1

TAX DEDUCTED AT SOURCE

Dinesh Choudhari

Sanjay Suthar

18 August 2012

INDEX

Introduction

Payments covered under the scheme of TDS.

Provisions for filing Returns to the Income Tax Department.

Effects of Tax Evasion

Introduction

To avoid cases of tax evasion, the Income-Tax Act has madeprovisions to collect tax at source on accrual of income. Casesincluded in the scheme are, generally, those where income canbe computed at the time of accrual of income. Under thisscheme, persons responsible for making payment of incomecovered by the scheme are responsible to deduct tax at sourceand deposit the same to the Government’s treasury within thestipulated time. The recipient of income—though he gets onlythe net amount (after deduction of tax at source)—is liable totax on the gross amount and the amount deducted at source isadjusted against his final tax liability. The details of the schemeof tax deduction and collection at source are briefly discussed inthis presentation. To conclude one can say that the scheme ofTDS is only payment of tax on adhoc basis by the payer ofincome on behalf of recipient.

Setps for TDS

TAN

• Every deductor is required to obtain a

unique identification number called TAN

(Tax Deduction Account Number) which is

a ten digit alpha numeric number. This

number has to be quoted by the deductor in

every correspondence related to TDS

Tax Deduction & Collection Account Number

Every person deducting tax or collecting tax should

obtain a tax deduction & collection number

Such person should quote such number in every

challan for payment u/s 200 or 206C(3), in every

certificate furnished u/s 203 or u/s 206C(5)

In all the TDS returns delivered

In all other documents pertaining to such transaction

as may be prescribed in the interest of revenue.

Payment covered under the scheme of TDS.

Salary (Sec.192)

Interest on Securities (Sec.193)

Dividends (Sec.194)

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

Winnings from Lotteries or crossword puzzles (Sec.194B)

Winnings from Horse Races (Sec.194BB)

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

Insurance Commission (Sec.194D)

Payment to Non-resident sportsmen or sports association (Sec.194E)

Payment in respect of NSC (Sec. 194EE)

Contd…

Payment covered under the scheme of TDS.

Payments in respect of Repurchase of units of Mutual

Funds or UTI (Sec.194F)

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

Commission or Brokerage (Sec.194H)

Rent (Sec.194I)

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

Payment of Compensation on acquisition of certain immovable property (Sec.194LA)

Other Sums (Sec.195)

Long term capital gain (Sec.196B)

Income or Long term capital gain from Foreign Currency bonds/Global Depository Receipts (Sec.196C)

Income of Foreign Institutional Investors from Securities (Sec.196D)

Salary (Sec.192)

Who is the payer Employer

Who is the recipient Employee

Payment Covered Taxable Salary of the employee

At what time TDS to be deducted At the time of payment

Maximum amount which can be paid

without tax deduction

The amount of exemption limit

(i.e.,Rs.160000/190000/240000 for A.Y.

2011-12)

Rate at which tax to be deducted. As per Calculation

When the provisions are not applicable --

Is it possible to get the payment without tax

deduction or with lower tax deduction

The employee can make application in

Form No.13 to the Assessing Officer to get

the certificate of lower tax deduction or no

tax deduction.

Interest on Securities (Sec. 193)

Who is the payer Payer of interest on securities

Who is the recipient A resident person holding securities

Payment covered Interest on securities

At what time TDS to be deducted. At the time of payment or at the time of

credit, whichever is earlier

Maximum amount which can be paid

without tax deduction

Rs. 2500

Rate at which TDS to be deducted 10%

When the provisions are not applicable Interest on Central/State Government

securities

Is it possible to get the payment without tax

deduction or with lower tax deduction

The recipient can make application to the

Assessing Officer in Form No. 13 or

declaration to the payer in Form 15G or

15H as applicable

Dividends (Sec. 194)

Who is the payer Domestic company

Who is the recipient Resident shareholder

Payment Covered Deemed dividend under section 2(22)(e)

At what time TDS to be deducted At the time of payment

Maximum amount which can be paid

without tax deduction

Rs.2500

Rate at which TDS to be deducted 20%

When the provisions are not applicable Dividend covered by section 115-O

Is it possible to get the payment without tax

deduction or with lower tax deduction

The recipient can make application to the

Assessing Officer in Form No. 13 or

declaration to the payer in Form 15G or

15H as applicable

INTEREST OTHER THAN INTEREST ON SECURITIES (Sec 194A)

Who is the payer Any person paying interest other than interest

on securities

Who is the recipient A Resident person

Payment covered Interest other than interest on securities

At what time TDS to be deducted. At the time of payment or at the time of credit,

whichever is earlier

Maximum amount which can be paid without

tax deduction

If payer is banking company, co-operative

engaged in banking business or Rs 10000/- if

Payer is any other person Rs 5000/-

Rate at which TDS to be deducted 10% if the recipient is resident non-corporate

assessee and 20% if the recipient is resident

corporate assessee

When the provisions are not applicable If the payee are Insurance companies or

financial institutions including co-operative

societies etc.

Is it possible to get the payment without tax

deduction or with lower tax deduction

Declaration to the payer in Form 15G or 15H

as applicable

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

Who is the payer Any person paying winnings from

lotteries/crossword puzzles/card games/other

games

Who is the recipient Any Person

Payment covered Winnings from lotteries/crossword

puzzles/card games/other games

At what time TDS to be deducted. At the time of Payment

Maximum amount which can be paid without

tax deduction

If the amount payment is Rs. 10000/- or less

than Rs. 10000/-

Rate at which TDS to be deducted 30%

When the provisions are not applicable --

Is it possible to get the payment without tax

deduction or with lower tax deduction

Not Possible

Winnings From Horse Races (Sec. 194BB)

Who is the payer Any person paying winnings from horse

races

Who is the recipient Any person

Payment covered Winnings from Horse Races

At what time TDS to be deducted. At the time of payment

Maximum amount which can be paid

without tax deduction

If the amount of payment is Rs. 5000/- or

less than Rs. 5000/-

Rate at which TDS to be deducted 30%

When the provisions are not applicable --

Is it possible to get the payment without tax

deduction or with lower tax deduction

Not Possible

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

Who is the payer Specified person

Who is the recipient A resident person

Rate of TDS 2%

Payment Covered Consideration for any Work Contract

At what time TDS has to be

deducted

At the time of payment or at the time of credit

Maximum amount which can

be paid without tax deduction

The tax is required to be deducted if a single payment exceeds

Rs. 30000/- or if the aggregate payments exceed Rs. 75000/-

per annum

Is it possible to get the

payment without tax

deduction or with lower tax

deduction

The recipient can make application to the Assessing Officer in

Form No. 13

Insurance Commission (Sec.194D)

Who is the payer Any person paying insurance commission.

Who is the recipient A resident person

Payment covered Insurance Commission

At what time TDS to be deducted. At the time of payment or at the time of credit

whichever is earlier

Maximum amount which can be paid without

tax deduction

If the amount of payment is Rs. 20000/- or

less than Rs. 20000/-

Rate at which TDS to be deducted 10% if the recipient is resident non-corporate

assessee and

20% if the recipient is resident corporate

assessee

When the provisions are not applicable --

Is it possible to get the payment without tax

deduction or with lower tax deduction

The recipient can make an application in

Form No. 13 to the Assessing Officer to get

the certificate of lower tax deduction or no tax

deduction.

Payment to Non-resident sportsmen or sports association (Sec.194E)

Who is the payer Any person making payment to non-resident

sportsman/sports association

Who is the recipient Non-resident sportsman/sports association

Payment covered Payment to non-resident sportsman/sports

association

At what time TDS to be deducted. At the time of payment or at the time of credit

whichever is earlier

Maximum amount which can be paid without

tax deduction

Nil

Rate at which TDS to be deducted 10%+ Education cess etc and Surcharge as

applicable

When the provisions are not applicable --

Is it possible to get the payment without tax

deduction or with lower tax deduction

No Provision

Payments in respect of NSC (Sec.194EE)

Who is the payer Post Office

Who is the recipient Any Person

Payment covered Payment (Principal+Interest) out of National

Saving Scheme, 1987.

At what time TDS to be deducted. At the time of payment

Maximum amount which can be paid without

tax deduction

If the amount of payment is Rs.2500 or less

than Rs.2500

Rate at which TDS to be deducted 20%

When the provisions are not applicable The payment is made to legal heirs of the

deceased depositor

Payments on account of repurchase of units of Mutual Funds

or UTI (Sec. 194F)

Who is the payer Mutual Fund or UTI

Who is the recipient Unit holder under section 80CCB

Payment covered Payment on account of repurchase of units

referred to in section 80CCB

At what time TDS to be deducted. At the time of payment

Maximum amount which can be paid without

tax deduction

--

Rate at which TDS to be deducted 20%

When the provisions are not applicable --

Is it possible to get the payment without tax

deduction or with lower tax deduction

No Provision

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

Who is the payer Any person paying commission of sale of

lottery tickets

Who is the recipient Any person

Payment covered Commission on sale of lottery tickets

At what time TDS to be deducted. At the time of payment or at the time of credit,

whichever is earlier

Maximum amount which can be paid without

tax deduction

If the amount of payment is Rs. 1000 or less

than Rs. 1000

Rate at which TDS to be deducted 10%

When the provisions are not applicable --

Is it possible to get the payment without tax

deduction or with lower tax deduction

The recipient can make an application in

Form No. 13 to the Assessing Officer to get a

certificate of lower tax deduction or no tax

deduction

Commission or Brokerage (Sec.194H)

Who is the payer Any person paying commission or

brokerage

Who is the recipient Any resident person

Payment covered Commission or brokerage (not being

insurance commission)

At what time TDS to be deducted. At the time of payment or at the time of

credit, whichever is earlier

Maximum amount which can be paid

without tax deduction

If the amount of payment is Rs. 5000 or

less than Rs. 5000

Rate at which TDS to be deducted 10% (up to may 31, 2007 : 5%)

When the provisions are not applicable --

Is it possible to get the payment without tax

deduction or with lower tax deduction

The recipient can make an application in

Form No.13 to the Assessing Officer to get

a certificate of lower tax deduction or no tax

deduction

Rent (Sec.194-I)

Who is the payer Any person paying rent (not being an individual

or HUF whose books of account are not

required to be audited under section 44AB in the

immediately preceding financial year)

Who is the recipient A Resident Person

Payment covered Rent

At what time TDS to be deducted. At the time of payment or at the time of credit,

whichever is earlier

Maximum amount which can be paid

without tax deduction

Rs. 180000/-

Rate at which TDS to be deducted For Plant and Machinary Rent 2% and for

For Use of and Land or Building including

Furniture etc.

Individual Huf 10%

For any other 20%

Is it possible to get the payment without

tax deduction or with lower tax

deduction

The recipient can make application in Form No.

13

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

Who is the payer Any person paying professional charges (not

being an individual or HUF whose books of

account are not required to be audited under

section 44AB in the immediately preceding

financial year)

Who is the recipient Any Person

Payment covered Professional services, technical services,

Royalty,

At what time TDS to be deducted. At the time of payment or at the time of credit,

whichever is earlier

Maximum amount which can be paid

without tax deduction

If the amount of payment during the financial

year is Rs. 30000 or less than Rs. 30000

Rate at which TDS to be deducted 10%

Is it possible to get the payment without

tax deduction or with lower tax deduction

The recipient can make application in Form No.

13

Provisions for Filing Returns

Different Payments In case the person deducting tax is a

company or a Government

department or a person whose books

are required to be audited u/s. 44AB

in the immediately preceding year or

in whose case number of deductees

in any of the quarterly statements in

the immediately year is 20 or more

In case the person

deducting tax is

any other person

Time-limit for submission

of return by the person

deducting tax

Salary Form No. 24Q in Electronic format

and Form No. 27A

Form No. 24Q Within 15 days from the

end of each quarter (31st

May in case of last

quarter)

Payment (other

than salary) to a

resident

Form No. 26Q in Electronic format

and Form No. 27A

Form No. 26Q Within 15 days from the

end of each quarter (31st

May in case of last

quarter)

Payment (other

than salary) to a

non-resident

Form No. 27Q in Electronic format

and Form No. 27A (quarterly)

Form No. 27Q

(quarterly)

Within 15 days from the

end of each quarter (31st

May in case of last

quarter)

Issue TDS Certificates Sec. 203

Sr.

No.

Form no Periodicity Cut off Date

1 16 For

Salary

Annual 31st May of following financial

year

2 16A Other

than

salary

Quarterly Within 15 days from due date

of furnishing the TDS

statement under rule 31A

Dates for Payment of TDS

Deductor For MARCH For April to February

Government On or before 7th

of next month for

salary

On the same day for other than

salary & on or before 7th of

next month for salary

Other than

Government

On or before 30th

April

On or before 7th of next month

Special

Cases

30th April Quarterly payment on or before

7th of the month succeeding

quarter

Furnishing of quarterly returns for payment of interest

to residents without Deducting Tax (Sec. 206A)

• Banking company, Cooperative societies, &

Public Companies shall furnish quarterly

return to department in respect of payments of

Interest (other than Interest on Securities) in

any computer readable media.

Collection of Tax

Who is the payer Seller

Who is the recipient Buyer

Payment covered As per Details in next slide

At what time TDS to be Collected. At the time of receipt or at the time of

debiting the account, whichever is earlier

Maximum amount which can be paid

without tax collection

Nil

Rate at which TDS to be deducted As per Details in next slide

Is it possible to get the payment without tax

deduction or with lower tax deduction

The recipient can make an application in

Form No. 13 to the Assessing Officer to get

a certificate of lower tax deduction or no tax

deduction

Rates for Collection of TAX

30

Thank You!

Effects of Evasion of TDS (Sec 201)

Sr. No.

Reasons Effects

1. Non deduction of TDS

The expenditure for which TDS to be deducted gets DISALLOWED & penal interest @1% for every month or part of month from the date on which such tax was deductible to

the date of deduction

2. Non payment of

TDS

The expenditure for which TDS deducted but not paid gets disallowed

3. Less deduction of TDS.

The amount less deducted is required to be paid by the deduct or along with penalty

4. Late Payment of TDS

The deductor should have to pay penal interest@1.5% for every month or part of month

from date of deduction to the date of payment.

Penal Provisions