Tax Deducted at source (TDS)rngca.com/resource/Services/Image/TDS.pdf · Where tax is deducted by...

Tax Deducted at source (TDS)

aims at collection of revenue at the very source of

income;

an indirect method of collecting tax;

combines the concepts of

Pay as you earn and

Collect as it is being earned

TDS is one of the modes of collection of taxes, by

which a certain percentage of amounts are deducted

by a person at the time of making/crediting certain

specific nature of payment to the other person and

deducted amount is remitted to the government

account.

2

What is TDS ??

Income is earned over a period of time but theassessment/

determination of tax liability takes place much later

Hence,

To avoid a liquidity problem for the tax payerand

to ensure a regular flow of revenue for thegovernment

The Income Tax Act has provided for periodic recoveryof tax from income liable to tax by requiring the tax tobe deducted at source from certain income/paymentsas and when such income/payments are credited.

3

Why TDS was conceptualized??

4

The concept of TDS is

• that the person responsible for making certain specifiedpayments

• is required to deduct tax at the prescribed rates from thepayments made to a specified recipient in accordance withthe provisions of the Income Tax Act.

It facilitates sharing of responsibility of tax collection betweenthe deductor and the tax administration. It ensures regularinflow of cash resources to the Government. It acts as apowerful instrument to prevent tax evasion as well as expands

the tax net.

Concept of TDS

Every person responsible for making payment of nature coveredby TDS provisions of Income Tax shall be responsible to deducttax.

But no TDS has to deducted if the person making the paymentis an individual or HUF whose books are not required tobe audited.

However, TDS is required to be deducted by the individual orHUF whose accounts are to be audited u/s 44AB. A person isliable to get its accounts audited u/s 44AB if during the relevantfinancial year its gross sales, turnover or gross receipts exceedsRs. 1 Crore in case of a business, or Rs 50 lacs in case of aprofession.

(Cont….)

5

Who is to Deduct TDS ?

These persons are mainly:

Principal Officer of a company for TDS purpose including

the employer in case of private employment or an

employee making payment on behalf of the employer.

DDO(Drawing and distribution officer), In case of Govt.

office any officer designated as such.

In the case of “Interest on securities” other than payments

made by or on behalf of the central govt. or the state

government, it is the local authority, corporation or

company, including the principal officer thereof.

Such person is called Deductor while the person from whom

the tax is deducted is called Deductee.

6

Who is to Deduct TDS ? (Cont..)

Deduct tax at the time of payment/credit

Any person responsible for paying any sum, on which tax

is deductible shall deduct tax at the prescribed rates at

the time of payment/ credit.

Tax must be deducted at the time of payment in cash or

cheque or credit to the payee’s account whichever is

earlier. Credit to payable account or suspense account is

also considered to be credit to payee’s account and TDS

must be made at the time of such credit.

7

Responsibilities of the Deductor/Collector

On declaration furnished by payee on Form 15G or Form

15H.

On certificate issued by ITO.

Payment to Government/RBI/Corporation established by or

under Central Act which is exempt from Income Tax by

virtue of any law/Mutual Fund specified under section

10(23D).

Exempt Incomes

Interest Payment by Offshore Banking Units.

Payment to New Pension System Trust.

Notified Payment to Notified Institutions/ Association

8

Where tax is deducted by the office of government:

In any other case:

9

Time-Limits to Deposit/Payment TDS for FY 2018-19

S.No Particulars Due Date

1. Tax Deposited without Challan Same Day

2. Tax Deposited with Challan 7th of Next Month

3.Tax on perquisites opted to be deposited by

the employer

7th of Next Month

S.No Particulars Due Date

1 Tax Deductible in March 30th April of next year

2Other Months and Tax opted to be

deposited by the employer7th of next month

Salary(Sec. 192)

Interest on Securities(Sec. 193)

Dividend(Sec. 194)

Interest other than Interest on Securities(Sec. 194A)

Winning from Lotteries or Crossword Puzzles(Sec. 194B)

Winnings from horse races(Sec. 194BB)

Payments to contractors & Sub-Contractors(Sec. 194C)

Insurance Commission(194D)

Payment under life insurance policy (including bonus)(Sec 194DA)

Payment to Non-Resident Sportsmen or Sport Association(Sec194E)

Payment in respect of deposit under NSS(Sec 194EE)

Payment in respect of repurchase of unit of Mutual Funds or UTI(Sec194F).

(Cont…)

10

Payments covered under the Scheme of TDS

Commission on sale of Lottery Tickets(Sec. 194G)

Commission or Brokerage(Sec. 194H)

Rent (Sec 194I)

TDS on transfer of Immovable Property(Sec 194IA).

Rent payable by Individual/HUF not covered u/s 194I(Sec 194IB)

Payment of Consideration under JDA or similar agreement(Sec 194IC)

Fees for professional or technical services(Sec.194J)

Payment on transfer of immovable property other than agriculturalland(Sec. 194LA).

Payment of interest on infrastructure debt fund to non-resident(Sec.194LB)

Income from units of a business trust(Sec.194LBA)

Investment fund paying an income to a unit holder other than incomewhich is exempt under Section 10(23FBB)] (Sec. 194LBB)

(Cont…)

11

Payments covered under the Scheme of TDS (Cont…..)

Income in respect of investment in securitisation trust(Sec.194LBC)

Payment of interest by an Indian Company or a business trust in

respect of money borrowed in foreign currency under a loan

agreement or by way of issue of long-term bonds (including long-

term infrastructure bond(Sec.194LC)

Payment of interest on rupee denominated bond of an Indian

Company or Government securities to a Foreign Institutional

Investor or a Qualified Foreign Investor(Sec194LD)

TDS on Payment made to Non-Resident(Sec. 195)

Income from units (including long-term capital gain on transfer of

such units) to an offshore fund(Sec. 196B)

Income from foreign currency bonds or GDR (including long-term

capital gains on transfer of such bonds not being dividend)(Sec

196C)

Income of FIIs from securities(Sec 196D)

12

Payments covered under the Scheme of TDS (Cont…..)

14

Salary (Sec.192)

Who is the Payer Employer

Who is the Recipient Employee

Payment covered Taxable Salary of Employee

At what time TDS to be

DeductedAt the time of Payment

Rate for TDSAs per the slab Rates

applicable to Assessee

Rate of TDS if no Valid PAN 30%

Section Covered 192A

Nature of Payment

Payment of accumulated

balance due to an employee

under Employees Provident

Fund Scheme,1952.

Rate of

TDS10%


Criteria for Deduction

When the amount of Payment

or accumulated amount of

payment exceeds Rs 30,000

and Rs 50,000.

15

Accumulated Balance due to an employee(Sec. 192A)

16

Section Covered 193

Nature of Payment

a)Any debentures or securities for

money issued by or on behalf of any

local authority or a corporation

established by a central ,state or

provisional Act

b)Any debentures issued by a company

where such debentures are listed on

RSE in accordance with Securities

Contracts (Regulation) Act, 1956(42 of

1956) or any other rules made

thereunder

c) any security of the Central or State

Government

d) interest on any other security

(Cont…)

17

Rate of TDS 10%



a) In case of security, at the

time of payment or credit ,

whichever is earlier, when

the amount exceeds Rs.

10,000/-

b) In case of debentures, at

the time of payment or

credit whichever is earlier

when the amount exceeds

Rs 5000/-

18

Dividend(Sec. 194)

Section Covered 194

Nature of Payment

Dividend other than the

dividend as referred to in

Section 115O

Rate of TDS 10%



Before making payment to

shareholder, other than

dividend declared u/s 115O

when amount exceeds Rs.

2,500

19

Interest other than Interest on Securities(Sec.194A)

Section Covered 194A

Nature of Payment Interest other than Interest on Securities

Rate of TDS 10%



a) In case of banks (including co-operative

banks),at the time of payment or credit ,

whichever is earlier, when the amount

exceeds Rs. 10,000/-p.a.

b) In case of others, at the time of payment

or credit, whichever is earlier, when the

amount exceeds Rs. 5,000/-p.a.

c) In case of senior citizen, at the time of

payment or credit, whichever is earlier,

when the amount exceeds Rs. 50,000/-

p.a.

20

Winning from Lotteries or Crossword

Puzzles(Sec.194B)

Section Covered 194B

Nature of PaymentWinning from Lotteries , Crossword

Puzzles, card games or other games

Rate of TDS 30%

Rate of TDS if no Valid

PAN30%

Criteria for Deduction Income of Rs. 10,000/- p.a.

21

Winning from Horse Races (Sec.194BB)

Section Covered 194BB

Nature of Payment Winning from Horse Races

Rate of TDS 30%


PAN30%

Criteria for Deduction Income of Rs. 10,000/- p.a.

22

Payments to Contractors & Sub-Contractors

(Sec.194C)

Section Covered 194C

Nature of PaymentPayments to Contractors and Sub-

Contractors

Rate of TDSFor Individual/HUF-1%

For Others-2%


PAN20%


At the time of credit or payment,

whichever is earlier, when the

amount of a particular contract

exceeds Rs. 30,000/- or the total

amount of contract exceeds Rs

1,00,000/-

23

Insurance Commission (Sec.194D)

Section Covered 194D

Nature of Payment Insurance Commission

Rate of TDSFor Individual/HUF-1%

For Others-2%


PAN20%




amount of a particular contract

exceeds Rs. 30,000/- or the total

amount of contract exceeds Rs

1,00,000/-

24

Payment under Life Insurance Policy(Including Bonus)

(Sec.194DA)

Section Covered 194DA

Nature of PaymentPayment under Life Insurance

Policy(Including Bonus)

Rate of TDS 1%


PAN20%


At the time of payment when the

amount or the total amount exceeds

Rs. 1,00,000/- p.a.

25

Payment to Non-Resident Sportsmen or Sports

Association (Sec.194E)

Section Covered 194E

Nature of PaymentPayment to Non-Resident Sportsmen

or Sports Association

Rate of TDS 20%


PAN20%

Criteria for DeductionAt the time of Credit or Payment

whichever is earlier.

26

Payment in respect of Deposit under NSS(Sec.194EE)

Section Covered 194EE

Nature of PaymentPayment in respect of deposit under

National Savings scheme

Rate of TDS 10%


PAN20%



whichever is earlier when the

amount exceeds Rs. 2,500/-

27

Payment in respect of repurchase of unit of Mutual

Funds or UTI (Sec.194F)

Section Covered 194F

Nature of PaymentPayment in respect of repurchase of

unit of Mutual Funds or UTI

Rate of TDS 20%


PAN20%

Criteria for DeductionAt the time of credit or payment,

whichever is earlier

28

Commission on Sale of Lottery Tickets (Sec.194G)

Section Covered 194G

Nature of Payment Commission on sale of lottery tickets

Rate of TDS5%-Individual/HUF

10%-Companies


PAN20%




amount exceeds Rs. 1,000/-

29

Payment of Commission or Brokerage(Sec.194H)

Section Covered 194H

Nature of PaymentPayment of Commission or

Brokerage

Rate of TDS 5%


PAN20%


At the time of credit or payment


amount exceeds Rs. 15,000/-p.a.

30

Rent (Sec.194I)

Section Covered 194I

Nature of PaymentPayment of Rent on Plant &

Machinery or Equipments

Rate of TDS 2%


PAN20%




amount exceeds Rs. 1,80,000/-p.a.

(Cont….)

31

Rent (Sec.194I) (Cont…..)

Section Covered 194I

Nature of PaymentPayment of Rent on Land &

Building

Rate of TDS 10%


PAN20%




amount exceeds Rs. 1,80,000/-p.a.

32

TDS on transfer of Immovable Property (Sec.194IA)

Section Covered 194IA

Nature of Payment

Payment on transfer of certain

immovable property other than

agriculture land

Rate of TDS 1%


PAN20%



whichever is earlier, when the land

is situated in specified area when

amount exceeds Rs. 50 lacs

33

Rent payable by an individual or HUF not covered u/s.

194I(Sec.194IB)

Section Covered 194IB

Nature of PaymentRent payable by an individual or HUF not

covered u/s. 194I

Rate of TDSThreshold limit Rs. 50,000/- per month. TDS

to be deducted @ 5%


Tax shall be deducted on such income at the

time of credit of rent, for the last month of

the previous year

or the last month of tenancy if the property is

vacated during the year, as the case may be,

to the account of the payee or at the time of

payment thereof in cash or by issue of a

cheque or draft or by any other mode,

whichever is earlier.

34

Payment of Consideration under JDA or similar

agreement(Sec.194IC)

Section Covered 194IC

Nature of Payment

Payment of Consideration (not being

in kind) under Joint Development

Agreement or other similar

agreement

Rate of TDSThreshold limit is Nil. TDS to be

deducted @ 10%

Criteria for DeductionAt the time of credit or payment,

whichever is earlier

35

Fees for Professional or Technical Services(Sec.194J)

Section Covered 194J

Nature of Payment

Any sum paid by way of

a)Professional Fees

b)Technical fees

c)Royalty

d)Remuneration/Fees/Commission to a Director

e)For not carrying out any activity in relation to any

business

f)For not sharing any know-how , patent, copyright

etc

Rate of TDSFor call center operator(only business)-2%

For others-10%


PAN20%

Criteria for DeductionAt the time of credit or payment, whichever is

earlier, when the amount exceeds Rs 30,000/-P.a.

36

Payment on transfer of Immovable Property other than

Agricultural Land (Sec.194LA)

Section Covered 194LA

Nature of PaymentPayment on transfer of certain immovable

property other than agricultural land

Rate of TDS

10%

Concessional rate of TDS is only available

on interest payment for borrowings made

before the 1st July, 2020

Rate of TDS if no

Valid PAN20%

Criteria for

Deduction

At the time of credit or payment whichever

is earlier if amount exceeds Rs. 2,50,000

p.a.

37

Payment of Interest on Infrastructure Debt Fund to

Non-Resident (Sec.194LB)

Section Covered 194LB

Nature of PaymentPayment of interest on infrastructure debt

fund to non-resident or foreign company

Rate of TDS

5%

Concessional rate of TDS is only available

on interest payment for borrowings made

before the 1st July, 2020

Rate of TDS if no

Valid PAN20%

Criteria for

Deduction


is earlier

38

Income from Units of a Business Trust (Sec.194LBA)

Section Covered 194LBA

Nature of PaymentCertain income from units of a business

trust

Rate of TDSFor Non- Resident =5%

For Others = 10%

Rate of TDS if no

Valid PAN20%

Criteria for

Deduction


is earlier

39

Investment Fund paying an Income to a Unit Holder

other than Income which is exempt U/s

10(23FBB)(Sec.194LBB)

Section Covered 194LBB

Nature of Payment

Investment fund paying an income to a unit

holder [other than income which is exempt

under Section 10(23FBB)

Rate of TDS

For person Resident in India =10%

For person not resident in India=30%

For Domestic companies = 10%

For Company not a domestic Company=40%

Rate of TDS if no

Valid PAN20%

Criteria for DeductionAt the time of credit or payment whichever is

earlier

40

Income in respect of Investment in Securitisation

Trust (Sec.194LBC)

Section Covered 194LBC

Nature of Payment

Investment fund paying an income to a unit

holder [other than income which is exempt

under Section 10(23FBB)

Rate of TDS

For person Resident in India

For Individual/HUF=25%

Other Person=30%

For person not resident in India=30%

For Domestic companies = 10%

For Company not a domestic Company=40%

Criteria for DeductionAt the time of credit or payment whichever is

earlier

41

Payment of interest by an Indian Company or a business

trust in respect of money borrowed in foreign currency

under a loan agreement or by way of issue of long-term

bonds (including long-term infrastructure bond)(Sec.194LC)

Section Covered 194LC

Nature of Payment

Payment of interest by an Indian Company or a business

trust in respect of money borrowed in foreign currency

under a loan agreement or by way of issue of long-term

bonds (including long-term infrastructure bond)

Rate of TDS

5%

Concessional rate of TDS is only available on interest

payment for borrowings made before the 1st July, 2020

Rate of TDS if no

Valid PAN20%

Criteria for

DeductionAt the time of credit or payment whichever is earlier

42

Payment of interest on rupee denominated bond of an

Indian Company or Government securities to a Foreign

Institutional Investor or a Qualified Foreign Investor

(Sec.194LD)

Section Covered 194LD

Nature of Payment

Payment of interest on rupee denominated bond of an

Indian Company or Government securities to a Foreign

Institutional Investor or a Qualified Foreign Investor

Rate of TDS

5%

Concessional rate of TDS is only available on interest

payment for borrowings made before the 1st July, 2020

Rate of TDS if no

Valid PAN20%

Criteria for

DeductionAt the time of credit or payment whichever is earlier

43

TDS on payment made to Non-Resident(Sec.195)

Section Covered 195

Nature of Payment TDS on Payment made to Non-Residents

Rate of TDS-Where

the person is not

Resident in India

Rate of TDS-Where

the person is not a

Domestic Company

TDS.pptx

44

Income from units (including long-term capital gain on

transfer of such units) to an offshore fund(Sec.196B)

Section

Covered196B

Nature of

Payment

Income from units (including long-term capital

gain on transfer of such units) to an offshore

fund

Rate of TDS 10%

Rate of TDS if

no Valid PAN20%

Criteria for

Deduction

At the time of credit or payment whichever is

earlier

45

Income from foreign currency bonds or GDR (including

long-term capital gains on transfer of such bonds not being

dividend)(Sec.196C)

Section

Covered196C

Nature of

Payment

Income from foreign currency bonds or GDR

(including long-term capital gains on transfer of

such bonds not being dividend)

Rate of TDS 10%

Rate of TDS if

no Valid PAN20%

Criteria for

Deduction


earlier

46

Income of FIIs from securities( Sec.196D)

Section

Covered196D

Nature of

PaymentIncome of FIIs from securities

Rate of TDS 20%

Rate of TDS if

no Valid PAN20%

Criteria for

Deduction


earlier

FORM NO Quarter Period TDS Return Due Date

Form 24Q TDS on salary Q1-31st July, 2018

Q2-31st October, 2018

Q3-31st January,2019

Q4- 31st May, 2019

Form 26Q TDS on all payments

except salaries

Q1-31st July, 2018

Q2-31st October, 2018

Q3-31st January,2019

Q4- 31st May, 2019

47

TDS Return Filing Last Dates for F.Y. 2018-19

(Cont…)

FORM NO Quarter Period TDS Return Due Date

Form 26QB TDS on sale of

property30 days from the end of

the month in which

TDS is deducted

Form 26QC TDS on rent 30 days from the end of

the month in which

TDS is deducted

48

TDS Return Filing Last Dates for F.Y. 2018-19

(Cont…)

Form 16,Form 16A, Form 16B and Form 16C are all TDSCertificates.

TDS certificates have to be issued by a person deducting TDSto the assessee from whose income TDS was deducted whilemaking payment

Banks issue Form 16A to the depositor when TDS isdeducted on interest from fixed deposits.

Form 16 is issued by the employer to the employee

49

Time-Limit for Issue of TDS Certificate

(Cont…)

50

Form Certificate of Frequency Due date

Form 16TDS on salary

paymentYearly 31st May

Form 16 A

TDS on non-

salary

payments

Quarterly

15 days from

due date of

filing return

Form 16 BTDS on sale of

property

Every

transaction

15 days from

due date of

filing return

Form 16 C TDS on rentEvery

transaction

15 days from

due date of

filing return

Time-Limit for Issue of TDS Certificate (Cont….)

SectionNature of

Default

Interest

subject to

TDS/TCS

amount

Period for which

interest is to be

paid

201A

Non deduction of

tax at source,

either in whole or

in part

1% per month

From the date on

which tax

deductable to the

date on which tax

is actually

deducted

After deduction

of tax, non

payment of tax

either in whole or

in part

1.5% per

month

From the date of

deduction to the

date of payment

51

Interest on Late payment of TDS

Note:- The above Interest should be paid before filing of return

Penalty for Short/Late payment of TDS:

The penalty can be imposed on the payer to the extent of an amount that was failed to be deducted or remitted.

Late Filing of TDS Return

Penalty (Sec 234E): Deductor will be liable to pay way of fee Rs200 per day until the filing of the return. However penaltyshould not exceed the total amount of TDS deducted for whichthe statement required to be filed.

Late Filing of TDS Return

Penalty (Sec 271H): Assessing officer may direct a person whofails to file the statement of TDS within

due date to pay penalty minimum of

Rs 10,000 which may extended to

Rs 1,00,000.

52

Penalties Provision

53

Prosecution for failure to pay TDS

Section Nature of Offence Minimum

period of

rigorous

imprisonme

nt

Maximum

period of

rigorous

imprisonme

nt

No punishment

if proved that

there was

reasonable

cause for such

failure(Section

278AA Whether

applicable)

276B Failure to pay tax to the

government’s treasury

deducted under provisions of

chapter XVIIB or tax payable

on dividends u/s 115-O(2) or

second proviso to section

194B(i.e. tax on lottery, prizes

given in kind).

Failure to deduct tax attracts

penalty U/s 271C

Failure to pay tax attracts

penalty u/s 271C and

prosecution U/s 276B

3Months

and Fine

7 Years and

Fine

Yes

54

Contact to:CA Preeti PunihaniB.Com, ACA +91 9711849930, +91 141 2742995 [email protected]

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