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Tds and tcs

The document provides an extensive overview of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) guidelines under various sections of the Income Tax Act. It details the types of income subject to TDS, the applicable rates, and the responsibilities of deductors in terms of deductions, thresholds, and conditions for various payments like salary, interest, and winnings. Additionally, it covers specific provisions for payments to non-residents, contractors, and other income categories, aiming to minimize tax evasion and streamline tax collection.

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Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) CA. Jugal Narendra Gala
Credits and Acknowledgments Harish Kumar R Thirumal V
Legends used in the Presentation AOP Association of Persons BOI Body of Individuals CBDT Central Board of Direct Taxes CG Central Government EDA Estate Duty Act EPF Employees Provident Fund GIC General Insurance Corporation GTA Gift Tax Act HUF Hindu undivided family IRS Indian Revenue Service ITA Income Tax Act, 1961 LIC Life Insurance Corporation PAN Permanent Account Number PY Previous Year RPF Recognized Provident Fund SG State Government TAN Tax deduction Account Number TCS Tax Collected at Source TDS Tax Deducted at Source UTI Unit Trust of India WTA Wealth Tax Act, 1957
Sections Covered Sec Particulars 192 Salary 192A Payment of accumulated balance due to an employee 193 Interest on securities 194A Interest other than Interest on securities 194B Winnings from lottery or crossword puzzle 194BB Winnings from horse race 194C Payments to contractors 194D Insurance commission 194DA Payment in respect of life insurance policy 194E Payments to non-resident sportsmen or sports associations 194EE Payments in respect of deposits under National Savings Scheme, etc 194F Payments on account of repurchase of units by Mutual Fund or Unit Trust of India 194G Commission, etc., on the sale of lottery tickets 194H Commission or brokerage Secs Particulars 194I Rent 194IA Payment on transfer of certain immovable property other than agricultural land 194IB Payment of rent by certain individuals or HUF 194IC Payment under specified agreement 194J Fees for professional or technical services 194LA Payment of compensation on acquisition of certain immovable property 194LB Income by way of interest from infrastructure debt fund 194LBA Certain income from units of a business trust 194LBB Income in respect of units of investment fund 194LBC Income in respect of investment in securitization trust 194LC Income by way of interest from Indian company 194LD Income by way of interest on certain bonds and Government securities 194M Payment of certain sums by certain individuals or HUF 194N Payment of certain amounts in cash 206C Collection at Source
Introduction Mode of collecting income tax Controlled by CBDT Combines the concept of pay as you earn and collect as it is earned Acts as a tool to collect tax in order to minimise tax evasion Reduces the burden of paying taxes as a lumpsum Steady inflow of revenue to Government
Manner of deduction Salary – Sec 192 Applicability Every person responsible for paying any income chargeable to tax under the head ‘Salaries’ to deduct income tax on the amount payable For purposes of deduction of tax out of salaries payable in a foreign currency, the value of salaries in terms of rupees should be calculated at the telegraphic transfer buying rate on date of deduction In respect of salary payments to employees of Government or to employees of companies, co-operative societies, local authorities, universities, institutions, associations or bodies, deduction of tax at source should be made after allowing relief under Sec 89 (arrears or advance of salary), where eligible Where an assessee has income from sources other than ‘Salary’ such income shall be disclosed to the deductor and TDS shall be deducted accordingly Rate of TDS • Such income-tax has to be calculated at the average rate of income-tax • Average rate means the rate arrived at by dividing the amount of income-tax by the total income Other Conditions • Payment of tax on non-monetary perquisites - the employer may pay this tax, at his option, in lieu of deduction of tax at source at the average rate applicable
Payment of Accumulated Balance Due to an Employee - Sec 192A Applicability • Taxable premature withdrawal from EPF scheme • Trustees of the EPF scheme or any person authorised to make payment of accumulated balance due to employees Time of Deduction Time of payment of accumulated balance due to the employee Non-applicability Amount or aggregate amount of such payment is less than Rs. 50,000 Requirement of Furnishing PAN • Any person entitled to receive any amount has to furnish his PAN to the person responsible for deducting such tax • On Failure, Deduction shall be made maximum marginal rate Rate of TDS 10% Maximum Marginal Rate means the rate of income-tax (including surcharge on income-tax, if any) applicable in relation to the highest slab of income in the case of an individual, AOP or, BOI as specified in the Finance Act of the relevant year
Interest on Securities - Sec 193 Applicability Every person responsible for paying to a resident any income by way of interest on securities Rate of TDS At the rates in force – which is 10% Time of deduction • At the time of credit of such income to the account of payee (includes credit to suspense or payable account) or • At the time of payment by way of cash or by issue of a cheque draft or by any other mode whichever is earlier Any interest payable on 4 % National Defence Bonds, 1972, where the bonds are held by an individual, not being a non-resident; or Any interest payable on National Development Bonds; or Any interest payable on 7-Year National Savings Certificates (IV Issue); or Any interest on debentures, issued by any institution or authority, or public sector company, or co-operative society, as notified by CG Any interest payable to the LIC Any interest payable to the General Insurance Corporation Any interest payable to any other insurer in respect of any securities owned by it or in which it has full beneficial interest; Non- applicability Rate of TDS
Securities Shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate Derivative Units or any other instrument issued by any collective investment scheme to the investors in such schemes Receipt or other security, issued by a securitisation company or reconstruction company to any qualified institutional buyer pursuant to a scheme, evidencing the purchase or acquisition by the holder thereof, of an undivided right, title or interest in the financial asset involved in securitisation Units or any other such instrument issued to the investors under any mutual fund scheme Government securities Such other instruments as may be declared by the Central Government to be securities and Rights or interest in securities Securities shall include: —
Interest other than Interest on Securities - Sec 194A Applicability • Interest other than interest on securities paid to Residents • By Individuals and HUF subject to Tax Audit in the previous FY • And Other Assessees Time of deduction • At the time of crediting such interest to the payee or • At the time of its payment in cash or by any other mode, whichever is earlier At the rates in force – which is 10%Rate of TDS Non-applicability No deduction shall be made: If the aggregate amount of interest paid or credited during the FY does not exceed Rs. 5,000 However, the limit will be Rs. 40,000 in respect of interest paid on : Time deposits with a banking company Time deposits with a co-operative society engaged in banking business Deposits with post office under notified schemes The limit Rs. 40,000 is increased to Rs. 50,000 in case of payee being a resident senior citizen
By a firm to any of its partners By a co-operative society to a member or to any other co-operative society By way of deposits under any scheme framed by the CG By way of deposits (other than time deposits) with: Deposits with primary agricultural credit society or a primary credit society or a co-operative land mortgage bank or a co-operative land development bank By the CG under any provisions of Income-tax Act A bank to which the Banking Regulation Act, 1949 applies: or A co-operative society engaged in carrying on the business of banking Interest credited or paid: Interest paid or credited to the following entities: Banking companies or co-operative societies engaged in the business of banking Financial corporations under Central, State or Provincial Act LIC, UTI, Insurance business carried by companies and co-operative societies Contd. – Non Applicability Notified institution, association, body by CG
Winnings from Lottery or Crossword Puzzle - Sec 194B Any income arising by way of winnings from lotteries, crossword puzzles, card game and other game of any sort other than horse races Rate of TDS 30% Responsibility to deduct TDS Every person responsible for paying to any person Resident or Non-resident Any income which falls under this Sec is required to deduct income tax, if the amount of payment exceeds Rs. 10,000 Where winnings are partly paid in cash and partly in kind • Where the winnings are wholly in kind or partly in cash and partly in kind • but the part in cash is not sufficient to meet the tax liability of deduction of tax • Then the person responsible for paying shall, before releasing the winnings, • Shall ensure that tax has been paid Applicability
Rate of TDS Any income arising by of winnings from horse race 30% Responsibility to deduct TDS The following person shall be responsible for deducting TDS Bookmaker A person to whom license has been granted by government For horse racing in any race course For arranging for wagering (to risk money by guessing the result of something) or betting in any race courseThreshold limit The obligation to deduct TDS when winnings from any horse race is in excess of Rs. 10,000 Winnings from Horse Race – Sec 194 BB Applicability A bookmaker is an organization or a person that accepts and pays off bets on sporting and other events at agreed-upon odds
Applicability Any person responsible for paying any sum to any resident for carrying out any work in pursuance of a contract between the contractor and specified person Specified person CG or SG or local authority, any government of foreign state or a foreign enterprise Any company, co-operative society, trust, firm, and Any person being an individual or HUF or AOP subject to tax audit in the immediately preceding FY Time of Deduction • At the time of payment of such sum or • at the time of credit of such sum to the account of contractor, whichever is earlier Payments to Contractors – Sec 194 C Payee TDS rate Individual/ HUF 1% Other than Individual/ HUF 2% Contractor in transport business (if PAN is furnished) Nil Sub-contractor in transport business (if PAN is furnished) Nil Rate of TDS
Work includes: Advertising, broadcasting and telecasting, carriage of goods or passengers by any mode of transport other than by railways Catering, manufacturing or supplying a product according to the specifications of customer by using customer's material Contd. Non- Applicability No deduction is required during the course of business of plying, hiring or leasing goods carriages if PAN is furnished to deductor No tax has to be deducted at source in respect of payments made by individuals/ HUF to a contractor exclusively for personal purposes Threshold limit Tax has to be deducted at source where the amount credited or paid exceeds Rs. 30,000 in single payment or Rs. 1,00,000 in aggregate during the FY
Applicability any person responsible for paying to a resident any income by way of remuneration or reward, by commission or otherwise, for soliciting or procuring Insurance business Rate of TDS 5% Tax to be deducted if such income or aggregate of amounts of such income exceeds Rs. 15,000 during the FY Insurance Commission – Sec 194 D • At the time of the credit of the income to the account of the payee or • at the time of making the payment to the payee, whichever is earlier. Time of Deduction Threshold limit Payment in respect of Life Insurance Policy – Sec 194DA Applicability Sum received under a life insurance policy which is not exempt under Sec 10(10D) Rate of TDS Deduction is made at the rate of 1% on any sum paid to a resident. However, with effect from 01-09-2019 tax is to be deducted at the rate of 5% Threshold limit If the payment or aggregate payments in a FY to an assessee is Rs. 1,00,000 or more
Sec 10(10D) Any sum received under a life insurance policy, including the sum allocated by way of bonus on such policy is exempt from tax, except the following Any sum received under a policy where the dependent of the assessee (who has claimed 80DD or 80DDA deduction predeceases and the assessee receives the sum assured Any sum received under a Keyman insurance policy Any sum received under an insurance policy n respect of which the premium payable for any of the years during the term of the policy exceeds 10% of the actual capital sum assured The limit shall be 15% in case of policy taken for person with disability or disease or ailment (Sec 80U or 80DDB)
• Any income referred to in Sec 115BBA (Game Fee, Advertisement, Contribution to Articles, any winnings etc. ) • Payable to a non-resident sportsman (including an athlete) or an entertainer who is not a citizen of India or a non-resident sports association or institution. Applicability Rate of TDS 20% Deduction should be made at the time of credit of such income to the account of the payee or at the time of payment, whichever is earlier Time of deduction Mode of payment can be in cash or by issue of a cheque or draft or by any other mode Payments to Non-resident Sportsmen or Sports Association – Sec 194 E Rate of TDS At the rate of 10% at the time of payment No such deduction shall be made where the amount of payment or the aggregate amount of payments in a FY is less than Rs. 2,500 Non-applicability Payments made to the heirs of the assessee shall not attract TDS under this Sec Payments in Respect of Deposits under National Savings Scheme etc. - Sec 194EE Person responsible for paying to any person any amount from National Savings Scheme AccountApplicability Threshold limit
Commission etc. on the Sale of Lottery Tickets - Sec 194G Applicability Time of deduction Deduction should be made at the time of credit of such income to the account of the payee or at the time of payment, whichever is earlier Mode of payment can be in cash or by issue of a cheque or draft or by any other mode Person responsible for paying to any person, who is or has been stocking, distributing, purchasing or selling lottery tickets, any income by way of commission, remuneration or prize on lottery tickets Rate of TDS Threshold limit Amount exceeding Rs. 15,000 5% 20% at the time of payment of such amount Repurchase of units by Mutual Fund or Unit Trust of India – Sec 194F A person responsible for paying to any person any amount on account of repurchase of units covered under Equity Linked Savings Scheme (Sec 80CCB) Applicability Rate of TDS
Applicability and Rate of TDS Any person who is responsible for paying any income by way of commission (other than insurance commission) or brokerage to a resident shall deduct income tax at the rate of 5% However, an individual or HUF not subject to Tax Audit preceding FY is not liable to deduct TDS Time of deduction Such deduction should be made at the time of credit of such income to the account of the payee or at the time of payment of such income, whichever is earlier. Mode of payment may be by cash, cheque, draft or any other mode Threshold limit No deduction is required if the amount of such income or the aggregate of such amount does not exceed Rs. 15,000 during the FY Commission or Brokerage - Sec 194H Meaning of Commission or brokerage any payment received or receivable, directly or indirectly, by a person acting on behalf of another person • for services rendered, • or for any services in the course of buying or selling of goods, • or in relation to any transaction relating to any asset, valuable article or thing, other than securities. Non- Applicability This Sec is not applicable to professional services (which is covered under Sec 194J) Commission or brokerage includes:
Applicability and Rate of TDS Any person who is responsible for paying to a resident any income by way of rent shall deduct income tax at the rate of: 2% in respect of rent for plant, machinery or equipment 10% in respect of other rental payments Rent - Sec 194I However, an individual or HUF not subject to Tax Audit preceding FY is not liable to deduct TDS Threshold limit No deduction need be made where the amount of such income or the aggregate of the amounts does not exceed Rs. 2,40,000 Meaning of Rent Rent means any payment, by whatever name called, under any lease, sub-lease, tenancy or any- Land Building Land appurtenant to a building Machinery Plant Equipment Furniture Fittings Time of deduction Such deduction should be made at the time of credit of such income to the account of the payee or at the time of payment of such income, whichever is earlier. Mode of payment may be by cash, cheque, draft or any other mode
Applicability and Rate of TDS Every transferee responsible for paying any sum as consideration for transfer of immovable property to a resident shall deduct tax, at the rate of 1% of such sum Time of deduction Such deduction should be made at the time of credit of such sum to the account of the resident transferor or at the time of payment of such sum, whichever is earlier. Threshold limit No deduction required where the total amount of consideration is less than Rs. 50 lakhs Non- applicability Compulsory acquisition of immovable property not covered under this Sec (Sec 194LA will apply) Payment on Transfer of Certain Immovable Property other than Agricultural Land - Sec 194IA Non-applicability of TAN Requirement of obtaining TAN shall not apply to the person required to deduct tax in accordance with the provisions of Sec 194-IA advance fee or any other charges of similar nature maintenance fee electricity or water facility fee car parking fee club membership fee Consideration for transfer of any immovable property includes all charges of the nature of : Explanation regarding consideration which are incidental to transfer of the immovable property Expl. inserted by Union Budget 2019
Applicability and Rate of TDS Individual or a HUF other than those not subject to Tax Audit in the immediately preceding FY responsible for paying to a resident any income by way of rent rate of 5% Threshold limit Time of deduction Tax has to be deducted at source only if the amount of such rent exceeds Rs. 50,000 for a month or part of a month during the PY • At the time of credit of such rent to the account of the payee or • At the time of payment thereof in cash or by issue of cheque or draft or by any other mode, whichever is earlier. Payment of Rent by Certain individuals or HUF - Sec 194 IB Non-applicability of TAN Requirement of obtaining TAN shall not apply to the person required to deduct tax in accordance with the provisions of Sec 194-IB Requirement to furnish PAN Sec 206 AA requires providing of PAN, failing which tax shall be deducted at a higher rate of 20%. As per the Sec 206 AA, deduction shall not exceed the amount of rent payable for the last month of the previous year or the last month of the tenancy, as the case may be.
Applicability and Rate of TDS Any person responsible for paying to a resident any sum by way of consideration, not being consideration in kind, under a Joint Development Agreement, to deduct income-tax at the rate of 10% Payment under Joint Development Agreement - Sec 194 IC Time of deduction Such deduction should be made at the time of credit of such income to the account of the payee or at the time of payment of such income, whichever is earlier. Mode of payment may be by cash, cheque, draft or any other mode Non-Applicability of Sec 194-IA Since, TDS under JDA is covered in this Sec, Sec 194-IA (Transfer of Immovable Property) shall not apply Meaning of specified agreement (JDA) - Sec 45(5A) It means a registered agreement in which a person owning land or building or both, agrees to allow another person to develop a real estate project on such land or building or both The consideration, in this case, is a share, being land or building or both in such project; part of the consideration may also be in cash
Applicability and Rate of TDS Every person, who is responsible for paying to a resident any sum by way of Fees for professional services Fees for technical services Any remuneration or fees or commission, by whatever name called, other than Salary, to a director of a company Royalty Non-compete fees referred to in sec 28(va)c shall deduct tax at source at the rate of 5% However, in case of a payee, engaged only in the business of operation of call centre, the TDS will be at 2% Time of deduction Such deduction should be made at the time of credit of such income to the account of the payee or at the time of payment of such income, whichever is earlier. Mode of payment may be by cash, cheque, draft or any other mode Fees for Professional or Technical Services - Sec 194J Threshold limit No deduction required if the amount of fees or the aggregate of the amounts of fees during a FY does not exceed Rs. 30,000 in the case of fees for professional services, fees for technical services, royalty and non-compete fees
Meaning of Professional services Professional services means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the CBDT for the purposes of Sec 44 AA or of this Sec. Contd. Non- Applicability An individual or HUF not subject to Tax Audit in the immediately preceding FY is not liable to deduct tax at source An individual or HUF shall not be liable to deduct TDS, in case such sum is credited or paid exclusively for personal purposes Meaning of Fees for technical services Means any consideration for rendering of any of the following services: Managerial services Technical services Consultancy services Provision of services of technical or other personnel The term does not include Consideration for any construction, assembly, mining Consideration which is chargeable under the head ‘Salaries’
Applicability The person responsible for paying to a resident any sum in the nature of compensation or the enhanced compensation the consideration or the enhanced consideration on account of compulsory acquisition, under any law for the time being in force, of any immovable property (other than agricultural land) Rate of TDS The amount of tax to be deducted is 10% of such sum Time of deduction The tax should be deducted at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier Threshold limit If the amount of such payment or, the aggregate amount of such payments to a resident during the FY does not exceed Rs. 2,50,000 then no deduction is required Payment of Compensation on Acquisition of Certain Immovable Property - Sec 194LA Non-applicability of TDS under Sec 194LA No TDS required where payment is made in respect of any award or agreement which has been exempted from levy of income tax under Sec 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013
Special rate of tax on interest received by non-residents from notified infrastructure debt funds Interest income received by a non-corporate non-resident or a foreign company from notified infrastructure debt funds would be subject to tax at a concessional rate of 5% Rate of TDS The amount of tax to be deducted is 5% on interest paid/credited by such fund to a non- resident/foreign company Time of deduction Such deduction should be made at the time of credit of such income to the account of the payee or at the time of payment of such income, whichever is earlier. Mode of payment may be by cash, cheque, draft or any other mode Income by way of Interest from Infrastructure Debt Fund - Sec 194 LB Applicability
Applicability and Rate of TDS Certain Income From Units of a Business Trust – Sec 194 LBA Particulars Recipient Rate • Distributing any interest received or receivable by it from a Special Purpose Vehicle (SPV) or • Any income received from renting or leasing or letting out any real estate asset owned directly by it, • to its unit holders Any Resident 10% Distributing any interest income received or receivable by it from a SPV to its unit holders Any Non-resident 5% Distributing any income received from renting or leasing or letting out any real estate asset owned directly by it to its unit holders Non-resident (not being a company) 30% Distributing any income received from renting or leasing or letting out any real estate asset owned directly by it to its unit holders Foreign Company 40% Business Trust Means an Infrastructure Investment Trust or a Real Estate Investment Trust which are listed in a stock exchange Special Purpose Vehicle SPV is an entity through which a business trust holds real estate assets
Income in Respect of Units of Investment Fund – Sec 194LBB Applicability Income distributed by an Investment Fund to its unit holder other than in the nature of PGBP (PGBP income is taxable in the hands of the fund) Rate of TDS Where the Payee is a: • Resident – 10% • Non-resident (other than company) – 30% • Foreign Company – 40% In case of Non-residents, TDS shall not be deducted if the distributed income is not chargeable to tax for such person as per provisions of Income-tax Investment Fund • Means any fund established or incorporated in India in the form of a Trust or a Company or a LLP or a body corporate • which has been granted a certificate of registration as a Category I or a Category II Alternative Investment Fund and is regulated under SEBI Regulations
Income in Respect of Investment in Securitization Trust – Sec 194LBC Applicability Income payable to an investor in respect of investment in a Securitisation trust Rate of TDS Payee Rate Resident Individuals and HUF 25% Residents other than Individuals and HUF 30% Non-resident (other than company) 30% Foreign Company 40% Securitisation Trust Means a trust, being a— • Special purpose distinct entity as SEBI (Securitised Debt Instruments) regulations or • Special Purpose Vehicle as defined in, and regulated by, the guidelines on securitisation of standard assets issued by RBI or • Trust set-up by a securitisation company or a reconstruction company formed, for the purposes of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, or in pursuance of RBI guidelines
Concessional rate of tax on interest on foreign currency borrowings by an Indian company or business trust To avail this concessional rate, the borrowing should be from a source outside India : Under a loan agreement at any time between 1.7.2012 and 30.6.2020 or By way of issue of any long-term bond, during the period between 1.10.2014 and 30.6.2020 and approved by the CG Rate of TDS The amount of tax should be deducted @ 5% Income by way of Interest from an Indian company - Sec 194LC Income by way of Interest on Certain Bonds and Government Securities – Sec 194 LD Any income by way of interest payable during the period between 1.6.2013 and 30.6.2020 in respect of investment made by an Foreign Institutional Investor or Qualified Foreign Investor in a rupee denominated bond of an Indian company or a Government security, shall be subject to tax deduction at source at a concessional rate of 5% Applicability and Rate of TDS Time of deduction Any such interest shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier
Applicability and rate of TDS For carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract; or By way of commission (not being insurance commission referred to in Sec 194D) or brokerage; or By way of fees for professional services Time of deduction The rate of deduction is at 5% The tax should be deducted at the time of credit of such sum or at the time of payment of such sum, whichever is earlier. Threshold limit No TDS shall be deducted if the such sum or aggregate of such sums does not exceed Rs. 50 lakhs during the FY An individual or a HUF responsible for paying any sum during the financial year to any resident: Payment of Certain Sums by Certain Individuals or HUF – Sec 194M Non-applicability An individual or a Hindu undivided family is not liable to deduct tax at source, if: They are required to deduct tax at source under Sec 194C They are required to deduct tax at source under Sec 194H on commission They are required to deduct tax at source under Sec 194J Inserted by Union Budget 2019
Applicability and rate of TDS every person being a banking company a co-operative society engaged in the business of banking a post office • Responsible for paying, in cash, any sum or aggregate of sums exceeding Rs. 1 crore during the PY to any person, • shall deduct TDS @ 2% exceeding Rs. 1 crore Payment of Certain Amounts in Cash – Sec 194 N Time of deduction This deduction is to be made at the time of payment of such sum Non-applicability The government Any banking company or co-operative society engaged in carrying on the business of banking or a post-office Any business correspondent of a banking company or co-operative society engaged in carrying on the business of banking, in accordance with the RBI guidelines Any white label ATM operator of a banking company or co-operative society engaged in carrying on the business of banking Such other person or class of persons notified by the central government in consultation with the RBI In case of payments made to Inserted by Union Budget 2019
Applicability and rate of TDS Sellers of certain goods are required to collect tax from the buyers at the specified rates Nature of Goods Percentage (i) Alcoholic liquor for human consumption 1% (ii) Tendu leaves 5% (iii) Timber obtained under a forest lease 2.5% (iv) Timber obtained by any mode other than (iii) 2.5% (v) Any other forest produce not being timber or tendu leaves 2.5% (vi) Scrap 1% (vii) Minerals, being coal or lignite or iron ore 1% Specified rates Tax Collection at Source – Sec 206 C
Every person, being a seller, who receives any amount as consideration for sale of a motor vehicle of the value exceeding Rs. 10 lakhs, shall collect tax from the buyer @1% of the sale consideration Non-applicability • No collection of tax shall be made in the case of a resident buyer furnishes to the person responsible for collecting tax, • a declaration that the specified goods are to be utilised for the purpose of • manufacturing, processing or producing articles or things or for the purposes of generation of power and not for trading purposes. Contd. Every person who grants a lease or a license or enters into a contract or otherwise transfers any right or interest in any parking lot toll plaza a mine or a quarry to another person (other than a public sector company) for the use of such parking lot or toll plaza or mine or quarry for the purposes of business At the rate of 2%
Consequences of Non-compliance of TDS Provisions Sec Nature of Default Consequence 40 (a) (i) Non deduction or non payment of TDS on interest, royalty, FTS or any sum payable to non-residents 100% disallowance of expenditure, shall be allowed in year of deduction 201 (1) TDS not withheld or deposited properly Deemed to be Assessee in default 201 (1A) TDS not withheld or deposited properly Interest per month or part of the month Non-deduction - @ 1% Non-payment - @1.5% 221 TDS withheld but not paid Penalty not exceeding tax not paid 271C Tax not withheld or short withheld Penalty not exceeding the tax not withheld 234E Failure to file TDS Return • Penalty of Rs 200 per day shall be paid by the assessee until the time the default continues. • Penalty not exceeding tax not paid 234F Failure to furnish TDS Returns or Furnishing of incorrect information Penalty of Rs. 10,000 to Rs.1,00,000
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Tds and tcs

  • 1.
    Tax Deducted atSource (TDS) and Tax Collected at Source (TCS) CA. Jugal Narendra Gala
  • 2.
  • 3.
    Legends used inthe Presentation AOP Association of Persons BOI Body of Individuals CBDT Central Board of Direct Taxes CG Central Government EDA Estate Duty Act EPF Employees Provident Fund GIC General Insurance Corporation GTA Gift Tax Act HUF Hindu undivided family IRS Indian Revenue Service ITA Income Tax Act, 1961 LIC Life Insurance Corporation PAN Permanent Account Number PY Previous Year RPF Recognized Provident Fund SG State Government TAN Tax deduction Account Number TCS Tax Collected at Source TDS Tax Deducted at Source UTI Unit Trust of India WTA Wealth Tax Act, 1957
  • 4.
    Sections Covered Sec Particulars 192Salary 192A Payment of accumulated balance due to an employee 193 Interest on securities 194A Interest other than Interest on securities 194B Winnings from lottery or crossword puzzle 194BB Winnings from horse race 194C Payments to contractors 194D Insurance commission 194DA Payment in respect of life insurance policy 194E Payments to non-resident sportsmen or sports associations 194EE Payments in respect of deposits under National Savings Scheme, etc 194F Payments on account of repurchase of units by Mutual Fund or Unit Trust of India 194G Commission, etc., on the sale of lottery tickets 194H Commission or brokerage Secs Particulars 194I Rent 194IA Payment on transfer of certain immovable property other than agricultural land 194IB Payment of rent by certain individuals or HUF 194IC Payment under specified agreement 194J Fees for professional or technical services 194LA Payment of compensation on acquisition of certain immovable property 194LB Income by way of interest from infrastructure debt fund 194LBA Certain income from units of a business trust 194LBB Income in respect of units of investment fund 194LBC Income in respect of investment in securitization trust 194LC Income by way of interest from Indian company 194LD Income by way of interest on certain bonds and Government securities 194M Payment of certain sums by certain individuals or HUF 194N Payment of certain amounts in cash 206C Collection at Source
  • 5.
    Introduction Mode of collectingincome tax Controlled by CBDT Combines the concept of pay as you earn and collect as it is earned Acts as a tool to collect tax in order to minimise tax evasion Reduces the burden of paying taxes as a lumpsum Steady inflow of revenue to Government
  • 6.
    Manner of deduction Salary– Sec 192 Applicability Every person responsible for paying any income chargeable to tax under the head ‘Salaries’ to deduct income tax on the amount payable For purposes of deduction of tax out of salaries payable in a foreign currency, the value of salaries in terms of rupees should be calculated at the telegraphic transfer buying rate on date of deduction In respect of salary payments to employees of Government or to employees of companies, co-operative societies, local authorities, universities, institutions, associations or bodies, deduction of tax at source should be made after allowing relief under Sec 89 (arrears or advance of salary), where eligible Where an assessee has income from sources other than ‘Salary’ such income shall be disclosed to the deductor and TDS shall be deducted accordingly Rate of TDS • Such income-tax has to be calculated at the average rate of income-tax • Average rate means the rate arrived at by dividing the amount of income-tax by the total income Other Conditions • Payment of tax on non-monetary perquisites - the employer may pay this tax, at his option, in lieu of deduction of tax at source at the average rate applicable
  • 7.
    Payment of AccumulatedBalance Due to an Employee - Sec 192A Applicability • Taxable premature withdrawal from EPF scheme • Trustees of the EPF scheme or any person authorised to make payment of accumulated balance due to employees Time of Deduction Time of payment of accumulated balance due to the employee Non-applicability Amount or aggregate amount of such payment is less than Rs. 50,000 Requirement of Furnishing PAN • Any person entitled to receive any amount has to furnish his PAN to the person responsible for deducting such tax • On Failure, Deduction shall be made maximum marginal rate Rate of TDS 10% Maximum Marginal Rate means the rate of income-tax (including surcharge on income-tax, if any) applicable in relation to the highest slab of income in the case of an individual, AOP or, BOI as specified in the Finance Act of the relevant year
  • 8.
    Interest on Securities- Sec 193 Applicability Every person responsible for paying to a resident any income by way of interest on securities Rate of TDS At the rates in force – which is 10% Time of deduction • At the time of credit of such income to the account of payee (includes credit to suspense or payable account) or • At the time of payment by way of cash or by issue of a cheque draft or by any other mode whichever is earlier Any interest payable on 4 % National Defence Bonds, 1972, where the bonds are held by an individual, not being a non-resident; or Any interest payable on National Development Bonds; or Any interest payable on 7-Year National Savings Certificates (IV Issue); or Any interest on debentures, issued by any institution or authority, or public sector company, or co-operative society, as notified by CG Any interest payable to the LIC Any interest payable to the General Insurance Corporation Any interest payable to any other insurer in respect of any securities owned by it or in which it has full beneficial interest; Non- applicability Rate of TDS
  • 9.
    Securities Shares, scrips, stocks,bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate Derivative Units or any other instrument issued by any collective investment scheme to the investors in such schemes Receipt or other security, issued by a securitisation company or reconstruction company to any qualified institutional buyer pursuant to a scheme, evidencing the purchase or acquisition by the holder thereof, of an undivided right, title or interest in the financial asset involved in securitisation Units or any other such instrument issued to the investors under any mutual fund scheme Government securities Such other instruments as may be declared by the Central Government to be securities and Rights or interest in securities Securities shall include: —
  • 10.
    Interest other thanInterest on Securities - Sec 194A Applicability • Interest other than interest on securities paid to Residents • By Individuals and HUF subject to Tax Audit in the previous FY • And Other Assessees Time of deduction • At the time of crediting such interest to the payee or • At the time of its payment in cash or by any other mode, whichever is earlier At the rates in force – which is 10%Rate of TDS Non-applicability No deduction shall be made: If the aggregate amount of interest paid or credited during the FY does not exceed Rs. 5,000 However, the limit will be Rs. 40,000 in respect of interest paid on : Time deposits with a banking company Time deposits with a co-operative society engaged in banking business Deposits with post office under notified schemes The limit Rs. 40,000 is increased to Rs. 50,000 in case of payee being a resident senior citizen
  • 11.
    By a firmto any of its partners By a co-operative society to a member or to any other co-operative society By way of deposits under any scheme framed by the CG By way of deposits (other than time deposits) with: Deposits with primary agricultural credit society or a primary credit society or a co-operative land mortgage bank or a co-operative land development bank By the CG under any provisions of Income-tax Act A bank to which the Banking Regulation Act, 1949 applies: or A co-operative society engaged in carrying on the business of banking Interest credited or paid: Interest paid or credited to the following entities: Banking companies or co-operative societies engaged in the business of banking Financial corporations under Central, State or Provincial Act LIC, UTI, Insurance business carried by companies and co-operative societies Contd. – Non Applicability Notified institution, association, body by CG
  • 12.
    Winnings from Lotteryor Crossword Puzzle - Sec 194B Any income arising by way of winnings from lotteries, crossword puzzles, card game and other game of any sort other than horse races Rate of TDS 30% Responsibility to deduct TDS Every person responsible for paying to any person Resident or Non-resident Any income which falls under this Sec is required to deduct income tax, if the amount of payment exceeds Rs. 10,000 Where winnings are partly paid in cash and partly in kind • Where the winnings are wholly in kind or partly in cash and partly in kind • but the part in cash is not sufficient to meet the tax liability of deduction of tax • Then the person responsible for paying shall, before releasing the winnings, • Shall ensure that tax has been paid Applicability
  • 13.
    Rate of TDS Anyincome arising by of winnings from horse race 30% Responsibility to deduct TDS The following person shall be responsible for deducting TDS Bookmaker A person to whom license has been granted by government For horse racing in any race course For arranging for wagering (to risk money by guessing the result of something) or betting in any race courseThreshold limit The obligation to deduct TDS when winnings from any horse race is in excess of Rs. 10,000 Winnings from Horse Race – Sec 194 BB Applicability A bookmaker is an organization or a person that accepts and pays off bets on sporting and other events at agreed-upon odds
  • 14.
    Applicability Any personresponsible for paying any sum to any resident for carrying out any work in pursuance of a contract between the contractor and specified person Specified person CG or SG or local authority, any government of foreign state or a foreign enterprise Any company, co-operative society, trust, firm, and Any person being an individual or HUF or AOP subject to tax audit in the immediately preceding FY Time of Deduction • At the time of payment of such sum or • at the time of credit of such sum to the account of contractor, whichever is earlier Payments to Contractors – Sec 194 C Payee TDS rate Individual/ HUF 1% Other than Individual/ HUF 2% Contractor in transport business (if PAN is furnished) Nil Sub-contractor in transport business (if PAN is furnished) Nil Rate of TDS
  • 15.
    Work includes: Advertising, broadcastingand telecasting, carriage of goods or passengers by any mode of transport other than by railways Catering, manufacturing or supplying a product according to the specifications of customer by using customer's material Contd. Non- Applicability No deduction is required during the course of business of plying, hiring or leasing goods carriages if PAN is furnished to deductor No tax has to be deducted at source in respect of payments made by individuals/ HUF to a contractor exclusively for personal purposes Threshold limit Tax has to be deducted at source where the amount credited or paid exceeds Rs. 30,000 in single payment or Rs. 1,00,000 in aggregate during the FY
  • 16.
    Applicability any personresponsible for paying to a resident any income by way of remuneration or reward, by commission or otherwise, for soliciting or procuring Insurance business Rate of TDS 5% Tax to be deducted if such income or aggregate of amounts of such income exceeds Rs. 15,000 during the FY Insurance Commission – Sec 194 D • At the time of the credit of the income to the account of the payee or • at the time of making the payment to the payee, whichever is earlier. Time of Deduction Threshold limit Payment in respect of Life Insurance Policy – Sec 194DA Applicability Sum received under a life insurance policy which is not exempt under Sec 10(10D) Rate of TDS Deduction is made at the rate of 1% on any sum paid to a resident. However, with effect from 01-09-2019 tax is to be deducted at the rate of 5% Threshold limit If the payment or aggregate payments in a FY to an assessee is Rs. 1,00,000 or more
  • 17.
    Sec 10(10D) Any sumreceived under a life insurance policy, including the sum allocated by way of bonus on such policy is exempt from tax, except the following Any sum received under a policy where the dependent of the assessee (who has claimed 80DD or 80DDA deduction predeceases and the assessee receives the sum assured Any sum received under a Keyman insurance policy Any sum received under an insurance policy n respect of which the premium payable for any of the years during the term of the policy exceeds 10% of the actual capital sum assured The limit shall be 15% in case of policy taken for person with disability or disease or ailment (Sec 80U or 80DDB)
  • 18.
    • Any incomereferred to in Sec 115BBA (Game Fee, Advertisement, Contribution to Articles, any winnings etc. ) • Payable to a non-resident sportsman (including an athlete) or an entertainer who is not a citizen of India or a non-resident sports association or institution. Applicability Rate of TDS 20% Deduction should be made at the time of credit of such income to the account of the payee or at the time of payment, whichever is earlier Time of deduction Mode of payment can be in cash or by issue of a cheque or draft or by any other mode Payments to Non-resident Sportsmen or Sports Association – Sec 194 E Rate of TDS At the rate of 10% at the time of payment No such deduction shall be made where the amount of payment or the aggregate amount of payments in a FY is less than Rs. 2,500 Non-applicability Payments made to the heirs of the assessee shall not attract TDS under this Sec Payments in Respect of Deposits under National Savings Scheme etc. - Sec 194EE Person responsible for paying to any person any amount from National Savings Scheme AccountApplicability Threshold limit
  • 19.
    Commission etc. onthe Sale of Lottery Tickets - Sec 194G Applicability Time of deduction Deduction should be made at the time of credit of such income to the account of the payee or at the time of payment, whichever is earlier Mode of payment can be in cash or by issue of a cheque or draft or by any other mode Person responsible for paying to any person, who is or has been stocking, distributing, purchasing or selling lottery tickets, any income by way of commission, remuneration or prize on lottery tickets Rate of TDS Threshold limit Amount exceeding Rs. 15,000 5% 20% at the time of payment of such amount Repurchase of units by Mutual Fund or Unit Trust of India – Sec 194F A person responsible for paying to any person any amount on account of repurchase of units covered under Equity Linked Savings Scheme (Sec 80CCB) Applicability Rate of TDS
  • 20.
    Applicability and Rate ofTDS Any person who is responsible for paying any income by way of commission (other than insurance commission) or brokerage to a resident shall deduct income tax at the rate of 5% However, an individual or HUF not subject to Tax Audit preceding FY is not liable to deduct TDS Time of deduction Such deduction should be made at the time of credit of such income to the account of the payee or at the time of payment of such income, whichever is earlier. Mode of payment may be by cash, cheque, draft or any other mode Threshold limit No deduction is required if the amount of such income or the aggregate of such amount does not exceed Rs. 15,000 during the FY Commission or Brokerage - Sec 194H Meaning of Commission or brokerage any payment received or receivable, directly or indirectly, by a person acting on behalf of another person • for services rendered, • or for any services in the course of buying or selling of goods, • or in relation to any transaction relating to any asset, valuable article or thing, other than securities. Non- Applicability This Sec is not applicable to professional services (which is covered under Sec 194J) Commission or brokerage includes:
  • 21.
    Applicability and Rateof TDS Any person who is responsible for paying to a resident any income by way of rent shall deduct income tax at the rate of: 2% in respect of rent for plant, machinery or equipment 10% in respect of other rental payments Rent - Sec 194I However, an individual or HUF not subject to Tax Audit preceding FY is not liable to deduct TDS Threshold limit No deduction need be made where the amount of such income or the aggregate of the amounts does not exceed Rs. 2,40,000 Meaning of Rent Rent means any payment, by whatever name called, under any lease, sub-lease, tenancy or any- Land Building Land appurtenant to a building Machinery Plant Equipment Furniture Fittings Time of deduction Such deduction should be made at the time of credit of such income to the account of the payee or at the time of payment of such income, whichever is earlier. Mode of payment may be by cash, cheque, draft or any other mode
  • 22.
    Applicability and Rateof TDS Every transferee responsible for paying any sum as consideration for transfer of immovable property to a resident shall deduct tax, at the rate of 1% of such sum Time of deduction Such deduction should be made at the time of credit of such sum to the account of the resident transferor or at the time of payment of such sum, whichever is earlier. Threshold limit No deduction required where the total amount of consideration is less than Rs. 50 lakhs Non- applicability Compulsory acquisition of immovable property not covered under this Sec (Sec 194LA will apply) Payment on Transfer of Certain Immovable Property other than Agricultural Land - Sec 194IA Non-applicability of TAN Requirement of obtaining TAN shall not apply to the person required to deduct tax in accordance with the provisions of Sec 194-IA advance fee or any other charges of similar nature maintenance fee electricity or water facility fee car parking fee club membership fee Consideration for transfer of any immovable property includes all charges of the nature of : Explanation regarding consideration which are incidental to transfer of the immovable property Expl. inserted by Union Budget 2019
  • 23.
    Applicability and Rateof TDS Individual or a HUF other than those not subject to Tax Audit in the immediately preceding FY responsible for paying to a resident any income by way of rent rate of 5% Threshold limit Time of deduction Tax has to be deducted at source only if the amount of such rent exceeds Rs. 50,000 for a month or part of a month during the PY • At the time of credit of such rent to the account of the payee or • At the time of payment thereof in cash or by issue of cheque or draft or by any other mode, whichever is earlier. Payment of Rent by Certain individuals or HUF - Sec 194 IB Non-applicability of TAN Requirement of obtaining TAN shall not apply to the person required to deduct tax in accordance with the provisions of Sec 194-IB Requirement to furnish PAN Sec 206 AA requires providing of PAN, failing which tax shall be deducted at a higher rate of 20%. As per the Sec 206 AA, deduction shall not exceed the amount of rent payable for the last month of the previous year or the last month of the tenancy, as the case may be.
  • 24.
    Applicability and Rate ofTDS Any person responsible for paying to a resident any sum by way of consideration, not being consideration in kind, under a Joint Development Agreement, to deduct income-tax at the rate of 10% Payment under Joint Development Agreement - Sec 194 IC Time of deduction Such deduction should be made at the time of credit of such income to the account of the payee or at the time of payment of such income, whichever is earlier. Mode of payment may be by cash, cheque, draft or any other mode Non-Applicability of Sec 194-IA Since, TDS under JDA is covered in this Sec, Sec 194-IA (Transfer of Immovable Property) shall not apply Meaning of specified agreement (JDA) - Sec 45(5A) It means a registered agreement in which a person owning land or building or both, agrees to allow another person to develop a real estate project on such land or building or both The consideration, in this case, is a share, being land or building or both in such project; part of the consideration may also be in cash
  • 25.
    Applicability and Rateof TDS Every person, who is responsible for paying to a resident any sum by way of Fees for professional services Fees for technical services Any remuneration or fees or commission, by whatever name called, other than Salary, to a director of a company Royalty Non-compete fees referred to in sec 28(va)c shall deduct tax at source at the rate of 5% However, in case of a payee, engaged only in the business of operation of call centre, the TDS will be at 2% Time of deduction Such deduction should be made at the time of credit of such income to the account of the payee or at the time of payment of such income, whichever is earlier. Mode of payment may be by cash, cheque, draft or any other mode Fees for Professional or Technical Services - Sec 194J Threshold limit No deduction required if the amount of fees or the aggregate of the amounts of fees during a FY does not exceed Rs. 30,000 in the case of fees for professional services, fees for technical services, royalty and non-compete fees
  • 26.
    Meaning of Professionalservices Professional services means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the CBDT for the purposes of Sec 44 AA or of this Sec. Contd. Non- Applicability An individual or HUF not subject to Tax Audit in the immediately preceding FY is not liable to deduct tax at source An individual or HUF shall not be liable to deduct TDS, in case such sum is credited or paid exclusively for personal purposes Meaning of Fees for technical services Means any consideration for rendering of any of the following services: Managerial services Technical services Consultancy services Provision of services of technical or other personnel The term does not include Consideration for any construction, assembly, mining Consideration which is chargeable under the head ‘Salaries’
  • 27.
    Applicability The personresponsible for paying to a resident any sum in the nature of compensation or the enhanced compensation the consideration or the enhanced consideration on account of compulsory acquisition, under any law for the time being in force, of any immovable property (other than agricultural land) Rate of TDS The amount of tax to be deducted is 10% of such sum Time of deduction The tax should be deducted at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier Threshold limit If the amount of such payment or, the aggregate amount of such payments to a resident during the FY does not exceed Rs. 2,50,000 then no deduction is required Payment of Compensation on Acquisition of Certain Immovable Property - Sec 194LA Non-applicability of TDS under Sec 194LA No TDS required where payment is made in respect of any award or agreement which has been exempted from levy of income tax under Sec 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013
  • 28.
    Special rate oftax on interest received by non-residents from notified infrastructure debt funds Interest income received by a non-corporate non-resident or a foreign company from notified infrastructure debt funds would be subject to tax at a concessional rate of 5% Rate of TDS The amount of tax to be deducted is 5% on interest paid/credited by such fund to a non- resident/foreign company Time of deduction Such deduction should be made at the time of credit of such income to the account of the payee or at the time of payment of such income, whichever is earlier. Mode of payment may be by cash, cheque, draft or any other mode Income by way of Interest from Infrastructure Debt Fund - Sec 194 LB Applicability
  • 29.
    Applicability and Rateof TDS Certain Income From Units of a Business Trust – Sec 194 LBA Particulars Recipient Rate • Distributing any interest received or receivable by it from a Special Purpose Vehicle (SPV) or • Any income received from renting or leasing or letting out any real estate asset owned directly by it, • to its unit holders Any Resident 10% Distributing any interest income received or receivable by it from a SPV to its unit holders Any Non-resident 5% Distributing any income received from renting or leasing or letting out any real estate asset owned directly by it to its unit holders Non-resident (not being a company) 30% Distributing any income received from renting or leasing or letting out any real estate asset owned directly by it to its unit holders Foreign Company 40% Business Trust Means an Infrastructure Investment Trust or a Real Estate Investment Trust which are listed in a stock exchange Special Purpose Vehicle SPV is an entity through which a business trust holds real estate assets
  • 30.
    Income in Respectof Units of Investment Fund – Sec 194LBB Applicability Income distributed by an Investment Fund to its unit holder other than in the nature of PGBP (PGBP income is taxable in the hands of the fund) Rate of TDS Where the Payee is a: • Resident – 10% • Non-resident (other than company) – 30% • Foreign Company – 40% In case of Non-residents, TDS shall not be deducted if the distributed income is not chargeable to tax for such person as per provisions of Income-tax Investment Fund • Means any fund established or incorporated in India in the form of a Trust or a Company or a LLP or a body corporate • which has been granted a certificate of registration as a Category I or a Category II Alternative Investment Fund and is regulated under SEBI Regulations
  • 31.
    Income in Respectof Investment in Securitization Trust – Sec 194LBC Applicability Income payable to an investor in respect of investment in a Securitisation trust Rate of TDS Payee Rate Resident Individuals and HUF 25% Residents other than Individuals and HUF 30% Non-resident (other than company) 30% Foreign Company 40% Securitisation Trust Means a trust, being a— • Special purpose distinct entity as SEBI (Securitised Debt Instruments) regulations or • Special Purpose Vehicle as defined in, and regulated by, the guidelines on securitisation of standard assets issued by RBI or • Trust set-up by a securitisation company or a reconstruction company formed, for the purposes of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, or in pursuance of RBI guidelines
  • 32.
    Concessional rate oftax on interest on foreign currency borrowings by an Indian company or business trust To avail this concessional rate, the borrowing should be from a source outside India : Under a loan agreement at any time between 1.7.2012 and 30.6.2020 or By way of issue of any long-term bond, during the period between 1.10.2014 and 30.6.2020 and approved by the CG Rate of TDS The amount of tax should be deducted @ 5% Income by way of Interest from an Indian company - Sec 194LC Income by way of Interest on Certain Bonds and Government Securities – Sec 194 LD Any income by way of interest payable during the period between 1.6.2013 and 30.6.2020 in respect of investment made by an Foreign Institutional Investor or Qualified Foreign Investor in a rupee denominated bond of an Indian company or a Government security, shall be subject to tax deduction at source at a concessional rate of 5% Applicability and Rate of TDS Time of deduction Any such interest shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier
  • 33.
    Applicability and rateof TDS For carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract; or By way of commission (not being insurance commission referred to in Sec 194D) or brokerage; or By way of fees for professional services Time of deduction The rate of deduction is at 5% The tax should be deducted at the time of credit of such sum or at the time of payment of such sum, whichever is earlier. Threshold limit No TDS shall be deducted if the such sum or aggregate of such sums does not exceed Rs. 50 lakhs during the FY An individual or a HUF responsible for paying any sum during the financial year to any resident: Payment of Certain Sums by Certain Individuals or HUF – Sec 194M Non-applicability An individual or a Hindu undivided family is not liable to deduct tax at source, if: They are required to deduct tax at source under Sec 194C They are required to deduct tax at source under Sec 194H on commission They are required to deduct tax at source under Sec 194J Inserted by Union Budget 2019
  • 34.
    Applicability and rateof TDS every person being a banking company a co-operative society engaged in the business of banking a post office • Responsible for paying, in cash, any sum or aggregate of sums exceeding Rs. 1 crore during the PY to any person, • shall deduct TDS @ 2% exceeding Rs. 1 crore Payment of Certain Amounts in Cash – Sec 194 N Time of deduction This deduction is to be made at the time of payment of such sum Non-applicability The government Any banking company or co-operative society engaged in carrying on the business of banking or a post-office Any business correspondent of a banking company or co-operative society engaged in carrying on the business of banking, in accordance with the RBI guidelines Any white label ATM operator of a banking company or co-operative society engaged in carrying on the business of banking Such other person or class of persons notified by the central government in consultation with the RBI In case of payments made to Inserted by Union Budget 2019
  • 35.
    Applicability and rateof TDS Sellers of certain goods are required to collect tax from the buyers at the specified rates Nature of Goods Percentage (i) Alcoholic liquor for human consumption 1% (ii) Tendu leaves 5% (iii) Timber obtained under a forest lease 2.5% (iv) Timber obtained by any mode other than (iii) 2.5% (v) Any other forest produce not being timber or tendu leaves 2.5% (vi) Scrap 1% (vii) Minerals, being coal or lignite or iron ore 1% Specified rates Tax Collection at Source – Sec 206 C
  • 36.
    Every person, beinga seller, who receives any amount as consideration for sale of a motor vehicle of the value exceeding Rs. 10 lakhs, shall collect tax from the buyer @1% of the sale consideration Non-applicability • No collection of tax shall be made in the case of a resident buyer furnishes to the person responsible for collecting tax, • a declaration that the specified goods are to be utilised for the purpose of • manufacturing, processing or producing articles or things or for the purposes of generation of power and not for trading purposes. Contd. Every person who grants a lease or a license or enters into a contract or otherwise transfers any right or interest in any parking lot toll plaza a mine or a quarry to another person (other than a public sector company) for the use of such parking lot or toll plaza or mine or quarry for the purposes of business At the rate of 2%
  • 37.
    Consequences of Non-complianceof TDS Provisions Sec Nature of Default Consequence 40 (a) (i) Non deduction or non payment of TDS on interest, royalty, FTS or any sum payable to non-residents 100% disallowance of expenditure, shall be allowed in year of deduction 201 (1) TDS not withheld or deposited properly Deemed to be Assessee in default 201 (1A) TDS not withheld or deposited properly Interest per month or part of the month Non-deduction - @ 1% Non-payment - @1.5% 221 TDS withheld but not paid Penalty not exceeding tax not paid 271C Tax not withheld or short withheld Penalty not exceeding the tax not withheld 234E Failure to file TDS Return • Penalty of Rs 200 per day shall be paid by the assessee until the time the default continues. • Penalty not exceeding tax not paid 234F Failure to furnish TDS Returns or Furnishing of incorrect information Penalty of Rs. 10,000 to Rs.1,00,000
  • 38.
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