CONTENTS · PAGE CONTENTS I-15 2.11-2 Foreigners on tour 146 2.11-3 Salary received by a ship’s...

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Chapter-heads I-7

BOOK ONE : DEDUCTION OF TAX AT SOURCE

1DEDUCTION OF TAX AT SOURCE FROM SALARY

1.1 Who is responsible to deduct tax at source in case ofincome from salary 41.1-1 Where salary is payable by other employers

also 41.2 When tax is to be deducted 5

1.2-1 Private arrangement of paying salary tax-freecannot discharge obligation of section 192 5

1.2-2 Tax deduction not required on judgment debt 51.2-3 Furlough pay received in foreign currency is

taxable as salary 51.2-4 Deduction of tax at source is mandatory from

salary 51.2-5 Correctness of investment 6

1.3 How to compute tax deductible at source 61.3-1 When tax payable on perquisites is paid by

employer 61.3-2 When relief under section 89 is available 61.3-3 When income other than salary income is

considered by employer 71.3-4 Statement of particulars in prescribed form 91.3-5 How to make adjustment of excess or deficiency 91.3-6 Deduction from provident fund payment 9

1.4 Tax deduction and collection account number (TAN) 91.5 Deposit of tax to the credit of Central Government 10

1.5-1 Where to deposit tax 10

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1.5-2 Time within which tax is to be deposited 111.5-3 Payment through challan 121.5-4 Claim for refund 13

1.6 Issue a certificate for tax deducted at source to employee 131.6-1 How to prepare Form No. 16 131.6-2 Form No. 16 with digital signature 141.6-3 Time limit within which the certificate should be

given 151.6-4 Issue of duplicate certificate 15

1.7 Statement or return of tax deduction to Government 151.7-1 Return of tax deduction from contribution paid

by the trustees of an approved superannuationfund 15

1.7-2 Annual filing of return 151.7-3 Quarterly return 151.7-4 By whom return is to be filed 24

1.8 Consequences of failure to deduct or pay tax, furnishreturn, etc. 261.8-1 Failure to deduct and/or pay tax 261.8-2 Failure to comply with provision of section 203A

regarding tax deduction account number 391.8-3 Failure to issue certificate, or submit return,

statement, etc. 391.8-4 Disallowance of deduction in respect of salary

payable to resident 441.8-5 Disallowance of deduction in respect of salary

payable to non-resident 45Illustration 45

2HOW TO WORK OUT ESTIMATED SALARY

AND QUANTUM OF TAX TO BEDEDUCTED THEREFROM

2.1 What is salary 462.1-1 Employer-employee relationship, a pre-requisite 462.1-2 Salary and wages are not conceptually different 492.1-3 Salary to former/present/prospective employee 492.1-4 Salary income must be real and not fictitious 492.1-5 When salary is forgone 502.1-6 Salary paid tax-free 50

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2.2 Basis for deduction of tax at source 502.3 Different forms of salary and its payment subject to tax

deduction at source 522.3-1 Advance salary 522.3-2 Arrears of salary 522.3-3 Leave salary 52

Illustration 552.3-4 Salary to a partner 562.3-5 Salary in lieu of notice period 562.3-6 Fees and commission 562.3-7 Bonus 562.3-8 Gratuity 57

Illustration 602.3-9 Pension 63

Illustrations 642.3-10 Annuity 672.3-11 Annual accretion to the credit balance in

provident fund 672.3-12 Amount transferred from unrecognised provident

fund to recognised provident fund 672.3-13 Retrenchment compensation 672.3-14 Profits in lieu of salary 692.3-15 Remuneration in addition to salary on the basis

of work done 712.3-16 Voluntary payments to employees 722.3-17 Compensation received at the time of voluntary

retirement or separation 732.3-18 Salary received by a teacher/professor from

SAARC Member States 762.3-19 Contribution to notified pension scheme by the

Central Government or any other employer 762.3-20 Decretal amount arising from suit for arrears of

salary and wrongful termination of appointment 762.3-21 Salary to non-resident seafarers 77

2.4 Allowances when subject to tax deduction at source 772.4-1 City compensatory allowance 772.4-2 House rent allowance 77

Illustrations 792.4-3 Entertainment allowance 80

Illustrations 812.4-4 Special allowance 81

Illustrations 94

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2.4-5 Allowance to Government employees outsideIndia 95

2.4-6 Tiffin allowance 952.4-7 Fixed medical allowance 952.4-8 Servant allowance 952.4-9 Allowance to High Court 952.4-10 Allowance received from United Nations

Organisation 952.4-11 Allowance to foreign technician 952.4-12 Allowance to other foreign citizen 952.4-13 Compensatory allowance under article 222(2) of

the Constitution 962.4-14 Sumptuary allowance 962.4-15 Allowances received by a teacher/professor from

SAARC Member States 962.4-16 Sumptuary allowance to serving chairman/

members of UPSC 962.4-17 Allowance to retired chairman/members of UPSC 96

2.5 Perquisites, amenability to tax deduction at source 962.5-1 What is “perquisite” 962.5-2 “Perquisite” as defined by the Act 982.5-3 Perquisites chargeable/Not chargeable to tax 992.5-4 Valuation of perquisites 102

Illustration 1032.6 Sums related to provident funds, amenability to deduction

of tax at source 1412.6-1 Types of employees’ provident funds 1412.6-2 Statutory provident fund 1412.6-3 Recognised provident fund 1412.6-4 Unrecognised provident fund 1422.6-5 Public provident fund 1422.6-6 Tax treatment 142

2.7 Contributions to and payment from approved superannua-tion fund, amenability to tax deduction at source 144

2.8 Approved gratuity fund - Tax treatment of the inflow andoutflow 145

2.9 Computation of salary 1452.9-1 Standard deduction 1452.9-2 Entertainment allowance 1452.9-3 Professional tax or tax on employment 145

2.10 Salaries of foreign technicians 1462.11 Salaries of foreign citizens 146

2.11-1 Diplomatic personnel 146

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2.11-2 Foreigners on tour 1462.11-3 Salary received by a ship’s crew 1462.11-4 Remuneration of a foreign trainee 147

2.12 Deductions granted under sections 80C to 80U 1472.13 Deduction in respect of life insurance premia, deferred

annuity, contributions to provident fund, subscriptionto certain equity shares or debentures, etc. 1472.13-1 Salient features of section 80C 1472.13-2 Computation of deduction under section 80C 148

Illustrations 1532.14 Deduction in respect of pension fund 1562.15 Deduction in respect of contribution to National Pension

System of Central Government (NPS) 1572.15-1 Conditions 1572.15-2 Consequences if the above conditions are satisfied 157

Illustration 1592.16 Deduction in respect of subscription to long-term

infrastructure bonds 1592.17 Deduction in respect of investment made under an equity

saving scheme 1602.18 Deduction under section 80D in respect of medical

insurance premia 1612.18-1 Conditions 1612.18-2 Maximum deductible amount 162

Illustrations 1632.19 Deduction under section 80DD in respect of medical

treatment of handicapped dependents 1632.19-1 Conditions 1632.19-2 Amount of deduction 1652.19-3 If dependent predeceases the taxpayer 165

Illustrations 1652.20 Deduction in respect of medical treatment under section

80DDB - To what extent available 1662.20-1 Conditions 1662.20-2 Amount of deduction 1662.20-3 Prescribed diseases and certificate from a doctor 166

2.21 Deduction in respect of interest on loan taken for highereducation 1672.21-1 Conditions 1682.21-2 Amount deductible 168

2.22 Deduction in respect of interest on loan taken forresidential house property 168Illustrations 169

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2.23 Deduction in respect of interest on loan taken for certainhouse property 170Illustration 171

2.24 Deduction in respect of interest on loan taken for purchaseof electric vehicle 173Illustration 173

2.25 Deduction under section 80G in respect of donation tonational funds 1742.25-1 Maximum limit 1762.25-2 Other points 177

2.26 Deduction under section 80GG in respect of rent paid 1772.26-1 Amount of deduction 1782.26-2 Meaning of total income for the purpose of

section 80GG 178Illustration 178

2.27 Deductions in respect of certain donations for scientificresearch or rural development 179

2.28 Deduction in respect of interest on deposits in savingsaccounts 1802.28-1 Post office savings bank interest exemption under

section 10(15)(i) 1812.29 Deduction under section 80TTB in respect of interest on

deposits in case of senior citizens 1822.29-1 Post Office Savings Bank interest exemption

under section 10(15)(i) 1822.30 Deduction under section 80U in case of a person with

disability 1832.30-1 Conditions 1832.30-2 Amount of deduction 184

Illustration 1842.30-3 Other points 185

2.31 When income other than salary income is considered fortax deduction under section 192 185

2.32 When salary received from other employer is considered 1852.33 Rate of exchange for deduction of tax at source on

income payable in foreign currency 1862.34 Rates of tax deduction at source during the financial

year 2019-20 1862.34-1 If PAN is not given by employer 187

2.35 Tax rebate under section 87A 188Illustrations 188

2.36 Tax rebate under sections 88B and 88C 1892.37 Relief under section 89 189

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2.37-1 Computation of relief when salary has been paidin arrears or in advance 189Illustration 190

2.37-2 Computation of relief in respect of gratuity 191Illustration 191

2.37-3 Computation of relief in respect of compensationon termination of employment 193

2.37-4 Computation of relief in respect of payment incommutation of pension 193

2.37-5 Computation of relief in respect of payment ofarrears of family pension 193

2.38 When can employee reduce the incidence of tax deduction -Certificate for deduction of tax at lower rates 1932.38-1 How lower rate is determined 1932.38-2 Validity of certificate 1942.38-3 Issued to the payer 1942.38-4 Retrospective certificate not possible 1942.38-5 Instruction issued by Board 1942.38-6 Other points 195

2.39 Rounding off of income 1952.40 Employee gets credit of tax deducted at source 195

2.40-1 Rules framed by Board 1952.41 Going through the real exercise - Examples on computation

of estimated salary and tax to be deducted therefrom undersection 192 196Illustrations 196

3TAX DEDUCTION FROM ACCUMULATED BALANCE

OF PROVIDENT FUND DUE TO AN EMPLOYEE

3.1 Person responsible for tax deduction from accumulatedbalance of provident fund 207

3.2 When tax has to be deducted 2073.2-1 No tax is deductible if payment is less than Rs. 50,000 2073.2-2 Private arrangement of paying accumulated balance

of provident fund tax-free is not relevant 2073.3 Tax deduction account number 2073.4 Deposit of tax to the credit of Central Government 207

3.4-1 Where to deposit 2073.4-2 Time of deposit 2083.4-3 Payment through challan 208

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3.4-4 Claim for refund 2083.5 Issue of certificate of tax deduction 208

3.5-1 Issue of duplicate certificate 2083.6 Quarterly return to the Government 2083.7 Consequences of failure to deduct or pay tax or furnish

return 2093.7-1 Failure to deduct and/or pay tax 2093.7-2 Failure to comply with the provisions of section 203A

regarding tax-deduction account number 2093.7-3 Failure to issue certificate or submit return 209

4HOW TO COMPUTE TAXABLE PREMATUREWITHDRAWAL OF PROVIDENT FUND AND

TAX TO BE DEDUCTED THEREFROM

4.1 When withdrawal from provident fund is subject to thetax deduction under section 192A 210

4.2 Rates of tax 2114.3 Payment without tax deduction or with deduction at lower

rates 2114.4 Tax credit 211

4.4-1 Rules framed by Board 211Illustration 212

5DEDUCTION OF TAX AT SOURCE FROM

INTEREST ON SECURITIES

5.1 Who is responsible to deduct tax at source in the case ofinterest on securities 217

5.2 When tax has to be deducted at source 2175.2-1 Relevance of identity of deductee under TDS

provisions 2175.2-2 Private arrangement of paying interest on

securities as tax-free cannot discharge obligationunder section 193 219

5.3 How to compute tax deduction at source 2195.4 Tax deduction account number 2195.5 Deposit of tax to the credit of the Central Government 219

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5.5-1 Where to deposit 2195.5-2 Time of deposit of TDS/TCS 2195.5-3 Challans for payment 2205.5-4 Claim for refund 220

5.6 Issue of certificate for tax deduction from interest onsecurities 2205.6-1 TDS certificate in Form No. 16A 220

5.6-2 Time limit within which the certificate shall beissued 221

5.6-3 Issue of duplicate certificate 2215.7 Return of tax deduction at source from interest on

securities 2215.7-1 Annual return 2215.7-2 Quarterly statement TDS deposited 221

5.8 Consequences of failure to deduct or pay tax, furnishreturns, etc. 2235.8-1 Failure to deduct and/or pay tax 2235.8-2 Failure to comply with the provision of section 203A

regarding tax deduction account number 2235.8-3 Failure to issue certificates, or submit returns 2235.8-4 Forfeiture of deduction in respect of interest on

securities 223Illustration 224

6HOW TO COMPUTE INTEREST ON

SECURITIES AND TAX DEDUCTIBLETHEREFROM AT SOURCE

6.1 Interest on securities - How defined 2296.2 Interest on securities not liable for tax deduction 229

6.2-1 Notified securities 2306.2-2 TDS on 8 per cent Savings (Taxable) Bonds, 2003

or 7.75 per cent Savings (Taxable) Bonds, 2018 2426.3 What happens when recipient is Government - Interest

on securities payable to the Government and certainCorporations 243

6.4 TDS on interest on securities - A few typical cases 2446.4-1 When interest is paid to oneself - Interest on own

debentures 244

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6.4-2 Interest payable to funds established for thebenefits of armed forces 244

6.4-3 Interest to provident funds 2446.4-4 Deep discount bond 244

6.5 Rates for tax deduction at source 2456.6 When can a security holder reduce the incidence of

tax deduction 2456.6-1 Certificate for tax deduction at lower rate or no

deduction 2456.6-2 Declaration under section 197A 2476.6-3 Payment to certain institution whose income is

exempt under section 10(23C) 2496.7 Tax credit to one who pays 249

6.7-1 Rules to be framed by Board 2506.7-2 Joint owners 2506.7-3 Beneficial owner 250

7DEDUCTION OF TAX AT SOURCE

FROM DIVIDEND

7.1 Who is responsible for tax deduction in the case of dividend 2537.1-1 Who is “principal officer” 2537.1-2 What makes one an Indian company 2537.1-3 What amounts to prescribed arrangements for

declaration and payment of dividends in India 2547.2 What is “dividend” for the purpose of tax deduction 2547.3 When tax is to be deducted 254

7.3-1 Private arrangement of paying dividend tax-freecannot discharge obligation under section 192 254

7.4 Tax deduction account number 2547.5 Deposit of tax to the credit of Central Government 255

7.5-1 Where to deposit 2557.5-2 Time within which tax is to be deposited 2557.5-3 Filing challan for payment 2557.5-4 Claim for refund 255

7.6 Issue a certificate for tax deducted at source toshareholders 2557.6-1 TDS certificate in Form No. 16A 2557.6-2 Time limit within which the certificate should be

given 256

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7.6-3 Issue of duplicate certificate 2567.7 Statement/returns to the Government 256

7.7-1 Annual return 2567.7-2 Quarterly return of TDS deposited 256

7.8 Consequences of failure to deduct or pay tax, furnishreturns, etc. 2567.8-1 Failure to deduct and/or pay tax 2567.8-2 Failure to comply with the provisions of section

203A regarding tax deduction account number 256

7.8-3 Failure to issue certificate, or submit return/statement 256

8HOW TO COMPUTE DIVIDENDS AND TAX

DEDUCTIBLE THEREFROM

8.1 Defining dividends 257

8.2 Deemed dividend under the Income-tax Act 257

8.2-1 Definition under section 2(22)(e) 257

8.2-2 Accumulated profits 257

8.2-3 Distribution of accumulated profits by way ofadvance or loan 259

8.3 Rates for tax deduction at source during the financialyear 2017-18 263

8.4 Dividends payable to Government or certain corporation 263

8.5 Deduction of tax at lower rates 263

8.5-1 Certificate for receiving dividend without taxdeduction 264

8.5-2 Declaration under section 197A 264

8.6 Who gets credit for tax deducted 265

8.6-1 Rules framed by Board 265

9DEDUCTION OF TAX AT SOURCE FROM INTEREST

OTHER THAN INTEREST ON SECURITIES

9.1 Who is to discharge the responsibility to make taxdeduction at source 267

9.2 Which interest qualifies for tax deduction at sourceunder section 194A 267

9.3 When tax has to be deducted at source 268

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9.3-1 When interest is credited to “Interest payableaccount” or “Suspense account” 268

9.3-2 Private arrangement of paying interest tax-freecannot discharge obligation under section 194A 269

9.4 How to compute tax deduction at source 269

9.5 Tax deduction account number 269

9.6 Deposit of tax to the credit of Central Government 269

9.6-1 Where to deposit 269

9.6-2 Time of deposit 269

9.6-3 Payment through challan 270

9.6-4 Claim for refund 270

9.7 Issue certificate of tax deduction from interest other thaninterest on securities 270

9.7-1 Certificates are issued by downloading from TINwebsite 270

9.7-2 Time limit within which certificate shall be issued 270

9.7-3 Issue of duplicate certificate 271

9.8 Return of tax deduction at source 271

9.8-1 Annual return 271

9.8-2 Quarterly return of TDS deposited 271

9.8-3 Quarterly return for payment without taxdeduction 272

9.9 Consequences of failure to deduct or pay tax, furnishreturn, etc. 273

9.9-1 Failure to deduct and/or pay tax 273

9.9-2 Failure to comply with the provisions ofsection 203A regarding tax deductionaccount number 273

9.9-3 Failure to issue certificate or submit return 273

9.9-4 Forfeiture of deduction in respect of interestother than interest on securities 273

10HOW TO COMPUTE INTEREST (OTHER THAN

INTEREST ON SECURITIES) AND TAXDEDUCTIBLE THEREFROM

10.1 When a payment can be regarded as “interest” 27410.1-1 Conditions 274

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10.1-2 When a payment is deemed to be payment ofinterest for the purpose of tax deduction 274

10.2 Rates for tax deduction at source during the financialyear 2019-20 27510.2-1 When adjustments are called for 276

10.3 Treatment of interest other than interest on securitiespayable to Government or certain corporation 276

10.4 Interest other than interest on securities not liable to taxdeduction under section 194A(3)/197A 27610.4-1 If interest does not exceed a specified amount 27610.4-2 Paid/credited to banks/financial institutions 27710.4-3 Interest by firm 27910.4-4 Co-operative society 27910.4-5 Interest under notified schemes 28010.4-6 Interest by bank 28110.4-7 Interest by co-operative society/bank 28110.4-8 Interest by Government 28110.4-9 Interest credited on compensation 28210.4-10 Interest paid on Compensation 28210.4-11 Zero coupon bonds 28210.4-12 Interest referred to in section 10(23FC) 28210.4-13 Interest by offshore banking unit 28210.4-14 Interest to Tirumala Tirupati Devasthanams 28210.4-15 Interest to securitisation trust 282

10.5 Interest without tax deduction or with deduction atlower rates 28210.5-1 Certificate for tax deduction at lower rate

under section 197(1) 28210.5-2 Declaration under section 197A 28310.5-3 Payment to certain institutions whose income is

exempt under section 10(23C) 28310.6 To deduct or not - Treatment of some typical cases 285

10.6-1 Interest on deposits in joint names - Manner oftax deduction 285

10.6-2 Interest payment under Land Acquisition Act 28610.6-3 Interest payable on hundi by buyer to supplier in

case of outstation sale of goods - Whether tax tobe deducted by the buyer 286

10.6-4 Interest payable by consignors to their commissionagent 286

10.6-5 Payment under a hire purchase agreement 286

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10.6-6 Who is an individual 28610.6-7 Interest payable by retail finance service company 28710.6-8 Cheque discounting charges 28710.6-9 Payment under a hire purchase agreement 28710.6-10 Interest on delayed payment of insurance

compensation 28710.6-11 Personal loan of directors routed through company 28710.6-12 Discounting charges 28710.6-13 Chit fund 28810.6-14 Judgment debtor 28810.6-15 Interest on overdue purchase bills is not ‘interest’ 28810.6-16 Loan processing fees 28810.6-17 Tax deduction on the deposits in banks in the name

of the registrar to the Supreme Court/High Courtduring pendency of litigation 288

10.6-18 Tax deductible even in the case of loss 28810.6-19 TDS on interest on deposits made under Capital

Gains Accounts Scheme where depositor hasdeceased 288

10.7 Giving credit for tax deducted 28910.7-1 Rules to be framed by Board 289

11TAX DEDUCTION FROM WINNINGS FROM

LOTTERY, CROSSWORD PUZZLE, CARDGAMES OR OTHER GAMES

11.1 Who is responsible for tax deduction in the case ofwinnings from lottery, crossword puzzle, card game orother game 291

11.2 Payments from which deduction is to be made 29111.3 When tax has to be deducted 291

11.3-1 Private arrangement of paying income-tax-freecannot discharge obligation under section 194B 291

11.4 Tax deduction account number 29111.5 Deposit of tax in the credit of Central Government 291

11.5-1 Where to deposit 29111.5-2 Time of deposit 29211.5-3 Payment through challan 29211.5-4 Claim for refund 292

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11.6 Issue a certificate for tax deducted at source 29211.6-1 Certificate is issued by downloading from TIN

website 29211.6-2 Time limit 29211.6-3 Issue of duplicate certificate 293

11.7 Annual/quarterly return to the Government 29311.7-1 Annual return 29311.7-2 Quarterly return 293

11.8 Consequences of failure to deduct or pay tax or furnishreturn, etc. 29411.8-1 Failure to deduct and/or pay tax 29411.8-2 Failure to comply with the provisions of

section 203A regarding tax deductionaccount number 294

11.8-3 Failure to issue certificate, or submit return 29411.8-4 Disallowance of expenditure 294

12WINNINGS FROM LOTTERY, CROSSWORD PUZZLE,

CARD GAME OR ANY OTHER GAME ANDTAX TO BE DEDUCTED THEREFROM

12.1 What can be termed as winnings from lottery, crosswordpuzzle and card game 29512.1-1 One has to fall back on dictionary meanings and

judicial pronouncement 29512.1-2 Preliminary conditions subject to which tax

deduction can be made 29712.1-3 Some typical situations - How to deal with them 298

12.2 Rates for deduction of tax at source during the financialyear 2019-20 299

12.3 No deduction at source from payments to Government orcertain corporation 300

12.4 Giving credit for tax deducted 30112.4-1 Rules framed by Board 301

13TAX DEDUCTION FROM WINNINGS

FROM HORSE RACE

13.1 Who is responsible for tax deduction 303

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13.1-1 Bookmaker - Meaning of 30313.2 When winnings from horse racing are subject to tax

deduction at source 30313.3 When tax has to be deducted 304

13.3-1 Private arrangement of making paymenttax-free cannot discharge the obligation 304



13.6 Issue of certificate for deduction from winning from horseraces 30513.6-1 Certificates are issued by downloading from TIN

website 30513.6-2 Time limit within which the certificate shall be

issued 30513.6-3 Issue of duplicate certificate 305

13.7 Annual/quarterly return of winning from horse race to theGovernment 30613.7-1 Annual return 30613.7-2 Quarterly return 306

13.8 Consequences of failure to deduct or pay tax, furnishreturn, etc. 30713.8-1 Failure to deduct and/or pay tax 30713.8-2 Failure to comply with the provisions of


13.8-3 Failure to issue certificate or submit return 30713.8-4 Disallowance of expenditure 307

14WINNINGS FROM HORSE RACE AND

TAX TO BE DEDUCTED THEREON

14.1 Meaning of horse race 30814.1-1 When winnings from horse race are subject to

tax deduction 30814.2 Rates at which deduction of tax is to be made at source

during the financial year 2019-20 308

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14.3 No deduction of tax from winnings payable to theGovernment/certain corporation 309

14.4 Credit for tax deducted 30914.4-1 Rules framed by Board 309

15TAX DEDUCTION FROM PAYMENT TO

CONTRACTORS

15.1 Person responsible for making deduction at source undersection 194C 31115.1-1 Payment to a resident contractor 311

15.2 When tax has to be deducted at source 31315.2-1 When amount is transferred to “Suspense

account” 31315.2-2 Private arrangement of making payment to

contractor/sub-contractor without taxdeduction cannot discharge the obligationunder section 194C 313

15.3 How to compute the amount of tax deduction 31315.4 Tax deduction account number 31315.5 Deposit of tax to the credit of Central Government 313


15.6 Issue of certificate of tax deduction 31415.6-1 Certificates are issued by downloading from TIN

website 31515.6-2 Time limit within which certificate shall be issued 31515.6-3 Issue of duplicate certificate 315

15.7 Annual and quarterly returns of tax deducted at source 31515.7-1 Annual return 31515.7-2 Quarterly return 315




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15.8-4 Forfeiture of deduction in respect of payment tocontractors/sub-contractors 316

16WHAT CONSTITUTES A PAYMENT TO CONTRACTOR/

SUB-CONTRACTOR AND HOW MUCH TAX IS TOBE DEDUCTED THEREFROM

16.1 Payment to contractors/sub-contractors 31716.1-1 When such payments are subject to tax deduction 31716.1-2 When such payments to contractors are not

subject to tax deduction at source 31716.2 “Work contract” and “contract for supply of labour for

works contract” - Meaning of 319

16.2-1 “Work” as defined in section 194C 31916.2-2 Work contract or sale of goods 32016.2-3 Tests to determine whether a contract is work

contract 32016.2-4 Emerging conclusion 32216.2-5 Examples of “work contracts” and “contracts for

sale of goods” 32316.3 Judicial pronouncements 32916.4 Rates for tax deduction at source during the financial

year 2019-20 33216.4-1 Other points 332

16.5 Clarifications from the Board 33316.5-1 Advertising contract 33316.5-2 Broadcasting/telecasting contracts 33516.5-3 Payment made to travel agent/or an airline 33516.5-4 Does catering include serving food in restaurant 33616.5-5 Payment of hire charges 33616.5-6 Payment to an electrician 33716.5-7 Maintenance contracts 33716.5-8 Fixed deposit commission 33716.5-9 Procurement of orders 33716.5-10 Reimbursement 33716.5-11 Bidi manufacturing 33716.5-12 National Rural Employment Programme 33716.5-13 Bus contractor 33716.5-14 Road transporters 338

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16.5-15 Tax deduction when material is supplied tocontractor 338

16.5-16 Contract on piece rate basis 33916.6 Payment to Government and certain corporations 33916.7 Certificate for tax deduction at lower rates 340

16.7-1 Time limit for soliciting the favour 34016.8 Credit for tax deduction 340


17TAX DEDUCTION FROM INSURANCE

COMMISSION

17.1 Person responsible for tax deduction from insurancecommission 342

17.2 When tax has to be deducted 34217.2-1 No tax is deductible if payment during a

financial year does not exceed Rs. 15,000 34217.2-2 Private arrangement of paying commission

tax-free is not relevant 34217.3 Tax deduction account number 34217.4 Deposit of tax to the credit of Central Government 342



website 34417.5-2 Time-limit within which certificate shall be issued 34417.5-3 Issue of duplicate certificate 344




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17.7-3 Failure to issue certificates or submit return 34517.7-4 Disallowance of expenditure 345

18HOW TO COMPUTE INSURANCE COMMISSION

AND TAX TO BE DEDUCTED THEREFROM

18.1 What qualifies as insurance commission for the purpose oftax deduction at source 346

18.1-1 Conditions to attract section 194D 346

18.2 Rates at which tax is to be deducted at source during thefinancial year 2019-20 34718.2-1 No tax deduction when payments are to

Government and certain corporation 34718.3 Circumstances in which no deduction or deduction at

lower rate is possible 34818.3-1 Certificate for tax deduction at lower rate under

section 197(1) 34818.3-2 Declaration under section 197A 348

18.4 Credit given to person on whose behalf tax is deducted 34918.4-1 Rules framed by Board 349

19TAX DEDUCTION FROM PAYMENT

IN RESPECT OF LIFE INSURANCE POLICY

19.1 Person responsible for tax deduction 35119.2 When tax has to be deducted 351

19.2-1 No tax is deductible if payment during a financialyear is less than Rs. 1,00,000 351

19.2-2 Private arrangement of paying commissiontax-free is not relevant 351



19.5 Issue of certificate of tax deduction 352

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19.5-1 Certificates are issued by downloading fromTIN website 352

19.5-2 Time-limit within which certificate shall be issued 35219.5-3 Issue of duplicate certificate 353


19.7 Consequences of failure to deduct or pay tax, furnishreturn, etc. 35419.7-1 Failure to deduct and/or pay tax 35419.7-2 Failure to comply with the provisions of section

203A regarding tax-deduction account number 35419.7-3 Failure to issue certificates or submit return 35419.7-4 Disallowance of expenditure 354

20HOW TO COMPUTE TAX TO BE DEDUCTED

FROM PAYMENT IN RESPECT OF LIFEINSURANCE POLICY

20.1 What qualifies as payment in respect of life insurancepolicy for the purpose of tax deduction at source undersection 194DA 35520.1-1 When exemption is available under section 10(10D) 355

20.2 Rates at which tax is to be deducted at source during thefinancial year 2019-20 356Illustrations 356

20.3 Circumstances in which no deduction or deduction at lower 357rate is possible

20.4 Credit given to person on whose behalf tax is deducted 35720.4-1 Rules framed by Board 358


NATIONAL SAVINGS SCHEME

21.1 Who is responsible to deduct tax 36021.2 When tax is to be deducted 36021.3 How to compute amount of tax deducted at source 36021.4 Tax deduction account number 360

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21.5 Deposit of tax to the credit of Central Government 36021.5-1 Where to deposit 36021.5-2 Time of deposit 36021.5-3 Payment through challan 36121.5-4 Claim for refund 361

21.6 Issue of certificate for tax deduction 36121.6-1 Certificates are issued by downloading from TIN

website 36121.6-2 Time limit within which the certificate shall be


21.7 Annual and quarterly return to the Government 36121.7-1 Annual returns 36121.7-2 Quarterly return 361

21.8 Consequences of failure to deduct or pay tax or furnishreturn 36321.8-1 Failure to deduct and/or pay tax 36321.8-2 Failure to comply with the provisions of



22HOW TO COMPUTE AMOUNT REFERRED TO

IN SECTION 80CCA(2)(a) AND TAX TO BEDEDUCTED THEREFROM

22.1 Payments referred to in section 80CCA(2)(a) 36422.1-1 What is the scheme of section 80CCA 36422.1-2 Payments subject to tax deduction under

section 194EE 36422.2 Rate of tax in force during the financial year 2019-20 36522.3 Payment without tax deduction under section 197A 365

22.3-1 Mode of submission of Form No. 15G/15H bypayer of income to income-tax authorities 366

22.4 Tax credit 36622.4-1 Rules framed by Board 366

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23DEDUCTION OF TAX AT SOURCE ON ACCOUNT

OF REPURCHASE OF UNITS BY MUTUALFUNDS OR UNIT TRUST OF INDIA

23.1 Who is responsible to deduct tax 36823.2 When tax is to be deducted 368

23.2-1 Private arrangement to pay income free of tax 36823.3 How to compute amount of tax deducted 36823.4 Tax deduction account number 36823.5 Deposit of tax to the credit of the Central Government 368



website 36923.6-2 Time-limit within which the certificate shall be


23.7 Annual and quarterly returns to the Government 37023.7-1 Annual return 37023.7-2 Quarterly returns 370




24HOW TO COMPUTE AMOUNT REFERRED TO

IN SECTION 80CCB(2) AND TAX TO BEDEDUCTED THEREFROM

24.1 Payments affected by section 194F 37224.1-1 What is the scheme of section 80CCB 372

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24.1-2 Payments subject to tax deduction undersection 194F 372

24.1-3 Illustration 37224.2 Rate of tax in force during the financial year 2019-20 37324.3 Deduction of tax at lower rate 37324.4 Tax credit 373



COMMISSION ON SALE OFLOTTERY TICKETS

25.1 Who is responsible to deduct tax at source 37525.2 When tax is deducted at source 375

25.2-1 When amount is credited to “suspense account” 375

25.2-2 Private arrangement to pay commission free oftax 375

25.3 How to compute tax deduction at source undersection 194G 375




website 37625.6-2 Time-limit within which certificate shall be issued 37625.6-3 Issue of duplicate certificate 377

25.7 Annual and quarterly return to the Government 37725.7-1 Annual return 37725.7-2 Quarterly return 377



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26HOW TO COMPUTE COMMISSION ON SALE OF

LOTTERY TICKETS AND TAX DEDUCTIBLETHEREFROM

26.1 When a payment is affected by section 194G 37926.2 Rates for tax deduction 37926.3 Deduction of tax at lower rate 38026.4 Tax credited 380


27TAX DEDUCTION FROM COMMISSION

OR BROKERAGE

27.1 Person responsible for tax deduction from commission/brokerage 382

27.2 When tax has to be deducted 382

27.2-1 No tax is deductible if payment during afinancial year does not exceed Rs. 15,000 382

27.2-2 Private arrangement of paying commission tax-free is not relevant 383











27.6 Annual and quarterly return to the Government 384


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27.6-2 Quarterly return 384

27.7 Consequences of failure to deduct or pay tax or furnishreturn 386


27.7-2 Failure to comply with the provisions ofsection 203A regarding tax deductionaccount number 386


27.7-4 Forfeiture of deduction in respect of commission/brokerage 386

28HOW TO COMPUTE COMMISSION OR

BROKERAGE AND TAX TO BEDEDUCTED THEREFROM

28.1 When commission/brokerage is subject to the taxdeduction under section 194H 387

28.2 Brokerage/commission covered by section 194H 38728.2-1 Professional services excluded 38728.2-2 “Commission” judicially defined 38828.2-3 Brokerage judicially defined 38928.2-4 Commission and service are two essential

elements 39028.2-5 Commission retained by consignee - Is it subject to

tax deduction 39328.2-6 Turnover commission by RBI 39328.2-7 Trade discount is different 39328.2-8 Discount on SIM offered by Cellular telephone net-

work provider to distributors 39428.2-9 Other judicial rulings 39428.2-10 Conclusions 396

28.3 Rates of tax 39628.4 No tax deduction when recipient is Government and certain

corporations 39728.5 Payment without tax deduction or with deduction at lower

rates 39728.5-1 Certificate for tax deduction at lower rate under

section 197(1) 39728.5-2 Turnover commission payable by Central

Government 398

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29TAX DEDUCTION FROM RENT

29.1 Person responsible for tax deduction from rent 400


29.2-1 No tax is deductible if payment during a financialyear does not exceed Rs. 2,40,000 401

29.2-2 Private arrangement of paying rent tax-free isnot relevant 401





29.4-3 Payment through Challan 402











29.7-2 Failure to comply with the provisions ofsection 203A regarding tax-deductionaccount number 404


29.7-4 Forfeiture of deduction in respect of rent 404

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30HOW TO COMPUTE RENT AND TAX TO BE

DEDUCTED THEREFROM

30.1 When rent is subject to the tax deduction undersection 194-I 405

30.2 Rent covered by section 194-I 40530.2-1 Rent as defined in section 194-I 40530.2-2 Broad inferences 407

30.3 Rates of tax 41330.4 No tax deduction when recipient is Government and certain

corporations 413

30.4-1 No tax deduction if recipient is exempt undersection 10(23C) 414

30.4-2 No tax deduction if recipient is real estateinvestment trust 414

30.5 Deduction of tax at lower rates 414

30.5-1 Certificate for receiving rent without tax deduction 414

30.5-2 Declaration under section 197A 415

30.6 Tax credit 415



CONSIDERATION PAYABLE FOR ACQUISITIONOF IMMOVABLE PROPERTY OTHER THAN

AGRICULTURAL LAND IN RURAL AREA

31.1 Who is responsible for tax deduction at source undersection 194-IA 417








31.5 Issue a certificate for tax deducted at source 418

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31.5-1 Certificates are issued by downloading fromTRACES Portal 418

31.5-2 Time limit within which the certificate should begiven 418



31.7 Consequences of failure to deduct or pay tax, furnishreturns, etc. 418


31.7-2 Failure to issue certificate, or submit return/statement 418

31.7-3 Forfeiture of deduction 418

32HOW TO COMPUTE TAX DEDUCTIBLE FROM

PAYMENT OF CONSIDERATION FORACQUISITION OF ANY IMMOVABLE

PROPERTY

32.1 Income subject to tax deduction under section 194-IA 41932.1-1 Immovable property 41932.1-2 Agricultural land 41932.1-3 Rural area in India 420

32.2 Rate for tax deduction at source during the financial year2019-20 421

32.3 Consideration payable to Government or certaincorporation 423

32.4 Certificate of tax deduction at lower rate 42332.5 Who gets credit for tax deducted 423


33TAX DEDUCTION FROM PAYMENT OF RENT BY

CERTAIN INDIVIDUALS AND HUFs33.1 Person responsible for tax deduction under section 194-IB 42533.2 When tax has to be deducted 425

33.2-1 No tax is deductible if rent does not exceedRs. 50,000 per month 425

33.2-2 Private arrangement of paying tax-free rent is notrelevant 425

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33.5 Issue of certificate of tax deduction 42633.5-1 Issue of duplicate certificate 426

33.6 Return to the Government 42633.7 Consequences of failure to deduct or pay tax or furnish

return 42633.7-1 Failure to deduct and/or pay tax 42633.7-2 Failure to issue certificate or submit return 42633.7-3 Forfeiture of deduction 426


RENT UNDER SECTION 194-IB34.1 Rent subject to tax deduction under section 194-IB 42734.2 Rates of tax deduction during the financial year 2019-20 427

Illustrations 42734.3 Payment without tax deduction or with deduction at lower

rates 42834.4 Consideration payable to Government or certain corporation 42934.5 Tax credit 429


35TAX DEDUCTION FROM PAYMENT UNDER

SPECIFIED AGREEMENT35.1 Person responsible for tax deduction from payment under

specified agreement 43135.2 When tax has to be deducted 431

35.2-1 Private arrangement to pay consideration free of tax 43135.3 Tax deduction account number 43135.4 Deposit of tax to the credit of Central Government 431

35.4-1 Where to deposit 43135.4-2 Time of deposit 431

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35.4-3 Payment through challan 43235.4-4 Claim for refund 432

35.5 Issue of certificate of tax deduction 43235.5-1 Issue of duplicate certificate 432

35.6 Quarterly return to the Government 43235.7 Consequences of failure to deduct or pay tax or furnish

return 43235.7-1 Failure to deduct and/or pay tax 43235.7-2 Failure to comply with the provisions of

section 203A regarding tax-deduction accountnumber 432


36HOW TO COMPUTE CONSIDERATION WHICH IS SUBJECT

TO TAX DEDUCTION UNDER SECTION 194-IC36.1 When payment under specified agreement is subject to tax

deduction under section 194-IC 43336.1-1 Specified agreement under section 45(5A) 433

36.2 Rates of tax 434Illustration 434

36.3 Payment without tax deduction or with deduction at lowerrates 435


37DEDUCTION OF TAX AT SOURCE FROM FEES

FOR TECHNICAL OR PROFESSIONALSERVICES OR ROYALTY

37.1 Who is responsible for tax deduction in the case of feesfor technical or professional services or royalty 43737.1-1 Director’s fees subject to TDS under section 194J

from July 1, 2012 43737.1-2 When payment/credit by an individual/HUF is

subject to TDS under section 194J 43737.2 When tax has to be deducted at source 438

37.2-1 When fees is credited to “suspense account” 438

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37.2-2 Private arrangement of paying fees for technicalor professional services or royalty tax-free cannotdischarge obligation under section 194J 438



37.5 Issue a certificate for tax deducted at source 44037.5-1 Certificates are issued by downloading from TIN

website 44037.5-2 Time limit within which the certificate should be

given 44037.5-3 Issue of duplicate certificate 440

37.6 Annual and quarterly return to the Government 44037.6-1 Annual return 44037.6-2 Quarterly return 440

37.7 Consequences of failure to deduct or pay tax, furnishreturns, etc. 44237.7-1 Failure to deduct and/or pay tax 44237.7-2 Failure to comply with the provisions of section

203A regarding tax-deduction account number 44237.7-3 Failure to issue certificate, or submit return/

statement 44237.7-4 Forfeiture of deduction in respect of technical/

professional fees/royalty 442

38HOW TO COMPUTE FEES FOR PROFESSIONAL

AND TECHNICAL SERVICES AND ROYALTYAND TAX DEDUCTIBLE THEREFROM

38.1 Professional/technical services 44338.1-1 What is professional services 44338.1-2 Technical services 44438.1-3 “Royalty” as defined in Explanation 2 to section

9(1)(vi) 44538.2 When payments for professional/technical fees, royalty,

director’s fees are covered by section 194J 448

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38.2-1 Other points 44938.3 Rates for tax deduction at source during the financial year

2019-20 45238.3-1 Reimbursement of expenditure - Whether subject

to TDS 45338.4 Fees for professional services/technical services or royalty

payable to Government or certain corporation 45338.5 Certificate of tax deduction at lower rate 454

38.5-1 Time limit for soliciting the favour 45438.6 Who gets credit for tax deducted 454



PAYMENT OF COMPENSATION ON ACQUISITIONOF IMMOVABLE PROPERTY

39.1 Who is responsible for tax deduction at source undersection 194LA 456

39.2 When tax has to be deducted at source 45639.3 Tax deduction account number 45639.4 Deposit of tax to the credit of Central Government 456

39.4-1 Where to deposit 45639.4-2 Time within which tax has to be deposited 45639.4-3 Claim for refund 456


website 45639.5-2 Time-limit 45639.5-3 Issue of duplicate certificate 457

39.6 Statement/return to the Government 45739.6-1 Annual return 45739.6-2 Quarterly return 457

39.7 Consequences of failure to deduct or pay tax, etc. 45839.7-1 Failure to deduct and/or pay tax 45839.7-2 Failure to comply with the provisions of section


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PAYMENT OF COMPENSATION ON ACQUISITIONOF IMMOVABLE PROPERTY

40.1 Income subject to tax deduction under section 194LA 45940.2 Rates for tax deduction at source during the financial year

2019-20 46040.3 Income is payable to Government or certain corporation 46040.4 Deduction of tax at lower rates 460

40.4-1 Certificate for receiving such without taxdeduction or with deduction at lower rate 460

40.5 Who get credit for tax deducted 46140.5-1 Rules framed by Board 461

41DEDUCTION OF TAX AT SOURCE FROMINCOME BY WAY OF INTEREST FROM

INFRASTRUCTURE DEBT FUND

41.1 Who is responsible for tax deduction at source undersection 194LB 463








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42HOW TO COMPUTE TAX DEDUCTIBLE

FROM PAYMENT OF INTEREST ONINFRASTRUCTURE DEBT FUND

42.1 Income subject to tax deduction under section 194LB 46642.2 Rates for tax deduction at source during the financial year

2019-20 46642.3 Deduction of tax at lower rate 46642.4 Who get credit for tax deducted 467


43DEDUCTION OF TAX AT SOURCE FROM INTEREST

ON UNITS OF BUSINESS TRUST

43.1 Who is responsible for tax deduction at source undersection 194LBA 469







203A regarding tax deduction account number 47143.7-3 Forfeiture of deduction in respect of payment of

interest 471

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PAYMENT OF INTEREST ON UNITS OFBUSINESS TRUST

44.1 Income subject to tax deduction under section 194LBA 47244.2 Rates for tax deduction at source during the financial

year 2019-20 47244.3 Deduction of tax at lower rate 47344.4 Who get credit for tax deducted 473


45DEDUCTION OF TAX AT SOURCE FROM INCOME

IN RESPECT OF UNITS OF INVESTMENTFUND/SECURITISATION TRUST

45.1 Who is responsible for tax deduction at source undersection 194LBB/194LBC 475





45.4-2 Time within which tax has to be deposited 475


45.5 Issue a certificate for tax deducted at source 475


45.5-2 Time-limit 475


45.6 Statement/return to the Government 476



45.7 Consequences of failure to deduct or pay tax, etc. 47745.7-1 Failure to deduct and/or pay tax 47745.7-2 Failure to comply with the provisions of section 203A

regarding tax deduction account number 47745.7-3 Forfeiture of deduction in respect of payment of

interest 477

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46HOW TO COMPUTE TAX DEDUCTIBLE FROM INCOME

IN RESPECT OF UNITS OF INVESTMENTTRUST/SECURITISATION TRUST

46.1 Income subject to tax deduction under section 194LBB/194LBC 47846.2 Rates for tax deduction at source during the financial

year 2019-20 47846.3 Certificate for tax deduction at lower rate (applicable with

effect from June 1, 2016) 47946.3-1 Time-limit for soliciting the favour 47946.3-2 How lower rate is determined 47946.3-3 Other points 479

46.4 Who get credit for tax deducted 47946.4-1 Rules framed by Board 480

47DEDUCTION OF TAX AT SOURCE FROM INCOMEBY WAY OF INTEREST FROM INDIAN COMPANY

UNDER SECTION 194LC

47.1 Who is responsible for tax deduction at source undersection 194LC 482



47.5 Issue a certificate for tax deducted at source 48347.5-1 Certificates are issued by downloading

from TIN website 48347.5-2 Time-limit 48347.5-3 Issue of duplicate certificate 483




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INTEREST PAYABLE TO NON-RESIDENT/FOREIGN COMPANY

48.1 Income subject to tax deduction under section 194LC 48548.1-1 Approval by Central Government 485

48.2 Time of tax deduction 48748.3 Rates for tax deduction at source during the financial year




INTEREST ON CERTAIN BONDS ANDGOVERNMENT SECURITIES

UNDER SECTION 194LD

49.1 Who is responsible for tax deduction at source undersection 194LD 490



49.5 Issue a certificate for tax deducted at source 49149.5-1 Certificates are issued by downloading from

TRACES Portal 49149.5-2 Time-limit 49149.5-3 Issue of duplicate certificate 491




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50HOW TO COMPUTE TAX DEDUCTIBLE FROMINTEREST PAYABLE UNDER SECTION 194LD

50.1 Income subject to tax deduction under section 194LD 49350.2 Time of tax deduction 49350.3 Rates for tax deduction at source during the financial year



51TAX DEDUCTION FROM PAYMENT TO RESIDENTCONTRACTOR, BROKER OR PROFESSIONAL BY

CERTAIN INDIVIDUALS AND HUFs

51.1 Person responsible for tax deduction under section 194M 496


51.2-1 No tax is deductible if payment/credit does notexceed Rs. 50 lakh in a financial year 496










51.6 Return to the Government 497




51.7-3 Forfeiture of deduction 497

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PAYMENT/CREDIT TO CONTRACTOR,PROFESSIONAL OR BROKER UNDER

SECTION 194M

52.1 Payment/credit subject to tax deduction under section194M 498

52.2 Work contract, commission or brokerage and professional -Meaning of 498

52.3 Rates of tax deduction during the financial year 2019-20 498

Illustration 499

52.4 Payment without tax deduction or with deduction at lowerrates 500

52.5 Consideration payable to Government or certain corporation 500

52.6 Tax credit 500


53DEDUCTION OF TAX AT SOURCE FROM CASH

PAYMENT TO ACCOUNTHOLDERS UNDERSECTION 194N

53.1 Person responsible for tax deduction under section 194N 502


53.2-1 No tax is deductible if cash payment does notexceed Rs. 1 crore in a financial year 502










53.6 Return to the Government 503

53.7 Consequences of failure to deduct or pay tax or furnish return 503

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CASH PAYMENT TO ACCOUNTHOLDERSUNDER SECTION 194N

54.1 Cash payment subject to tax deduction under section 194N 50454.2 Rates of tax deduction during the financial year 2019-20 504

Illustration 50454.3 Payment without tax deduction or with deduction at lower

rates 50554.4 Consideration payable to Government or certain corporation 50554.5 Tax credit 505


55TAX DEDUCTION FROM PAYMENTS

TO NON-RESIDENTS

55.1 Who is required to deduct tax under sections 194E and 195 507

55.1-1 Payer/Principal officer is person responsible fortax deduction 507

55.1-2 In case of consideration for transfer of foreignexchange amount 507

55.2 Payment from which deduction has to be made 508


55.3-1 Payments referred to section 115BBA 508

55.3-2 Any other payments 508

55.3-3 Private arrangement of paying income tax-freecannot discharge obligation under sections 194E,195 and 196A 509





55.5-3 Payment through challan 50955.5-4 Claim for refund 510

55.6 Issue of certificate for tax deducted at source 510

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55.6-2 Time limit 51055.6-3 Issue of duplicate certificate 510

55.7 Quarterly return to the Government 51055.7-1 Quarterly return 510

55.8 Consequences of failure to deduct or pay tax or furnishreturn 51255.8-1 Failure to deduct and/or pay tax 51255.8-2 Failure to comply with the provisions of section

203A regarding tax-deduction account number 51255.8-3 Failure to issue certificate or submit return 51255.8-4 Forfeiture of deduction in respect of payment of

annual charge, interest, royalty, fees, etc. 512Illustration 513

56HOW TO COMPUTE AMOUNT PAYABLE

TO NON-RESIDENT AND TAX TO BEDEDUCTED THEREFROM

56.1 Payments subject to tax deduction under section 194E 51656.1-1 Payments covered by section 115BBA 51656.1-2 Other points pertaining to section 194E 517

56.2 Payment subject to tax deduction under section 196A 51756.3 “Other sum” subject to tax deduction under section 195 517

56.3-1 Meaning of non-resident 51856.3-2 Withdrawal of Circular Nos. 23, 163 and 786 and

its impact on taxability of export commission inIndia 518

56.3-3 Payment made to resident agent of a non-resident 51956.3-4 Advances to ship hirer adjustable against hire

charges 52056.3-5 Constructive payment of commission to non-resident

through another non-resident 52056.3-6 Money paid into Court under decree obtained by

non-resident 52056.3-7 Payment to non-resident for goods resold by it to

resident seller 52056.3-8 Interest on purchase price paid to non-resident in

instalments 520

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56.3-9 Customary, non-contractual payment to officers ofship by stevedores 521

56.3-10 Payment to foreign firm whose one of the partnersis managing firm’s affairs from India 521

56.3-11 Section 195 is applicable even in the case of regulartrading operation 521

56.3-12 Payment to foreign shipping companies 52156.3-13 Payments to non-resident at UAE 52256.3-14 Payments of interest by a branch office to head

office outside India 52356.3-15 Any other sum chargeable to tax 52356.3-16 Travelling expenses 52356.3-17 Payment for data transmission 52456.3-18 When payee is non-resident at the time of tax

deduction but becomes resident at the time ofpayment 524

56.3-19 Mere accrual of income is not sufficient 52456.3-20 Reimbursement of salary or other expenses 52456.3-21 When income is exempt under DTAA 52456.3-22 Lead manager of GDR 52556.3-23 Transfer of controlling interest in a foreign

company having assets in India 52556.3-24 Lease rent, roaming charges, telephone services,

uplinking charges, bandwidth network charges,interconnection/port access charges 527

56.3-25 Export contract 52756.3-26 Remittance from India 52756.3-27 Subscription charges 527

56.4 Tax deduction only on recipient’s chargeable income -Provisions for ascertaining recipient’s chargeable income 52756.4-1 Appropriation is not possible in the case of interest,

fees and royalty 52956.5 Grossing up of amount payable to non-resident stipulated to

be paid net of taxes 53256.5-1 Cases when grossing up is not required 532

56.6 Rates of tax deduction at source for the financial year 2019-20 53356.6-1 TDS when payment/credit is given to a person in

notified jurisdictional area 53456.6-2 TDS when PAN of deductee is not available 534

56.7 Payments to non-resident without tax deduction in certaincases 536

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56.7-1 Qualifying persons and qualifying incomes 53656.7-2 Conditions to be satisfied 53756.7-3 Procedure for issue of certificate 537

56.8 Certificate for deduction of tax at lower rate in the case ofrecipient other than a company 53856.8-1 Time limit for soliciting the favour 53856.8-2 How lower rate is determined 53856.8-3 Validity of the certificate 53856.8-4 Other points 538

56.9 Furnishing information regarding remittance 53856.9-1 Other Points 539

56.10 Credit for tax deducted 53956.10-1 Rules framed by Board 540

56.11 Procedure for refund of tax deducted at source undersection 195 to the person deducting tax at source 540

57DEDUCTION OF TAX AT SOURCE FROM INCOME

OF UNITS OF OFFSHORE FUND

57.1 Who is responsible to deduct tax 54457.2 When tax is to be deducted 54457.3 How to compute amount of tax deducted 54457.4 Tax deduction account number 54457.5 Deposit of tax to the credit of Central Government 544

57.5-1 Where to deposit 54457.5-2 Time of deposit 54457.5-3 Payment through Challan 54557.5-4 Claim for refund 545


website 54557.6-2 Time-limit 545

57.7 Quarterly returns to the Government 54657.8 Consequences of failure to deduct or pay tax or furnish

return 54657.8-1 Failure to deduct and/or pay tax 54657.8-2 Failure to comply with the provisions of section

203A regarding tax deduction account number 54657.8-3 Failure to issue certificate or submit return 546

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58HOW TO COMPUTE AMOUNT OF TAXDEDUCTION UNDER SECTION 196B

58.1 Amount covered by section 196B 54758.1-1 Units referred to in section 115AB 54758.1-2 Overseas financial organisation 547

58.2 Rate for tax deduction 54858.3 When tax is deductible at lower rate 54858.4 Tax credit 548



INCOME FROM FOREIGN CURRENCY BONDOR SHARES OF INDIAN COMPANY







203A regarding tax-deduction account number 55259.8-3 Failure to issue certificate or submit return 552

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60HOW TO COMPUTE AMOUNT OF TAX DEDUCTION

UNDER SECTION 196C

60.1 Amount covered by section 196C 55360.1-1 Bonds/shares referred to in section 115AC 553



61DEDUCTION OF TAX AT SOURCE FROMINCOME OF FOREIGN INSTITUTIONAL

INVESTORS FROM SECURITIES







203A regarding tax-deduction account number 55861.8-3 Failure to issue certificate or submit return 558

62HOW TO COMPUTE AMOUNT OF TAXDEDUCTION UNDER SECTION 196D

62.1 Amount covered by section 196D 559

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62.1-1 Securities referred to in section 115AD 55962.1-2 Who is a Foreign Institutional Investor 559



ANNEXURES TO BOOK ONE

Annexes 1.1 to 1.47 Relevant provisions of the Income-taxAct, 1961 581

Annexes 1.50 to 1.77 Relevant rules of the Income-taxRules, 1962 620

Annexes 1.80 to 1.115 Relevant forms 655Annexes 1.120 to 1.231 Relevant circulars on sections 191 to 206 758

Annex 1.120 Payment of direct taxes, other than taxdeducted at source, to be made at theplace where taxpayer is assessed to tax 758

Annex 1.121 Recording date of tender of cheque anddate of its realisation on challans for pay-ment of direct taxes is to be done bybranch of authorised public sector bankwhere it is tendered for payment 759

Annex 1.122 Facility of payment of direct taxes throughall branches of State Bank of India andother authorised banks by cash/cheque/draft 760

Annex 1.123 Section 192 of the Income-tax Act, 1961 -Deduction of Tax at Source - Salary -Income-tax Deduction from Salaries dur-ing the Financial Year 2018-19 undersection 192 764

Annex 1.124 Use of computerised challan forms fordeposit of tax deducted at source 812

Annex 1.125 Filing of returns relating to Tax Deduc-tion at Source on computer media 812

Annex 1.125A Issuance of certificate for tax deducted atsource in Form No.16 835

Annex 1.126 Clarification regarding deduction of taxfrom payments of additional pay, allow-ances and arrears to Central Governmentemployees following the Notificationbased on recommendations of the FifthPay Commission 836

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Annex 1.127 Clarifications regarding use of Form No.16 for pensioners where pensioners aredrawing their pensions through banks 837

Annex 1.128 Section 203 of the Income-tax Act, 1961,read with rule 31 of the Income-tax Rules,1962 - Deduction at source - Certificatefor tax deducted - Issuance of certificatefor tax deducted at source in Form No.16 838

Annex 1.129 100 per cent deduction to be grantedfrom total income while calculating taxfor the purpose of TDS for contributionsmade to A.P.C.M.’s Cyclone Relief Fund 839

Annex 1.130 Deduction of tax at source - Certificatefor deduction at lower rate - Whethercertificate issued under section 197(1)will be applicable only in respect of creditor payments, as the case may be, subjectto tax deduction at source, made on orafter date of such certificate 840

Annex 1.131 Deductions - In respect of medical treat-ment, etc., of handicapped dependants -Whether it would be sufficient if theemployee furnishes a medical certificatefrom a Government Hospital and a decla-ration in writing duly signed by the claim-ant certifying the actual amount ofexpenditure on account of medical treat-ment (including nursing) training andrehabilitation of the handicapped depen-dant and receipt/acknowledgement forthe amount paid or deposited in the speci-fied schemes of LIC or UTI 840

Annex 1.132 Deductions - In respect of donations tocertain funds, charitable institutions, etc.- Submission of certificate for claimingdeduction under section 80G in respect ofdonations made by an employee to theNational Defence Fund, the Army CentralWelfare Fund, the Indian Naval Benevo-lent Fund, the Air Force Central WelfareFund 841

Annex 1.133 Deduction - In respect of donations to cer-tain funds, charitable institutions, etc. -Submission of certificate for claimingdeductions in respect of donations madeby an employee to the Prime Minister’sNational Relief Fund, the Chief Minister’s

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Relief Fund and the Lieutenant Governor’sRelief Fund 842

Annex 1.134 Employee claiming that salary is notchargeable to tax and no income-taxshould be deducted at source - Employerto require employee to obtain certificateunder section 197(1) 842

Annex 1.135 Calculation of exempt amount of houserent allowance under section 10(13A) forthe purposes of deduction of tax at sourceunder the section - Salary whether in-cludes dearness pay 843

Annex 1.136 Procedure for regulating refund ofamounts paid in excess of tax deductedand/or deductible 843

Annex 1.137 Procedure for deducting tax at sourcefrom seamen’s wages 844

Annex 1.138 Deduction admissible for deposits madein National Savings Scheme to be allowedwhile computing income of employeesfor purpose of deduction of tax at source 845

Annex 1.139 Effect of insertion of sub-sections (2), (2A)and (2B) in section 192 by the Finance Act,1987 - Relevant rules amended to enabletax deduction at source in situationsenvisaged in the said sub-sections 846

Annex 1.140 Collection and recovery - Penalty payablewhen tax in default - Non-initiation ofpenalty and prosecution proceedings incases of default under section 192 847

Annex 1.141 Deduction of tax at source - Salary -Whether, where non-residents aredeputed to work in India and taxes areborne by employers, in certain cases if anemployee to whom refunds are due hasalready left India and has no bankaccount here by the time assessmentorders are passed, refund can be issued toemployer as tax has been borne by it 848

Annex 1.142 Deduction of tax at source - Personsdeducting tax to furnish prescribed re-turns - Clarification regarding filing ofreturns in respect of tax deducted atsource from salary of employees of com-pany working at its headquarters or inother branches 848

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Annex 1.143 Instructions regarding deduction ofdonations made to Chief Minister’s Earth-quake Relief Fund, Maharashtra undersection 80G 849

Annex 1.144 Option to certify TDS certificates by wayof Digital Signatures 850

Annex 1.145 Instructions for deduction of tax at sourcefrom interest on securities - Rate ofdeduction from interest on securitiesduring financial year 1994-95 851

Annex 1.146 Procedure for deduction of tax at sourcefrom interest on securities registered inthe name of bank on behalf of its consti-tuents 857

Annex 1.147 Clarifications regarding tax treatment ofdeep discount bonds and STRIPS(Separate Trading of Registered Interestand Principal of Securities) 861

Annex 1.147A Acknowledgement by banks at the timeof submission of Form 15G/15H 864

Annex 1.148 Sections 193, 194 and 194K, read withsection 10(23C)(iv) of the Income-tax Act- Deduction of tax at source - Interest onsecurities/Interest other than “Interest onsecurities”/Income in respect of units -Exemption from requirement of deduc-tion of income-tax at source on paymentof income to Ramakrishna Math andRamakrishna Mission whose income isexempt under section 10(23C)(iv) 865

Annex 1.149 Ramakrishna Math and RamakrishnaMission, Kolkata, whose income isexempt under section 10(23C)(iv) of theIncome-tax Act, 1961 865

Annex 1.150 Deduction of income-tax at source undersections 193, 194, 194A and 194K - Pay-ment to Shri Ram Chandra Mission, Chen-nai, whose income is exempt undersection 10(23C) 866

Annex 1.151 Deduction of income-tax at source undersections 193, 194A and 194K - Payment toWorld Renewal Spiritual Trust, Mumbai 866

Annex 1.152 Rates of tax for deduction at source fromdividends during the financial year1974-75 - Instructions regarding 867

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Annex 1.153 Threshold limits for deduction of tax atsource from income by way of dividendsand income from units 867

Annex 1.154 Rates of tax for deduction at source frominterest other than securities during thefinancial year 1975-76 - Instructionsregarding 868

Annex 1.155 Deduction of tax at source - Interest otherthan “Interest on securities” - Regardingextension of applicability to interest ontime deposits with banks 869

Annex 1.156 Section 194A of the Income-tax Act, 1961- Deduction of tax at source - Interestother than interest on securities - Taxdeduction at source on the deposits inbanks in the name of the Registrar/Pro-thonotary and Senior Master attached tothe Supreme Court/High Court etc.during the pendency of litigation of claim/compensation 873

Annex 1.157 Applicability of the provisions in respectof income paid or credited to a member ofco-operative bank 876

Annex 1.158 Exemption from requirement of deduc-tion of income-tax at source on paymentto Sri Sathya Sai Central Trust, Sri SathyaSai Medical Trust and Sri Sathya Sai Insti-tute of Higher Learning, Bangalore, whoseincomes are exempt under section 10(23C)of the Income-tax Act, 1961 876

Annex 1.159 Section 194A of the Income-tax Act, 1961- Deduction of tax at source - Interestother than interest on securities - Clarifica-tion regarding TDS on payment of inter-est on time deposits by banks followingCore-Branch Banking Solutions (CBS)software 877

Annex 1.160 Deduction of tax at source - Interest otherthan interest on securities - Clarificationregarding deduction from interest on timedeposits with banks 878

Annex 1.161 Instructions for deduction of tax at sourcefrom interest on deposits in joint names 878

Annex 1.162 General instructions for compliance ofrequirement of deducting tax at sourcefrom interest other than interest on secu-

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rities in terms of the section from October1, 1967 880

Annex 1.163 Supplier drawing hundi on buyer androuting it through his banker withinstructions to charge interest on amountof hundi from date of acceptance to dateof actual payment - Whether tax isdeductible at source by party retiringhundi from interest at the time of makingpayment to bank 882

Annex 1.164 Whether tax is to be deducted at sourcefrom interest paid by consignor to com-mission agent 883

Annex 1.165 Whether tax is to be deducted at sourcefrom interest payable to educational ins-titution/charitable trust whose income isexempt under section 10(22) and undersection 11, respectively 884

Annex 1.166 Whether interest payments under LandAcquisition Act are covered by section194A 884

Annex 1.167 Clarification regarding deduction frominterest on Cumulative Deposits/Deben-tures/Bonds 887

Annex 1.168 Clarification regarding applicability ofprovisions of section 194A to commercialpapers and certificates of deposits 888

Annex 1.169 Deduction from winnings from lottery,crossword puzzles, horse races or fromcommission, etc., paid on sale of lotterytickets - Rates of tax applicable during thefinancial year 1991-92 888

Annex 1.170 Prizes awarded to agents under “lucky dipdraws” scheme - Whether they are “lotter-ies” within the meaning of the sectionfrom which tax is required to be deductedat source 891

Annex 1.171 Applicability of TDS provisions of section194C on contract for fabrication of articleor thing as per specifications given by theassessee - Contradiction between twoCirculars of CBDT - Resolution thereof 892

Annex 1.172 Applicability of section 194C to servicecontracts - Clarification regardingSupreme Court judgment in AssociatedCement Co. Ltd. v. CIT [1993] 67 Taxman346/201 ITR 435 892

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Annex 1.173 Clarification regarding applicability ofsection 194C in view of Supreme Court’sdecision in Associated Cement Co. Ltd. v.CIT [1993] 201 ITR 435 896

Annex 1.174 Section 194C of the Income-tax Act, 1961 -Deduction of tax at source - Payments tocontractors & sub-contractors - Deduc-tion of tax at source on payment of gastransportation charges by the purchaserof natural gas to the seller of gas 899

Annex 1.175 Clarifications on various provisions relat-ing to tax deduction at source regardingchanges introduced through Finance Act,1995 900

Annex 1.176 Deduction of tax at source - Payments tocontractors and sub-contractors -Clarification regarding applicability ofsection 194C in case of tickets sold byairlines and travel agents to customers 905

Annex 1.177 Deduction of tax at source - Payments tocontractors and sub-contractors - Clarifi-cation regarding applicability of section194C/194J in case of advertising agency 905

Annex 1.178 Section 194C and section 194J - Doublededuction of tax not permissible 906

Annex 1.179 Decision of the Supreme Court in BrijBhushan’s case - Whether permits, inrespect of composite works contract,deduction of tax at source at 2 per cent onnet payment (after excluding cost ofmaterial supplied by Government) -Whether para 1(5) of Circular No. 86,dated 29-5-1972 requires modification 907

Annex 1.180 Scope of provisions of the section requir-ing deduction of tax at source from pay-ments to contractors and sub-contrac-tors explained 908

Annex 1.181 Tax deduction at source from paymentsto contractors and sub-contractors in bidimanufacturing industry - Whethermunshis are contractors 913

Annex 1.182 Whether provisions of section 194C areapplicable to work executed underNational Rural Employment Programme(NREP) and Rural Landless EmploymentGuarantee Programme (RLEGP) 914

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Annex 1.183 Clarification regarding hire charges paidto bus owners from the hire of buses 915

Annex 1.184 Deduction of tax at source - Insurancecommission, etc. - Rate of tax applicableduring financial year 1991-92 917

Annex 1.185 Whether, at the time of deducting taxfrom insurance commission credited toagent’s account, adjustment for debitsmade earlier is permissible 919

Annex 1.186 Deduction of tax at source - Payments inrespect of deposits under NSS, etc. -Instructions regarding 920

Annex 1.187 Deduction of tax at source - Rent - Clari-fication regarding deduction of tax atsource from payment of rent 922

Annex 1.188 Deduction of tax at source - Rent - Whetherrequirement of deduction of income-taxat source under section 194-I applies incase of payment by way of rent toGovernment, statutory authorities re-ferred to in section 10(20A) and localauthorities whose income under head“Income from house property” or “Incomefrom other sources” is exempt fromincome-tax 923

Annex 1.189 Clarification regarding scope of section194-I 924

Annex 1.190 Clarification regarding TDS underChapter XVII-B on GST service tax com-ponent comprised of payments made toresidents 926

Annex 1.191 Deduction of tax at source - Rent - Appli-cability of TDS provisions of section194-I on lump sum lease premium paidfor acquisition of long term lease 928

Annex 1.192 Payment on transfer of certain immov-able property other than agricultural land -Correction and statement-cum-challanrelating to TDS on sale of property undersection 194-IA - Withdrawal of StandardOperating Procedure (SOP) 929

Annex 1.193 Section 197A, read with section 194J ofthe Income-tax Act, 1961 - Deduction oftax at source - No deduction in certaincases - Specified payment under section197A(1F) 937

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Annex 1.194 Section 194J tax deduction in the case ofpayment by TPAs 937

Annex 1.194A Section 197A, read with section 194H, ofthe Income-tax Act, 1961 - Deduction oftax at source - No deduction in certaincases - Notified payments - Supersessionof notification No. SO 3069(E), dated31-12-2012 938

Annex 1.195 Clarification contained in CircularNo. 155, dated 21-12-1974 reiterated toensure proper computation of tax to bededucted at source in the case of non-resident whose tax liability is to be borneby payer 939

Annex 1.195A Section 195 of the Income-tax Act, 1961 -Deduction at source - Other sums - Proce-dure for submission of Form 15CC by anauthorised dealer in respect of remittancesunder section 195(6) 941

Annex 1.196 Section 194LC of the Income-tax Act,1961 - Income by way of interest fromIndian Company - Approval of loan agree-ments/long-term infrastructure bondsand rate of interest for the purpose ofsection 194LC 942

Annex 1.196A Notified rates of interest on rupee de-nominated bond of an Indian companyfor the purpose of section 194LD 945

Annex 1.197 Where whole payment would not beincome chargeable to tax in the hands ofrecipient non-resident person responsiblefor paying such sum may make applica-tion for determination of appropriate por-tion 946

Annex 1.198 Whether non-deduction of tax is only inrespect of interest credited to Non-resi-dent (External) Account and not to alltypes of non-resident accounts 946

Annex 1.199 Remittance to non-residents under sec-tion 195 947

Annex 1.199A Remittances to non-residents 950Annex 1.200 Remittances by Consular receipts to non-

residents 950Annex 1.201 Procedure for refund of tax deducted at

source under section 195 951

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Annex 1.201A Section 244A, read with section 195, of theIncome-tax Act, 1961 - Refunds - Intereston - Payment of interest on refund ofexcess TDS deposited under section 195 953

Annex 1.202 Section 239 of the Income-tax Act, 1961 -Refunds - Procedure for refund of taxdeducted at source under section 195 tothe person deducting the tax - Amend-ment in Circular No. 7/2007, datedOctober 23, 2007 954

Annex 1.203 Taxation of foreign telecasting compa-nies - Guidelines for computation ofincome-tax, etc. 955

Annex 1.204 Withdrawal of Circular Nos. 23, 163 and786 956

Annex 1.205 Guidelines regarding taxation of incomeof artists, entertainers, sportsmen, etc.,from international/national/local events 957

Annex 1.206 Income payable ‘net of tax’ - Issue ofcertificate for tax deducted at source inrespect of payment made ‘net of tax’ 960

Annex 1.207 Applicable rates of taxes under the DoubleTaxation Avoidance Agreement betweenIndia and the United Arab Emirates 961

Annex 1.208 Taxability of interest remitted by branchesof banks to the head office situated abroadunder the Foreign Currency PackingCredit Scheme of Reserve Bank of India 962

Annex 1.209 Effect of non-obstante clause in the sec-tion - Whether sections 193, 194 and 194Acontinue to be in force and facility pro-vided in the section is in addition to faci-lity under the said sections 962

Annex 1.210 Shares belong to one person but they areheld in somebody else’s name who is reg-istered as shareholder - Whether regis-tered shareholder can be given credit fortax deducted at source 964

Annex 1.211 Form of application for allotment of Tax-deduction Account Number prescribedin Form No. 49B 965

Annex 1.212 Tax deduction at source from paymentmade to foreign shipping companies 965

Annex 1.213 Clarification regarding payment of incomeby way of interest on securities and rentmade to Regimental Funds or Non-public

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Fund established by Armed Forces ofUnion for welfare of past and presentmembers of such forces or theirdependants, whose income is exemptunder section 10(23AA) 966

Annex 1.214 Clarification regarding applicability ofprovisions of section 194-I to film dis-tributors and exhibitors 966

Annex 1.215 Discontinuance of requirement of send-ing quarterly statements in case of pay-ments by foreign companies and law firmsto residents in India 967

Annex 1.216 Clarification regarding certificate fordeduction of tax made by Central Gov-ernment Departments who are makingpayments by book adjustments 967

Annex 1.217 Section 203 of the Income-tax Act, 1961 -Deduction of Tax at Source - Certificatefor tax deducted - Issuance of TDSCertificates in Form No. 16A downloadedfrom TIN website 968

Annex 1.218 Payment of income by way of interest onsecurities to Ramakrishna Math andRamakrishna Mission whose income isexempt under section 10(23C)(iv) 969

Annex 1.219 Whether in case of a provident fund, whoseincome is exempt under section 10(25)(ii),established under scheme under Emp-loyees’ Provident Funds and Miscella-neous Provisions Act, 1952, income byway of interest on securities of Centraland State Governments may be paid tosuch provident funds without deductionof income-tax at source 970

Annex 1.220 Clarification regarding payments to per-sons resident in India by foreign compa-nies or foreign law firms that have nopresence in India 970

Annex 1.221 Whether certificate issued under section197(1) will be applicable only in respect ofcredit or payments, as the case may be,subject to tax deduction at source, madeon or after date of such certificate 971

Annex 1.222 Section 197A of the Income-tax Act, 1961- No deduction to be made in certaincases 971

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Annex 1.223 Scheme for Furnishing of Paper Returnsof Tax Deducted at Source, 2005 972

Annex 1.224 Filing of returns of Tax Deduction atSource and Tax Collection at Source onComputer Media for deductions/collec-tions up to 31st March, 2005 974

Annex 1.225 Order under section 119(2)(a) of theIncome-tax Act, 1961 regarding exten-sion of due date for Electronic Filing ofAnnual Return for Tax Deduction atSource for Financial Year 2004-05 byGovernment Deductors 975

Annex 1.226 Issue of TDS Certificate in cases of Truck/Goods-carriage Operators 976

Annex 1.227 Ex-post facto extension of due date forfiling TDS/TCS statements for FYs 2012-13 and 2013-14 976

Annex 1.228 Certificate of lower deduction or non-deduction of tax at source under section197 977

Annex 1.229 Credit of TDS under section 199 to anassessee when the tax deducted has beendeposited with revenue by deductor –Direction of Hon’ble Delhi High Court inthe case Court on its Own Motion v. Unionof India [2013] 31 taxmann.com 31 978

Annex 1.230 Timely issue of TDS certificate to custo-mers 979

Annex 1.231 Guidelines for compounding of offencesunder Direct Tax Laws, 2014 979

Annex 1.232 Section 197A, read with section 10(15)(viii),of the Income-tax Act, 1961 -Deduction oftax at source - No deduction in certaincases - Clarifications on applicability ofsection 197A(1D) and section 10(15)(viii)to interest paid by IFSC Banking Units(IBUS) set up in Special Economic Zones 986

Annex 1.233 Section 201, read with section 119, of theIncome-tax Act, 1961 - Tax deduction atsource - Consequences of failure to de-duct or pay - Guidelines for waiver ofinterest charged under section 201(1A)(i)of said Act 987

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BOOK TWO : ADVANCE TAX

63INCOME LIABLE TO ADVANCE TAX

63.1 Provisions applicable up to the assessment year 1988-89 99263.2 All incomes are subject to advance tax from the assessment

year 1989-90 992

64LIABILITY TO ADVANCE TAX -

WHEN ARISES

64.1 Who is liable to pay advance tax 993Illustration 993

65DUE DATES OF PAYMENT

65.1 Instalments of advance tax 99565.2 Due dates 995

Illustration 99565.3 Tax paid after the due dates but within the financial year 99665.4 Due dates when advance tax is payable on notice issued

by Assessing Officer 996Illustrations 996

66COMPUTATION OF ADVANCE TAX LIABILITY

66.1 Payment of advance tax by the assessee on his own account 99866.1-1 No need to submit any estimate/statement 99866.1-2 Revision of second and subsequent instalment 99866.1-3 Computation of tax 99866.1-4 Tax rates 998

Illustration 99866.2 Payment of advance tax in pursuance of order of Assessing

Officer 100166.2-1 Lower/higher estimate by assessee 100166.2-2 Computation of tax by Assessing Officer 1001

Illustration 100266.3 Payment of advance tax in pursuance of revised order of

Assessing Officer 1003

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66.3-1 Lower/higher estimate by assessee 100366.3-2 Computation of tax 1003

Illustration 1003

67INTEREST PAYABLE BY THEASSESSEE/GOVERNMENT

67.1 Interest for default in payment of advance tax 100567.1-1 Assessed tax - Meaning of 100567.1-2 Adjustment when tax is paid before regular

assessment under section 140A 100667.1-3 Adjustment in the case of reassessment/recompu-

tation under section 147 or 153A 100667.1-4 Adjustment in the case of rectification/revision/

modification under sections 154, 155, 250, 254,260, 262, 263, 264, 245D(4) 1007

67.1-5 Where an application for settlement is madeunder section 245C(1) 1007

67.1-6 Interest under section 234B or 234C in case of MAT 100867.1-7 Shipping business of non-residents 100867.1-8 Payment by cheque 100867.1-9 Specific order 100867.1-10 If returned income and assessed income of latest

year is nil 100967.1-11 Collection of interest under sections 234A, 234B

and 234C is mandatory 100967.1-12 Cash seized during search 100967.1-13 Shortfall because of interpretation of law 101067.1-14 When advance tax liability arises because of a

subsequent court ruling 101067.1-15 Application of section 234B in the case of

settlement of cases 101067.1-16 Other points 1011

67.2 Interest for deferment of advance tax 101167.2-1 Category A 101167.2-2 Category B 101267.2-3 Category C 101367.2-4 Short payment of advance tax in case of capital

gains/casual income 101467.2-5 What is returned income 1014

67.3 Waiver or reduction of interest under sections 234A, 234Band 234C 101467.3-1 Conditions 101467.3-2 Period 1014

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67.3-3 Extent of interest to be reduced or waived 101567.3-4 Discretion should be exercised in judicial manner 1015

67.4 Chief Commissioner/Director General (Investigation) toreduce penal interest in certain cases 1015

67.5 Power of CBDT and Settlement Commission to reduce/waive interest 1016

67.6 Interest payable to assessee 101667.6-1 Provisions applicable after amendments by the

Finance Act, 2016 and Finance Act, 2017 101767.6-2 Other points 1018

67.7 Procedure to be followed in calculation of interest 1019Illustrations 1019

ANNEXURES TO BOOK TWO


Annexes 2.8 to 2.13 Relevant Rule and Forms 1037Annex 2.11 Reduction or waiver of interest 1042Annex 2.12 Fringe benefit tax paid during 2009-10 to

be treated as advance income-tax forthe assessment year 2010-11 1043

Annex 2.13 Date of payment of December instalmentof advance tax extended from 15-12-2013to 17-12-2013 1044

BOOK THREE : TAX COLLECTIONAT SOURCE

68TAX COLLECTION AT SOURCE

68.1 In which case tax has to be collected at source 104868.2 Tax collection in Category A 1049

68.2-1 Who is seller in Category A 104968.2-2 Who is buyer in Category A 104968.2-3 Meaning of “scrap” 105068.2-4 When tax has to be collected in Category A 105268.2-5 Goods utilised for manufacturing/processing or

generation power of in Category A is not subjectto tax collection 1052

68.2-6 Other judicial rulings 105368.3 Tax collection in Category B 1054

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68.4 Tax collection in Category C 105468.5 Tax collection in Category D 105468.6 Requirement to furnish PAN by collectee 105568.7 Tax collection at lower rate 105568.8 Tax collection account number 105668.9 Deposit of tax 1056

68.9-1 e-Payment of tax 105668.10 Issue of certificate 1056

68.10-1 Due date of issuing certificate in Form No. 27D 105668.10-2 Duplicate certificate 1057

68.11 Return to the Government 105768.11-1 Annual return 105768.11-2 Quarterly return 105768.11-3 Mode of furnishing quarterly returns 105768.11-4 Quarterly return not possible before payment of

tax and interest 105868.11-5 PAN data of collectee 1058

68.12 Consequences of failure to collect or pay tax, furnishreturn, etc. 1058

68.13 Tax credit to one who pays 105868.13-1 Rules framed by Board 1058

68.14 Consequences if tax is not collected or paid 105868.15 There is no ambiguity in the provisions of section 206C 1059

ANNEXURES TO BOOK THREE

Annexes 3.1 & 3.2B Relevant provisions of the Income-taxAct, 1961 1062

Annexes 3.3 to 3.10 Relevant rules of the Income-tax Rules 1070

Annexes 3.11 to 3.19 Relevant forms 1078Annexes 3.20 to 3.27 Relevant circulars 1093

Annex 3.20 Section 206C of the Income-tax Act, 1961-Tax collected at source - Profits and gainsfrom the business of trading in alcoholicliquor, forest produce, scrap, etc. - Rate oftax for financial year 1993-94 1093

Annex 3.21 Deduction of tax at source - Profits andgains from the business of trading in alco-holic liquor, forest produce, etc. - Instruc-tions regarding 1095

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Annex 3.22 Section 206C of the Income-tax Act, 1961 -Deduction of tax at source - Profits andgains from the business of trading inalcoholic liquor, forest produce, scrap,etc. - Instruction regarding 1099

Annex 3.23 Section 206C of the Income-tax Act, 1961 -Collection of tax at source - Profits andgains from business of trading in alco-holic liquor, forest produce, scrap, etc. -Filing of half-yearly return 1100

Annex 3.24 Section 206C of the Income-tax Act, 1961 -Collection at source - Profits and gainsfrom business of trading in alcoholic li-quor, forest produce, scrap, etc. - Proce-dure for purpose of furnishing and verifi-cation of Form 27BA for removing ofdefault of short collection and/or non-collection of tax at source 1100

Annex 3.25 Section 206C of the Income-tax Act, 1961 -Collection at source - Profits and gainsfrom business of trading in alcoholic li-quor, forest produce, scrap, etc. - Clarifi-cations on amendment made in section206C by Finance Act, 2016 1104

Annex 3.26 Section 200, read with section 206C of theIncome-tax Act, 1961 - Collection of taxat source - Procedure for online submis-sion of statement of deduction of taxunder section 200(3) and statement ofcollection of tax under proviso to section206C(3) 1107

Annex 3.27 Section 197 read with section 206C of theIncome-tax Act, 1961 - Deduction of tax atsource - Certificate for deduction at lowerrate - No deduction of income-tax undercollection of the tax at any lower rate 1108

BOOK FOUR : REFUND

69REFUND FOR EXCESS PAYMENT

69.1 Right to claim refund - When arises 1116

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69.2 Who can claim refund 1116

69.3 How to claim refund 1116

69.3-1 Claim after the statutory time-limit 1116

69.4 Refund on appeal 1117

69.4-1 In case assessment is set aside or cancelled 1117

69.4-2 In case assessment is annulled 1118

69.5 Correctness of assessment not to be questioned 1118

69.6 Set off of refunds against the tax remaining payable 1118

70INTEREST ON REFUND

70.1 Interest on refund on excess payment of advance tax andtax deduction at source 1120

70.2 Interest on refund of tax other than advance tax/taxdeducted at source 1120

70.3 Refund which arises out of appeal effect 112070.4 Interest along with refund is a must 112070.5 Delay attributable to the assessee is not considered 112170.6 Automatic revision of interest in case of appeal,

reassessment, etc. 112270.7 Interest on excess refund 1122

70.7-1 Interest under section 234D(1) 112270.7-2 Computation of interest 1123

Illustration 1123

ANNEXURES TO BOOK FOUR


Annex 4.12 Relevant rule of the Income-taxRules, 1962 1131

Annex 4.13 Relevant form 1132Annexes 4.14 to 4.20 Relevant circulars 1133

Annex 4.14 Instructions to subordinate authorities -Authorisation regarding condonation ofdelay in filing refund claim 1133

Annex 4.15 Facility of sending refund, at the requestof assessee, by means of money orderin case where amount does not exceedRs. 250 1135

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Annex 4.16 Whether Court fees/stamp duty payableon refund vouchers returned byCommissioners for cancellation 1135

Annex 4.17 Modification of procedure regardingdischarge by payee in case of income-taxrefund orders 1135

Annex 4.18 Payment of interest under section 244Awhen assessee is not at fault 1136

Annex 4.19 Set off of refunds against tax remainingpayable - Past adjustment of refundsagainst arrears where procedure undersection 245 was not followed 1137

Annex 4.20 Section 244A, read with section 195, ofthe Income-tax Act, 1961 - Refunds -Interest on - Payment of interest onrefund of excess TDS deposited undersection 195 1138

REFERENCER

Referencer 1 : Tax rates 1141� Tax deduction at source 1141

Referencer 2 : Withholding tax rates 1148Referencer 3 : Rates for tax collection at source 1154Referencer 4 : Advance tax rates 1156Referencer 5 : Calendar for tax deduction/Collection at source and

advance payment of tax 1163

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