Tds ignou (1) final

Payments made by Regional Centres and Study Centres on which
TDS is applicable are as follows:
A. Regional Centres: B. Study Centres:
Salary & allowances to staff
Rent of Leased Premises
Hire charges of equipment
Annual maintenance contracts
Service contracts for outsourcing &
security
Transportation of goods
Taxi Hire Charges
Advertisements
Honorarium & Conveyance to
Coordinator
Honorarium & Conveyance to Program
Incharge
Honorarium & Conveyance to Assistant
Coordinator
Payment to Academic Counselors
Payment to Assignment Evaluators
Hire charges of equipment
Annual maintenance contracts
Service contracts for outsourcing &
security
Taxi Hire Charges
Advertisements

 Statutory responsibility for TDS has been placed on any
‘person’ responsible for paying income chargeable under the
head ‘Salaries’.
 In the case of employees of IGNOU appropriate disbursing
officer is person responsible for paying salary. Hence
responsibility of TDS lies on the DDO.
PAYERS, WHO ARE COVERED U/s 192

Do’s & Don’ts for Deposit of Tax
Sl. Do’s Dont’s
(a) Use Challan Type - ITNS 281 (a) Don’t use single challan to deposit
tax under various sections.
(b) Quote correct TAN of the deductor (b) Don’t use single challan to deposit
tax deducted for Corporate and Non-
corporate deductees.
(c) Use separate challan to deposit TDS under
each section & indicate the correct nature of
Code.
(c) Don’t make any mistake in the
Assessment Year to be indicated in
the challan.
U/s Nature of Payment Code (d) If you have multiple TANs for the
same division filing TDS returns,
don’t use different TANs in different
challan. Use one consistently &
surrender the others.
192 Salary 92B
194A Interest other than Interest on securities 94A
194C Payment of contractor or sub-contractor 94C
194H Commission or Brokerage 94H
194I a) Rent on equipment 4 IA
194I b) Rent on building or furniture & fixture 4 IB
194J Fees for professional or Technical Services 94J

Effect of mistake done by the Deductor or
the Outsourced Professional
If error is made by Deductor or Outsourced
Professional w.r.t.
If wrong PAN is entered, no credit will be
available to the deductee due to non-reflection in 26AS
If name is wrongly entered, credit of TDS will
still be available, because it is PAN based
If address is wrongly entered, credit of TDS will
still be available, because it is PAN based
Although credit of TDS will be available, but his Income will
be wrongly reflected in his TDS certificate.
Although credit of TDS will be available,
but it can result in application of interest .
Deductee will not get benefit of tax credit
because 26AS shows status ‘U’
means Unmatched.
means Unmatched.
means Unmatched.
means Unmatched.
Demand will be raised by TDS Department on the Deductor, along with Interest @ 1% P.M.
PAN
NAME
ADDRESS
CREDIT AMOUNT
CREDIT DATE
WRONG SECTION
OF TDS
CHALLAN BSR CODE
CHALLAN DATE
BANK NAME
TDS RATE
OUTSOURCED
PROFESSIONAL
Generates
FVU* File
& uploads
through e-
filing on
NSDL Site

Rates for Tax Deduction at Sources on Various Payments
Nature of
Payment
Threshold Limit TDS (Surcharge : NIL,
CESS :NIL on Payments
Other than Salary)
Payment of salary –
U/s 192
Age :
- below 60 years RRs.2,00,000
Note: 1 U/s 80EE : Deduction U/s 80EE upto Rs. 1Lac being
interest on loan for acquisition of residential house shall be
admissible w.e.f. 1st April 2014.
Note:2 W.e.f. 1st April 2014, Rebate U/s 87A: Resident
Individual whose Total Income does not exceed Rs.5 Lacs
shall get a rebate of Rs. 2,000 or 100% of Tax Payable
whichever is lower.
Average of Income-tax
computed on basis of
the rate in-force for the
Financial Year as
follows:
0- Rs.2 Lacs - NIL
Rs.2 Lacs-Rs.5 Lacs – 10%
Rs.5 Lacs- Rs.10 Lacs – 20%
Above Rs.10 Lacs – 30%
(Plus Education Cess
& SHEC : - 3%)

Nature of Payment Threshold
Limit
TDS (Surcharge : NIL,
CESS : NIL)
Interest other than interest on
securities – U/s 194 A
Rs. 5,000 per
annum
10 %
Payment / credit to a
contractor/sub-contractor
U/s 194 C
Rs. 30,000 per
contract or
Rs. 75,000 per
annum in
aggregate
a. Individual / HUF 1%
b. Other than an 2%
individual /HUF
(e.g.: Company/Firm)
Commission or Brokerage -U/s 194 H Rs. 5,000 per
annum
10%
Rent U/s 194 I
a. On Equipment
b. On Building or Furniture
Rs. 1,80,000 P.A.
Rs. 1,80,000 P.A
2%
10%
Fees for Professional or technical
services – U/s 194 J
Rs. 30,000 per
annum
10%

Appointment Letters of Coordinators
The Coordinator is responsible :
1. for all the activities of the Study Centre. He shall coordinate
the work of all the individual counselors and act as a liaison
between the University Regional Centre and the Study Centre.
2. for maintenance of all records and registers in respect of all
activities of the Study Centre either academic or
administrative.
3. to ensure discipline in the Study Centre consistent with the
aims and objects of the University.
4. to perform such other duties, as are assigned by University
from time to time for the effective functioning of Study Centre.

Payment to Consultant
Where IGNOU engages an employee as a Consultant on part-time basis on
contract, remuneration paid to such Consultant is liable for TDS
i) U/s 194J
(Professional
Services)
Where Contract is FOR SERVICE:
Where the employer such as IGNOU engages
services of Professional on basis of Agreement
which gave them choice of time to come to IGNOU
for providing their professional services and they
were not on roll of IGNOU as its employees, there
was no Employer-Employee relationship and
payments to them is covered U/s 194J.
ii) U/s 192 (Salary) Where Contract is OF SERVICE:
Where the employer can demand services from
employee as part of employment service.

Features of Contract FOR SERVICE
• (Commissioner of Income Tax V. Coastal Power Co. [2007]
162 Taxman 120 )
1. A.K. Bhatnagar was an employee of Coastal Power Co.
2. He was drawing salary from Coastal Power Co.
3. in addition to that under a separate Agreement, he was given a Consultancy
Assignment which had the following covenants :
i) Consultancy was on temporary basis;
ii) Consultant was not entitled to participate in welfare plans – such as
Medical plans, Travel Accident Plan etc.
iii) Consultant would indemnify the employer against all liabilities
Delhi High Court held that in view of the above covenants, there is no Employer-
Employee relationship and payments are not covered U/s 192 as Salary but covered
U/s 194J as Professional Fees.

Features of Contract OF SERVICE
1. Where the employer can demand services from employee as part of
employment service.
2. To treat an amount as salary – Payment must not have been received by the
service provider in course of carrying on profession, because fees for technical
services includes any consideration received from rendering managerial,
technical or consultancy services but excludes any consideration which would
be income of the recipient chargeable under the head ‘SALARIES’.
(United Hotels Ltd. V. ITO [2005] 2 SOT 264) (Delhi-Trib.)
3. In one case, a hospital had, apart from regular employees, engaged consultant
doctors on contract basis, and paid them remuneration in the form of share in
the fees charged by it from the patients, subject to a specified minimum agreed
amount. They were treated as employees falling under the category of fixed
period/contract employees and / or part-time employees, thereby resulting in
the existence of employer-employee relationship.

Conclusion:
• Remuneration paid to part time teachers for assignments are covered as
salary U/s 192, and not as fee for Professional Services U/s 194J or
Contract U/s 194C.
This has been held by the Authority of Advance Ruling in Max Muller
Bhawan Case (2004) 268 ITR 31 (AAR).

Judicial decisions on TDS on Salary U/s 192
a) Section 192 requires that deduction from salary is to be made at the
time of payment and not at the time when salary become due.
[Citigroup Global Markets India (P) Ltd. V. DCIT (2009) 29 SOT 326 (Mum.) ].
b) If any tax has been deducted in excess in the earlier months, the
employer is authorized to adjust such excess in the subsequent
months. Visa-versa, if the employer has deducted less tax in the
earlier months, he will have to make higher deduction in the
subsequent months.
[Hero Honda Motors Ltd. V. ITO [2004] 112 Taxman 154 (Delhi) (Mag.)]
The above adjustment is permissible only in respect of same employee
and not for all employees.
Interest u/s 201(1A) is not leviable if the exact amount of TDS is not
deducted each month. [ITO V. Asia Hotels Ltd. (1991) 41 TTJ (Del) 28].

Judicial decisions on TDS on Salary
c) If after the year is over, there is a short deduction of tax due to honest
and bonafide belief by the employer and employee make good this
short fall in his Return of Income the employer is not to recover such
short fall and he cannot be penalized.
[Gwalior Rayon Silk Ltd. V. CIT (1983) 140 Income Tax Return 832
(MP)].
But at the same time employer cannot take TDS on salary casually and
resort to a lump-sum deduction at the end of Financial Year for making
good the deficiency. [Madhya Gujrat Vij Co. Ltd. V. ITO [2011] 14
taxmann.com 156 (Ahb.-Trib.)].
Controversy with the Department normally arises when such variation
is adjusted in last quarter or last month.
d) If employee incurring loss from house property furnishes verified
statement as per Rule 26B, benefit of the same can be given in TDS.

e) Deduction U/s 80G will generally not be allowed for purpose of TDS.
However, contribution made by employee through employer to Prime
Minister National Relief Fund, CM Relief Fund, LG Relief Fund will be
admissible on basis of certificate issued by DDO. [Circular No. 2/2005
dated 12.01.2005]
f) Salaried employees drawing house rent allowance upto Rs. 3,000 per
month will be exempted from production of rent receipt to the
employer.
g) Where the Head Office or the Branch Office is already filing the return
under Section 206, no other Assessing Officer shall require the
assessee to file such a return with him.
[Circular No. 719 dated 22.08.1995]

h) Although earlier the Supreme Court had held in . [CIT V. ITI Ltd. (2009)
183 Taxman 219 (Supreme Court) ] that there is No statutory
obligation of the employer to collect supporting evidence to the
declaration given to show that the employee has actually utilized
amount paid towards leave travel concession or conveyance
allowance for purpose of TDS U/s 192, but subsequently the CBDT has
issued Circular No. 8/2012 [F.No- 275/192/2012-IT(B)] dated
05.10.2012 as per which :
“the employer has to satisfy the obligation that leave travel (fare)
concession is not taxable in view of Section 10(5), the employer is not
only required to be satisfied about the ingredients of the said clause
but also to keep and preserve evidence in support thereof”.

Some More Points on TDS on Salary
1. Special Allowance exempt under Section 10(14):
Allowance, not in the nature of perquisite, granted to meet expenses
wholly, necessarily & exclusively incurred in the performance of duties to
the extent to which actually incurred & proof of expenditure furnished to
the employer.
2. Where IGNOU pays amount to another partner institute towards
reimbursement of salaries of certain personnel of that institute who are
deputed for rendering services to IGNOU, the amounts so reimbursed to
that institute will not be subject to TDS because there was no contract
between IGNOU & the deputed personnel by virtue of which IGNOU could
demand services from the deputed personnel and that personnel could
not claim fees directly from IGNOU since there was no specific contract
between IGNOU & the deputed personnel.
3. If those deputed personnel are not carrying on the specified profession,
they will not be covered for TDS U/s 194J.

Claim for credit of TDS in the year in which relative
income is offered for tax:
• Section 198 provides that TDS deducted is
deemed to be income received. Hence, even
when the relative income is received later, to
the extent of TDS, income is deemed to be
received in the year of deduction of TDS.

TDS on Contract Payment U/s 194C
a) In absence of a contract section 194C does not come into play.
b) TDS will be deducted on invoice value excluding the value of material purchased
from such customer if such value is mentioned separately in the invoice.
c) Where the contract of work is given on piece rate basis and the total payment
was not expected to exceed RRs. 75,000 but later on it is found that the payment
exceeds that amount, deduction should be made in respect of earlier payments
as well. [Circular No. 93, dated 26.09.1972]
d) There will be no requirement to deduct TDS of those authorities or bodies whose
income is unconditionally exempt U/s 10 of Income Tax Act, 1961 and who are
statutorily not required to file Return of Income U/s 139. [Circular No. 4/2002,
dated 10.07.2002]
e) In composite contracts if Invoice is raised, separately mentioning the value of
material supplied, no deduction is required to be made U/s 194C for the value of
material supplied, even if the said agreement is part of a composite transaction.
[CIT v. Karnataka Power Transmission Corporation Ltd. 49 ITCL 167].

TDS on Contract Payment U/s 194C
f) Where different contracts entered with sister concern are found to be in nature
of a single integrated agreement termed as “Works Contract”, deduction of TDS
U/s 194C is applicable for the entire payment.
[Essar Oil Ltd. v. ITO 30 Taxmann.com 39]
g) In respect of outsourcing services received from placement agencies, even if
separate bills are raised, one for salaries of outsourced persons and second for
service charges of the placement agencies, TDS @ 2% U/s 194C will be applicable
on the entire payment made to the placement agency.
h) Similar treatment will be done for payments made to Security Agencies.

Payment for Hiring Goods Carriage
1. Provisions of Section 194C will be applicable. Threshold limit will
be Rs. 30,000 for each GR and Rs. 75,000 in aggregate for the
whole year.
2. TDS is not to be deducted if transporter furnishes PAN to the
deductor. Its details have to be furnished in E-TDS Return.
3. If transporter does not furnish PAN to the deductor, TDS will be
deducted @20% of the value, which will also be reported in the E-
TDS Return but the deductee will not be entitled to claim credit of
the TDS.
4. TDS U/s 194C is applicable on Hire Charges of taxi in excess of Rs.
30,000 for each duty and Rs. 75,000 in aggregate for the whole
year.

Professions covered for fees U/s 194J are:
Sl. No. Professions covered for fees U/s 194J
1 Legal Profession
2 Medical Profession
3 Engineering
4 Architecture
5 Accountancy
6 Technical Consultancy
7 Interior Decoration
8 Advertising
9 Any other profession notified by CBDT for purpose of maintaining
Books of Accounts U/s 44A. They are:
a) Authorized Representative before legal authority
b) Film Artist

Sl. No. Professions covered for fees U/s 194J
9 c) Information Technology Professional : Notified Technology enabled
products or services are:
 Back-office Operations
Call Centres
Content Development or
Animation
Data Processing
Engineering and Design
Geographic Information System
Service
Human Resources Services
Insurance Claim Processing
Payroll
Remote Maintenance
Revenue Accounting
Support Centres, and
Web-Site Services
It does not mean that any Managerial or Agency Services can be covered as
Professional or Technical Services U/s 194J.
[GlaxoSmithkline Consumer Healthcare Ltd. V. ITO [2007] 12 SOT 221 (Del.)]
Where professional raises a separate bill for reimbursement of Out of Pocket
Expenses such as conveyance, boarding/lodging etc., on which there is no element of
profit, TDS is to be made only on fees component & not on the reimbursement
component. [ITO v. Dr. Willmar Schwabe India(P) Ltd. [2005] 3 SOT 71 (Delhi-Trib.)

Application of Section 194J on Fees for Technical Services
Only when technology or technical knowledge of a person is made
available to others and not where by using technical system,
services are rendered to others.
e.g.: If charges are paid to Electricity Transmission Company for
operation and maintenance of transmission lines for use of the
transmission lines, there is no technical service rendered by the
transmission company.
Therefore deduction of TDS is Not Applicable for rendering
Transmission Service.
(Jaipur Vidyut Vitran Nigam Ltd. V. Dy CIT [2009] 123 TTJ (JP-Trib.)
888)

Brokerage & Commission U/s 194H
Where a franchisee operates education centre jointly and
shares revenue on account of composite services provided by
them, on amount shared and remitted to Franchisee for
infrastructural claims, TDS is not deductable as rent U/s 194I.
[ACIT Vs. Nib Ltd. (2008) SOT 44 (Del) (URO)]
Further section 194C can be attracted only when one person
provides service to another, and not when there is payment for
use of one person’s trade Name or Goodwill by the other
person.
[Career Launchers (India) Ltd. v. ACIT 250 CTR 240 (Delhi)].

TDS on Rent U/s 194I
1. On aggregate amount exceeding Rs. 1,80,000 paid to each
landlord individually during Financial Year.
2. Rent on :
- Land, Building, Furniture & Fixture : TDS @ 10%
- Equipment Hire : TDS @ 2%
3. TDS is to be made on Advance Rent at the time of paying the
Advance. The deductee can claim credit as and when the
rental income is offered for taxation by him.
Language of Rent Agreement is important to determine how
& when the Advance Rent is adjustable in order to trigger the
liability of TDS on Advance Rent.

4. Payment to Hotels:
Earlier, payments to hotels was notified by Circular No. 681,
dated 08.03.1994 as a contract covered U/s 194C.
However, following a writ in the case of East India Hotels Ltd.
v. CBDT [2009] 320 Income Tax Return 526 (Bom.), the
Circular was held to be bad in law. As a result payment to
hotels is now not covered U/s 194C.
Further, as per Circular No. 715, dated 08/Aug/1995,
payments made to hotels for rooms hired on “Regular Basis”
would be in the nature of rent subject to TDS U/s 194I.

• “Regular Basis” has been defined where
rooms are earmarked at specified rate. But
where it merely a rate contract and there is no
obligation on part of the hotel to provide a
room or specified set of rooms, the occupancy
will be considered as concessional or casual,
as a result provisions of Section 194I will Not
Apply.

Purchase of Land – TDS involvement U/s 194 IA
In this case “Immovable Property” means Land (Other
than Agricultural Land) or any building or part of a
building. Tax shall be deducted @ 1% of such sum, if
the consideration paid or payable for the transfer of
such property is Rs. 50 lacs or more.

Clarification by CBDT on the correct scope of TDS on
specific services:
Sl.
No
Payment to Covered
U/S
Reasons
1 Recruitment Agency 194J It is not for carrying out any
work for supply of labour but
is payment for services
rendered.
2 Sponsorship of debates/seminar &
other functions held in university
with a view to earn publicity
through display of banners
194C The essence is for carrying out
work of advertisement.
3 Cost of advertisement issued to
souvenirs
194C The essence is for carrying out
work of advertisement
4 Advertisement Contract for release
covers the gross amount including
bills of Media
194C @1% of Gross Amount of the
bill.

Sl.
No
Payment to Covered
U/S
Reasons
5 Advertisement payment made
directly to Government agency
like Doordarshan
No TDS Government agencies are
exempted.
6 Contract for supply of printed
material as per prescribed
specification
194C It is a contract for carrying out
work under contract.
7 Software acquired in
subsequent transfer without any
modification
No TDS The receiver obtain a Declaration
from the Transferor of the
software that TDS U/s 194J has
been deducted for any previous
transfer of such software.
[Notification No.-21/2012 dated
30.06.2012]
8 Composite Agreement for use of
premises & provision of man-
power
194I Where essence is taking
premises on rent.

Sl. No Payment to Covered
U/S
Reasons
9 Deposit given to landlord against
rent
194I Only if deposit is adjustable
against future rent.
10 Payment to regular electrician on
contract basis
194C It is a contract for carrying out
the work.
11 Maintenance contract including
supplies spares:
 Routine Maintenance
 Technical Services
194C
194J
It is a contract for carrying out
the work.
It is a technical consultancy.

Exemption of Allowances
• Leave Travel Allowance
• Leave Encashment
• Medical Benefits
• House Rent Allowance
• Children Education Allowance
• Hostel Expenditure Allowance
• Academic Allowance
• Uniform Allowance
• Transport Allowance
• Hill Area Allowance

Leave Travel Allowance
i) Leave Travel Allowance (LTC) : is limited to amount of travelling of an
employee and his family members (upto 2 surviving children born after 1st
October 1998)
ii) Allowed twice in the Block of 4 Calendar year :
(Current Block is 2010-13)
(Next Block is 2014 – 17)
Where no LTC is availed in the Block of 4 years, the amount can be availed
during the first calendar year of the immediately succeeding Block.
iii) Allowance is restricted to economy class of Air fare of National Carrier or A.C.
First Class for travelling to any place in India.
iv) If places are not connected by Air or Rail, the amount eligible will be the
amount of First Class or Deluxe Class fare of Recognized Public Transport
System.
(Where no Recognized Public Transport System exists, amount equivalent to
A.C. First Class Rail fare for equivalent distance of journey).

Leave Encashment
Leave Encashment on retirement will be exempt upto least of
the following:
• 10 months salary on basis of last 10 months average salary.
• Rs. 3 Lacs
• Amount equivalent to earned leave;
• Actual amount paid by the employer
• Entitlement to earned leave not to exceed 30 days for every
year of actual service.

Medical Benefits
In addition to reimbursement of amount spent for medical
treatment upto Rs. 15,000 in a Financial Year, the following are
also exempt for Medical Treatment of an employee or any other
family member (spouse/children/parents/dependant brothers &
sisters):
i) Treatment in hospitals maintained by
employer/Government/Local Authority;
ii) Treatment of prescribed disease in hospital approved by
Commissioner of Income Tax.
(DDO must obtain certificate of the hospital w.r.t. disease
and amount spent on treatment)

House Rent Allowance
Least of the following exempt:
• - 50% of salary
(if residential house is located in Delhi / Mumbai / Kolkata /
Chennai)
- 40% of salary if residential house is located in any other city.
• Actual House Rent Allowance received.
• Excess of rent paid over 10% of salary.

Children Education Allowance
• Rs. 100 per month per child upto maximum of 2
children.
• Employee can claim tax free education allowance U/s
10(14), and at the same time avail the rebate
U/s 80C in respect of tuition fee of 2 children.
Hostel Allowance
• Rs. 300 per month per child upto maximum of 2
children.

Academic Allowance
• Allowance upto any limit granted by employer for
encouraging academics, research & training in
educational and Research Institutions.

UNIFORM ALLOWANCE
• Allowance granted to meet expenditure on
purchase and maintenance of Uniforms.

Transport Allowance
For conveyance to & fro place of duty:
• Upto Rs. 800 per month
• For Blind person the exemption is Rs. 1600 per
month.

Hill Area Allowance
• Exemption varies from Rs. 300 to Rs. 7000 per
month depending upon the specified place.

Allowances which are fully taxable
• Dearness Allowance
• City compensatory Allowance
• Lunch/Tiffin Allowance
• Overtime Allowance
• Non - Practising Allowance
• Family Allowance
• Servant Allowance

Valuation of perquisites
1 Interest free / Concessional Loan
2 Use of Moveable Assets
3 Rent free unfurnished accommodation taken on
lease / owned by employer
4 Valuation of perquisites on Motor Cars

Interest free / Concessional Loan
1. The difference between SBI Prime lending rate for similar type of loan as on
1st day of the year compared with the rate charged by the employer.
Type of Loan SBI Lending Rates
Housing Loan Varies from 9.95% - 10.10% p.a.,
depending upon loan amount
-Upto Rs. 30 Lacs : 9.95% p.a.
-Above Rs. 30 Lacs : 10.10% p.a.
Car Loan For term loan : 10.45% p.a.
For Overdraft : 10.15% p.a.
Two Wheeler Loan Upto 3 years : 17.95% p.a
Education Loan Upto Rs. 4 Lacs : 13.20% p.a.
Above Rs. 7.5 Lacs : 11.45% p.a.
(for girl students 0.50% concession in
interest rates)

Use of Moveable Assets
• Moveable assets like furniture is included in income @ 10% of original cost upto
10 years of the life of the asset
or
• Actual Hire Charges as reduced by amount recovered from the employer.
(Laptop/Computer are not treated as perquisite).
• On transfer of moveable assets, difference between WDV & the price at which
the asset is sold to employee.
• Depreciation rates to be considered on:
- Electronic Items Rates
- Computer 50%
- Motor Car 20%
- Other Assets 10%

Rent free unfurnished accommodation taken on Lease
1. Actual rent or 15% of salary, whichever is lower reduced by rent paid by the
employee.
2. Rent free unfurnished accommodation owned by employer :
Size of City in terms of Population Percentage (%) of Salary
Below 10 Lacs 7.5%
10 Lacs – 25 Lacs 10%
Above 25 Lacs 15%

Valuation of Perquisites on Motor Cars
Motor car owned
or taken on hire by
Expenses met by Value of Perquisites
Capacity up to
1.6 Ltrs.
Capacity above
1.6 Ltrs
Employer Employer Rs. 1,800 Rs. 2,400
Employer Employee Rs. 600 Rs. 900
Employer Employee Expenses –
Rs. 1,800 or actual
expenses for official
use (If proper
documents are
maintained)*
Expenses –
Rs. 2,400 or actual
expenses for official
use (if proper
documents are
maintained)*
In addition to above, the perquisite value shall be increased by Rs. 900 if driver is also
provided to run the motor car.

Eligible Deductions from Salary for Computing TDS
Sl. Section Particulars
1 80C • Life Insurance (Restricted to 10% of Capital Sum Assured)
•Contribution to PF/RPF/PPF
• Housing Loan Repayments
• Notified Mutual Fund/ UTI
• Tuition fees of any 2 children paid to University/College/
schools in India. (Full time education includes Play-school
activities, Pre-Nursery & Nursery classes
(Circular No. 5/2011, dated 16/August/2011]
•Term Deposit with Scheduled Bank for 5 years & above.
• 5 years Term Deposit with Post Office
Gross qualifying amount or Rs. 1 Lac, whichever is lower
Note: DDO can call for documents of investment made by
the employee, and cannot merely rely on declaration of
investment made by the employees (Circular No. 9/2005]

2 80CCC • Contribution of Pension Fund: Amount eligible: Rs. 1 Lac
• Contribution for Annuity Plan of LIC or any other Insurer for
receiving Pension from the fund
3 80CCD • Contribution to Central Government Pension Scheme
• Amount eligible : 10% of Salary of the previous year.
NOTE: Aggregate deduction U/s 80C/80CCC/80CCD shall not exceed Rs. 1 Lac.
4 80CCG Investment in Rajiv Gandhi Equity Saving Scheme (RGESS):
• Gross total income of the employee should not exceed Rs. 12 Lacs
• The employee should be first time investor in Equity / Mutual Fund .
• Amount of deduction will be 50% of Investment subject to ceiling of
Rs. 25,000.
• The deduction can be spread over a period of 3 years commencing
from Assessment Year 2013-14.
5 80D • Premium for Health Insurance Policy
• Policy should be of an approved Insurer or approved scheme of GIC
• Employee can availed deduction for premium paid by parents
(including Rs. 5000/- for preventer Health Check-up and not
Diagnostic Check-up)

6 80DD • Medical treatment of Handicap Dependant(s)
• Fixed deduction of : Rs. 50,000
• For severe disability : Rs. 1 Lac
(Obtain Certificate issued by Medical Authority)
7 80DDB • Medical treatment of specified disease : Rs. 40,000
• Where expenditure relates to Sr. Citizen : Rs. 60,000
(Age 60 Years )
8 80E • Interest on loan for Higher Education of the employee or any
relative (Spouse & children) of the employee
• No ceiling limit for the deduction
9 80EE • Interest upto Rs. 1 Lac on loan for Residential House Property for
A/Y 2014-15.
Condition : - Loan is sanctioned between 01 April 2013 to
31st March 2014.
• Value of the Residential House not to exceeds Rs. 40 Lacs
• Purchaser does not own any other residential house property on
the date of sanction of Housing Loan
• Amount of loan sanctioned does not exceeds Rs. 25 Lacs
• Where Interest is more than Rs. 1 Lac, balance amount will be
allowed as deduction in A/Y 2015-16

10 80G For purpose of TDS the following will be eligible:
i) Donation to :
 PM Relief Fund
CM Relief Fund
LG Relief Fund
National Defence Fund
Army Central Welfare Fund
Air Force Central Welfare Fund
Indian Naval Benevolent Fund
• Amount of deduction is whole of the amount subject to ceiling of
10% of Salary
11 80GG • Deduction in respect to House Rent paid for Residence subject to
not receiving HRA from employer
• Employee or is spouse or minor children does not own residential
house in the place where he is employed. Employee should file
declaration in Form-10.
•Amount eligible for deduction will be least of the following:
 House rent paid in excess of 10% of his total income;
25% of total income
Rs. 2000 per month

12 80U Deduction for Disability Allowance:
• Certified by Medical Authority
• Notified for purpose of the persons with Disabilities (Equal
Opportunities, Protections of Rights and Full Participation) Act, 1995.
• Deduction is not related to expenditure incurred by the employee
• a) amount of deduction : Rs. 5,000
• b) For Severe Disability : Rs. 75,000

Whether TDS is applicable on amount of Service Tax
i. No TDS on amount of Service Tax on Rent U/s 194I
A. Payment on rent may be liable to Service Tax but the payer does not have to deduct TDS on the
amount of Service Tax. For Example:
+ =
In this case payer has to deduct tax on Rs. 1,00,000 only and
not on Rs. 1,12,360.
B. TDS is applicable on amount of Service Tax on Professional & Technical U/s 194J. For Example:
+ =
If liable to Service Tax then the payer has to deduct TDS on Service Tax amount also.
In this case payer has to deduct tax on Rs. 1,12,360 & not on Rs. 1,00,000.
C. TDS is applicable on amount of Service Tax on Contract or Sub-Contract U/s 194C.
Payment on contract may be liable to Service Tax. The payer has to deduct the TDS on the Service
Tax amount also (As example B).
Rent
Rs. 1,00,000
Service Tax
Rs. 12,360
Total Value
Rs. 1,12,360
TDS on
Rs. 1,00,000
Rent
Rs. 1,00,000
Service Tax
Rs. 12,360
Total Value
Rs. 1,12,360
TDS on
Rs. 1,12,360

Preparation of TDS Returns
1. While preparing TDS return , please check all aspects such as:
A. Details of Deductor  TAN of deductor
 Name & Address of deductor
B. Challan details such as: • Challan Date
• Bank name in which TDS deposited
• BSR Code (7 digits)
• Challan No. (upto 5 digits)
• Against each Challan, indicate the details of deductee
on whose account the tax has been deducted
• Do not mention Challan No. as ITNS 281 .
Challan Serial No. generated by bank is to be entered.
C. Deductee Details  PAN (10 digits) (alpha-numeric)
 Name of Payee
 TDS Amount paid
2. While depositing TDS
Challan
 Use Challan No. 281 (ITNS)
 Proper Head in which TDS to be deposited
 Section Code such as 92B, 94C, 94J, 94I
 Whether deductee is a Company or Non-Company
 TAN & Name of Payee

3. After deposit the TDS Challan:  Check details regarding deposit of TDS made
by Deductor is Tallied with the data given by
banks
• Proper Stamp of Bank
• Clear Serial No. (Upto 5 digit)
• Clear Date
• Clear BSR Code (7 Digits)
• We can check the details provided by the
bank by using the Challan Status Enquiry on
TIN Website: www.tin-nsdl.com
• If bank has not uploaded your challan, you
may request the bank to upload the same.
 If PAN not provided by deductee then TDS
will be @ 20% & deductee will not get credit
of TDS.
Preparation of TDS Returns

Prescribed Time Limit for Depositing TDS
NOTE:
If TDS is not deducted, then Interest will be charged @ 1% per month or part of a
month, but if TDS is deducted and not deposited, then interest will be charged 1.5%
per month or part of a month.
For Example:
TDS Amount - Rs. 40,000
Deducted on - April 20, 2013
Due Date - May 7, 2013
Paid On - May 22, 2013
Interest for - One month and 2 days – rounded off to 2 months
Interest Rate - 1%
Interest - 40000 X (1/100) X (2) = Rs. 800
APRIL TO FEBRUARY Within 7 Days of Next Month
MARCH 30TH APRIL

Prescribed manner of Payment for TDS
Deductor Relevant
Sections of
TDS
Bank where payment can
be made
Manner of
making
payment
Other than
Government –
such as
University
All Sections RBI or State Bank of India
or any authorised bank
Challan to
accompany
the payment

When payment made through challan at Bank, Challan Status Enquiry
www.tin-nsdl.com
Challan Status Enquiry
TAN Based View
Enter TAN & Period
Enter Amount
Confirm Amount
Check Challan Details

Prescribed Time Limit for Furnishing TDS Returns
NOTE:
(i) Late fee U/s 234E for late filing of TDS Return - Rs. 200 per day from the due
date. Fee shall not exceed total amount of Tax Deduction.
(ii) Section 271 H: It provides penalty ranging from Rs. 10,000 and Rs. 1,00,000 for
delay in furnishing TDS Return, but no penalty shall be levied if the TDS return is
furnished within 1 year of the due date after payment of the Tax Deducted
along with the interest and fees.
Ist Qtr Ended – 30th June 15TH July
IInd Qtr. Ended –
30th September
15TH October
IIIrd Qtr. Ended – 31st
December
15TH January
IVth Qtr. Ended – 31st
March 15TH May

Time Limit for Issue of TDS Certificates
Note: If the TDS Certificate is not issued within time limit prescribed, the payer will be liable for
penalty @ Rs. 100 for each day of default. Total penalty cannot exceed the TDS Amount.
FORM 16 for Salary Annually Due Date 31st May
FORM 16 –A for
Non- Salary Payments
Quarterly
Within 15 Days from the due date of
furnishing the TDS Return under Rule
31-A
Ist Qtr
30th June
IInd Qtr
30th September
IIIrd Qtr
31st December
IVth Qtr
31st March
TDS certificates to
be issued by
30th July
TDS certificates to be
issued by
30th October
TDS certificates to be
issued by
30th January
TDS certificates to
be issued by
30th May

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