TDS stands for tax deducted at source, where any person making certain types of payments is required to deduct tax from the payment and deposit it with the government. The key points covered are: - Common sections related to TDS include 192 (salaries), 193 (interest), 194A (other interest), 194C (contractors), among others. - Rates and thresholds vary based on the type of payment and recipient. Rates are typically 10-20% and thresholds are amounts like Rs. 30,000 for contractors. - The payer is responsible for depositing the TDS, issuing certificates to payees, and filing annual returns. Payees can claim credit for TDS against

1. TDS

2. BASICS
Payer deducts tax From Payment/credit
Payer deposits tax to Government
Payer File Return of TDS
Payer issues TDS certificate to Payee
Payee claims refund of TDS in his ITR.

3. What is TDS ?
 TDS stands for tax deducted at source. As per the Income Tax Act,
any company or person making a payment is required to deduct tax
at source if the payment exceeds certain threshold limits.
 The concept of TDS was introduced with an aim to collect tax from
the very source of income. As per this concept, a person (deductor)
who is liable to make payment of specified nature to any other
person (deductee) shall deduct tax at source and remit the same into
the account of the Central Government. The deductee from whose
income tax has been deducted at source would be entitled to get
credit of the amount so deducted on the basis of Form 26AS or TDS
certificate issued by the deductor.

4. Section 192 : TDS on Salaries
 Any person responsible for paying any income (employer) chargeable
under the head “salaries” shall at the time of payment deduct income-tax
on the amount payable at the average rates applicable to the estimated
income of the assessee (employee) under this head for that financial year.
 TDS is to be deducted on monthly basis as: Tax liability/ 12 Months.
 Tax is to be deducted at the time of payment.
 An employee at his option furnish to employer the details of other income.
 Losses from House property can only be considered and not other losses.

5. Section 192A : Premature withdrawal
from employees provident fund.
 No TDS if the aggregate amount of such payment is less than 50,000.
 Rate :- 10% [ If PAN not furnished then maximum marginal rate of 35.88%
will be applicable].
 Tax is to be deducted at the time of payment.
 Note:-
 Amount withdrawn from RPF is exempt in following cases:
 The employee has worked for a continuous period of at lease 5 years.
 If the amount is withdrawn before 5 years then it should be for reasons beyond
control.
 If he joins any other organization before 5 years the P.F balance should be
transferred to new employer’s A/c.

6. Section 193 : Interest on securities.
 The person responsible for paying to a resident any income by way of
interest on securities shall deduct income-tax on the interest payable.
 Rate :- @10%
@ 20% (If PAN no Not quoted)
 Limit :-
 On Debentures – Rs5,000
 On Others – Rs10,000
 Deduction at the time of credit or payment whichever is earlier.
 Exempt from this Provision :- NDB, NSC, Gold Bonds, Govt securities.

7. Section 194 : TDS on Deemed
Dividends
 The principle officer of an Indian company or a company which has made
prescribed arrangements for the declaration or payment of dividends
within India shall deduct tax.
 Rate :- @10%
 Limit :- Rs-5,000
 Deduction before making any payment in cash or before issuing cheque.
 Deemed dividend as under section 2(22)(e).

8. Section 194A : Interest other than
Interest on securities.
 Any person not being an individual or HUF who is responsible for paying to a
resident any income by way of interest other than income by way of interest
on securities shall deduct the Income-tax.
 Rate :- @10%
@ 20% (If PAN no Not quoted)
 Limit :-
 For banking Co– Rs 10,000
 For Others – Rs 5,000
 Deduction at the time of credit or payment whichever is earlier.
 Exempt from this Provision :-
 Interest credit or paid to a banking company, financial institution, LIC, UTI.
 Interest credit or paid by firm to its partners, co operative society.

9. Section 194B : Winnings from Lotteries
and crossword puzzles.
 The person responsible for paying to any person any income by way of
winnings from lotteries or crossword puzzles or card game and other game of
any sort, shall deduct tax at the time of such payment.
 Rate :- @ 10%
 Limit :- Rs 10,000
 Deduction at the time of payment or credit of cash or kind.
 Note :-
 When prize is given partly in cash and kinds, tax will be deducted from the cash
prize with reference to the aggregate amount of cash prize and the value of the
prize in kind.
 Tax deductible from the income by the way of commission payable to the lottery
agent or seller of lottery tickets on the sales made by them will be dealt under
section 194G.

10. Section 194BB : Winnings from Horse
races.
 Income-tax has to be deducted at source from any income by the way of
winnings from horse races.
 Rate :- @ 10%
 Limit :- Rs 10,000
 Deduction at the time of payment or credit of cash or kind.

11. Section 194C : Payment to Resident
Contractor or Sub-Contractor
 Any person responsible for paying to any of the contractor for carrying out
any work (including supply of labour for carrying out work) in pursuance of
a contract shall, at the time of credit or payment whichever is earlier
deduct income tax thereon.
 Rate
 Individual / HUF :- 1%
 Others :- 2%
 Limit
 Any single sum Paid/credited >= Rs 30,000 or,
 Total sum paid/credited during FY >= Rs 1,00,000 .

12. Section 194C : Payment to Resident
Contractor or Sub-Contractor
 Explanation :- For the purpose of this section :-
 “Contract” shall include sub-contract.
 “Work” shall include –
 Advertising;
 Broadcasting and Telecasting including production of programmes for such
broadcasting or telecasting;
 Carriage of goods or passengers by any mode of transport other than by railways;
 Catering;
 Manufacturing or supplying product according to the requirement or specification of
a customer by using material purchased from such customer.

13. Section 194D : Insurance Commission
 Any person responsible for paying to a resident any income by way of
commission or otherwise for soliciting or procuring insurance businesses
shall deduct tax at source.
 Rate :-
 For individual and HUF @ 5%
 For corporate assessee @ 20%
 @ 20% ( If PAN No not furnished)
 Limit : - Rs 15,000.

14. Section 194DA : Payment in respect of
life Insurance policy
 Any person responsible for paying any sum to a resident any sum under
life insurance policy, including sum allocated by the way of bonus on such
policy, other than the amount not includible in total income.
 Rate :- @ 1%
 Limit : - Rs 1,00,000.

15. Section 194E : Payment to non
Residents
 Any payment made to Non resident sportsman, who in not an Indian
citizen or a non resident sports association or institution or non-resident
entertainer.
 Rate :- @ 20%
 Limit :- Any amount
 Exemption :-
 Sports person from
 Participation in any game or sport in India
 Advertisement
 Contribution of articles to newspapers, magazines, or journal
 Income from the performances in India by entertainer.

16. Section 194EE : Payments in respect of
deposits under NSS etc.
 The person responsible for paying to any person any amount which has
been deposited under National saving scheme shall at the time of
payment deduct Income-tax.
 Rate :- @10%
 Limit :- Rs 2,500
 Note :-
 No TDS if the amount is paid to the heirs of the assessee.

17. Section 194G : Commission, etc. on the
sale of lottery tickets.
 Any person paying any income by way of commission, remuneration or
prize (by whatever name called) on lottery tickets shall deduct the Income-
tax.
 Rate :- @ 5%
 Limit :- Rs 15,000

18. Section 194H : Commission or
Brokerage.
 Any person not being an individual or a Hindu Undivided Family, who is
responsible for paying to a resident any income by way of commission (not
being insurance commission) or brokerage shall deduct Income-tax.
 Rate :- @5%
 Limit :- Rs 15,000
 No TDS on the brokerage of shares and securities.

19. Section 194I : Rent.
 Any person other than an individual or a HUF who is responsible for
paying to a resident any income by the way of rent is required to deduct
tax.
 Rate :-
 @ 2% (for rent on plant and machinery and equipment)
 @10% (for rent on land and building, furniture and fixture)
 Limit :- Rs 1,80,000 (for each co-owner)
 Note :- Rent includes any non refundable deposits.

20. Section 194IA : Payment on transfer of
immovable property other than
agricultural land.
 Any person, being transferee, responsible for paying to the resident
transferor any sum by way of consideration of transfer of any immovable
property (other than agricultural land) shall deduct income-tax.
 Rate :- @ 1%
 Limit :- Rs 50,00,000
 The provisions of section 203A shall not apply to a person required to
deduct tax in accordance with the provision of this section.

21. Section 194J : Professional and
technical fees.
 Any person other than an individual or a HUF who is responsible for
paying to a resident following Income :-
 Fees for professional services
 Fees for technical services
 Royalty
 Non competing fees
 Remuneration or fees or commission paid to a director of a company (not
being salaries chargeable under section 15)
 Rate :-
 @ 2% (in case payee is engaged in the business of operation of call center)
 @ 10% (others)

22. Section 194J : Professional and
technical fees.
 Limit :- Rs 30,000
 Note:-
 The term professional includes film artists, resident sport person, resident
umpire, coach, match referee, etc.
 Payment for right to use software amounts to royalty and liable for TDS u/s
194J. Except the following case-
 Software is acquired in a subsequent transfer without any modification; and
 Tax has been deducted on any previous transfer; and such confirmation has obtained
by the transferee along with the PAN of the transferor.

23. Person responsible to deduct tax at
source.
In case of following payments individual or HUF are liable to deduct tax at
source only if in the preceding financial year their accounts have been
subjected t audit u/s 44 AB (I.e. whose gross turnover exceeds Rs 1 crore or
receipts from profession exceeds Rs 50 lakhs)
 Payment to resident contractor u/s 194C
 Commission or brokerage U/s 194 H
 Rent U/s 194I
 Professional or technical services or royalty or non-compete fees U/s 194J
 Interest U/s 194A
In case of individual there shall be no obligation to deduct tax at source
where payments are exclusively for personal purposes.

24. Obtaining TAN
 The person responsible for deducting tax at source must apply for Tax
Deduction and Collection Account Number (TAN).
 However obtaining and quoting TAN shall not be required for such
persons as may be notified by the Central Government. It must be noted
that for payments covered U/s 194IA and 194 IB tax can be deducted at
source without obtaining TAN.

25. TDS Payment
 TDS Must be deposited to the credit of Central Government through
Challan No. 281.
 If deducted in
 Month ending April to Feb then Due date will be 7th of the next month
 For the month March due date will be 30th April.
 If the tax is deducted by Govt. offices then it should be deposited in the
same day without production of challan i.e., by book adjustment.
 E-payment of TDS is mandatory For:
 Company
 Assessee whose accounts are audited u/s 44AB.

26. TDS Return
 The Deductor must file quarterly return with Govt
 For Tax deduction u/s 194IA / 194IB: Tax shall be paid within 30th of the next
month always and shall be accompanied by a challan-cum-statement in form
26QB.
 For Tax deduction under other sections: The Deductor must file quarterly return
with Govt.

Quarter ending Due date of Return
June 30 31st July
September 30 31st October
December 31 31st January
March 31 31st May

27. TDS Return
 Revised Return: The Deductor may also deliver to the prescribed authority
a correction statement for rectification of any mistake or to add, delete or
update the information furnished in the statement delivered in such form
and verified in such manner as may be specified by the authority.
 The deductor must issue a certificate to deductee confirming deduction of
tax at source.