. 16AA Other than Salaries - Other than Salaries - Form No. 16AForm No. 16A The certificates issued in Form No. 16 can be issued under Digital The certificates issued in Form No. 16 can be issued under Digital

Signature by virtue of Circular No. 2/2007 dated 21/05/2007Signature by virtue of Circular No. 2/2007 dated 21/05/2007 Due Dates by which certificate is to be submitted to the payee:Due Dates by which certificate is to be submitted to the payee: Salaries - Form No. 16 /16AA - within one month from the close of the Salaries - Form No. 16 /16AA - within one month from the close of the

financial yearfinancial year Other Payments – Form No. 16A – within one month from the end of the Other Payments – Form No. 16A – within one month from the end of the

month in which payment is made or where more than one payment is month in which payment is made or where more than one payment is made in a year at the request of the payee with in one month from the made in a year at the request of the payee with in one month from the end of the financial year.end of the financial year.

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Exceptions to the time limit Exceptions to the time limit specified for issuance of TDS specified for issuance of TDS

certificates.certificates.In respect of cases where deduction is by virtue of credit – within In respect of cases where deduction is by virtue of credit – within one week from the expiry of two months after the month of creditone week from the expiry of two months after the month of credit

Duplicate certificates can be issued on receipt of a letter on a plain Duplicate certificates can be issued on receipt of a letter on a plain paper from the payeepaper from the payee

Non Issuance of TDS certificates with in the due dates will attract a Non Issuance of TDS certificates with in the due dates will attract a penalty of Rs.100/- per delay under Sec.272A. penalty of Rs.100/- per delay under Sec.272A.

April 18, 2023 51

Tax Deduction Account Number – Tax Deduction Account Number – (TAN) Sec.203A Read with Rule (TAN) Sec.203A Read with Rule

114A.114A.

Every person who is liable to deduct tax at source shall obtain a Every person who is liable to deduct tax at source shall obtain a TAN number within one month from the end of the month in which TAN number within one month from the end of the month in which tax has been deducted. Penalty for failure to obtain TAN is Rs. tax has been deducted. Penalty for failure to obtain TAN is Rs. 10,000 (Sec 272BB)10,000 (Sec 272BB)

An application for the allotment of a TAN shall be made in An application for the allotment of a TAN shall be made in duplicate in Form No. 49B.duplicate in Form No. 49B.

April 18, 2023 52

E-TDS RETURNSE-TDS RETURNS

MeaningMeaning--

E-TDS return is a TDS return prepared in form No.24Q,26Q or 27Q inE-TDS return is a TDS return prepared in form No.24Q,26Q or 27Q in

electronic media as per prescribed data structure in either a floppy or a CD electronic media as per prescribed data structure in either a floppy or a CD ROM. The floppy or CD ROM prepared should be accompanied by a ROM. The floppy or CD ROM prepared should be accompanied by a signed verification in Form No.27A.signed verification in Form No.27A.

Need for filing e-TDS ReturnNeed for filing e-TDS Return – –

As per Section 206 of Income Tax Act all corporate and government As per Section 206 of Income Tax Act all corporate and government deductors are compulsorily required to file their TDS return on electronic deductors are compulsorily required to file their TDS return on electronic media (i.e. e-TDS returns). However, for other Deductors, filing of e-TDS media (i.e. e-TDS returns). However, for other Deductors, filing of e-TDS return is optional.return is optional.

April 18, 2023 53

FORM NO.FORM NO. PARTICULARSPARTICULARS PERIODICITYPERIODICITY

Form 24Q Quarterly statement for tax deducted at source from "Salaries"

Quarterly

Form 26Q Quarterly statement of tax deducted at source in respect of all payments other than "Salaries

Quarterly

Form 27Q Quarterly statement of deduction of tax from interest, dividend or any other sum payable to non-residents

Quarterly

April 18, 2023 54

Form 27A is a summary of TDS return (Form 24Q, 26Q or 27Q), Form 27A is a summary of TDS return (Form 24Q, 26Q or 27Q), which contains control totals of 'Amount Paid' and 'Income tax which contains control totals of 'Amount Paid' and 'Income tax

deducted at source'.deducted at source'.

QUARTER DUE DATE DUE DATE FOR 27Q

April to June July 15 14 July

July to September October 15 14 October

October to December January 15 14 January

January to March June 15 14 June

Sec. 206 and Rule 31ASec. 206 and Rule 31A

April 18, 2023 55

Thank YouThank You