CA Kapil Goel

Tax Deducted at Source (TDS) is one of the modes of collecting income tax in India at the very source of income, governed under the Indian Income Tax Act of 1961. It is controlled by the Central Board for Direct Taxes (CBDT) and is part of the Department of Revenue in-charge of Indian Revenue Service (IRS).

TDS is simply an indirect method of collection of tax which combines the concepts of “pay as you earn” and “collect as it earned.” Its importance to the government lies in the fact that it prepones the collection of tax, provides a greater reach and wider base for tax. At the same time, it benefits to the tax payer also, it distributes the incidence of tax and provides a simple and convenient mode of payment of taxes.

The concept of TDS requires that the person, on whom responsibility has been cast, is to deduct tax at the appropriate rates, from payments of specific nature which are being made to a specified recipient. The deducted sum is required to be deposited to the credit of the Central Government. The recipient from whose income tax has been deducted at source gets the credit of the amount deducted in his personal assessment on the basis of the certificate issued by the deductor.

In the concept of TDS, Income Tax Act requires specified persons to deduct tax on specified nature of payments being made by them. An Individual or an H.U.F. is not liable to deduct TDS on such payment except where the individual or H.U.F. is carrying on a business/profession where accounts are required to be audited u/s 44AB, in the immediately preceding financial year. A person is liable to get its accounts audited u/s 44AB if during the relevant financial year its gross sales, turnover or gross receipts exceeds Rs. 1 Crore in case of a business, or Rs. 25 lacs in case of a profession.

There are also some conditions also where there is no liability of deductor to deduct TDS which are as follows.

  • On declaration furnished by payee on Form 15G or 15H as the case may be.
  • On certificate issued by ITO.
  • Payment to Government/RBI/Statutory Corporation etc.
  • Exempt Incomes.
  • Interest Payment by Offshore Banking Units.
  • Payment to New Pension System Trust.
  • Notified payment to Notified Institutions / Associations.

 TDS Rates and Returns for Assessment Year 2014-15 (Financial Year 2013-14)

TDS Rate on Payment of Salary and Wages:

Section 192 Payment of Salary and Wages
Criterion of Deduction TDS is deducted if the estimated income of the employee is taxable.Employer must not deduct tax on non-taxable allowances like conveyance allowance, rent allowance, medical allowance and deductible investments under sections like 80C, 80CC, 80D, 80DD, 80DDB, 80E, 80GG and 80U.No tax is required to be deducted at source if the estimated total income of the employee is less than the minimum taxable income (Rs. 2,20,000/- in case of Individual, HUF, AOP, BOD and AJP. Nil for others.)
TDS Rate As per Income Tax, Surcharge and Education Cess rates applicable on the estimated income of employee for the year.

TDS Rates on Payments other than Salary and Wages to Residents (including domestic companies)

Section For Payment of On Payments Exceeding Individual/HUF Others
193 Interest on Debentures Rs. 5000/- 10% 10%
194 Deemed Dividend No minimum 10% 10%
194 A Interest other than on securities by banks Rs. 10000/- 10% 10%
194 A Interest other than on securities by others Rs. 5000/- 10% 10%
194 B Winnings from Lotteries / Puzzle / Game Rs. 10000/- 30% 30%
194 BB Winnings from Horse Race Rs. 5000/- 30% 30%
194 C (1) Payment to Contractors Rs. 30000/- for single paymentRs. 75000/- for aggregate
payment during Financial Year
1% 2%
194 C (2) Payment to Sub-Contractors / for Advertisements
194 D Payment of Insurance Commission Rs. 20000/- 10% 10%
194 EE Payment of NSS Deposits Rs. 2500/- 20% NA
194 F Repurchase of units by Mutual Funds / UTI Rs. 1000/- 20% 20%
194 G Commission ons Sale of Lottery tickets Rs. 1000/- 10% 10%
194 H Commission or Brokerage Rs. 5000/- 10% 10%
194 I Rent of Land, Building or Furniture Rs. 180000/- 10% 10%
Rent of Plant & Machinery Rs. 180000/- 2% 2%
194 IA Transfer of Immovable Property (w.e.f. 01.06.2013) Rs. 50 lacs 1% 1%
194 J Professional / technical services, royalty Rs. 30000/- 10% 10%
194 J (1) Remuneration / commission to director of the company 10% 10%
194 J (ba) Any remuneration / fees / commission paid to a director of a company, other than those on which tax is deductible u/s 192. 10% 10%
194 L Compensation on acquisition of Capital Asset Rs. 100000/- 10% 10%
194 LA Compensation on acquisition of certain immovable property Rs. 200000/- 10% 10%

Notes:

  1. No surcharge or education cess is deductible / collectible at source on payments made to residents {Individuals / HUF / Society / AOP / Firm / Domestic Company) on payment of incomes other than salary or wages.
  2. TDS at higher rate of 20% or TDS rate, whichever is higher, has to be deducted if the deductee does not provide PAN to the deductor. (section 206AA)

All persons who are required to deduct tax at source or collect tax at source on behalf of IncomeTax Department are required to apply for and obtain Tax Deduction or Tax Collection Account Number (TAN).

Point of Deduction of TDS

Salary: At the time of payment

Other Payments: When income paid or credited including credit to “Payable” or “Suspense” account.

Consequences of failure to deduct tax: 

Interest – 1% of the tax deductible.

Penalty – equal to the amount of tax deductible but not deducted.

Due Dates for depositing TDS

Quarter Salary Payments Other Payment
April to February 7th of next month 7th of next month
March 30th April 30th April

 Consequences of default:

Interest @ 1.5% of tax not deposited is payable u/s 201(A).

Punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine under Section 276(B).

Issue of TDS Certificate

1. Section 192 (TDS on Salary) :

The certificate on Form No. 16 should be issued by the deductor by 31st day of May of the financial year immediately following the financial year in which the income was paid and tax deducted.

2. In all other cases :

The certificate on Form No. 16A should be issued within fifteen days from the due date for furnishing the “statement of TDS” under rule 31A.

Penalty on Failure to Issue TDS Certificate: Rs. 100/- every day for the period failure continues subject to a maximum of TDS amount.

Forms for submitting Quarterly Statements of Tax Deducted at Source (Rule 31A)

(a) Statement of deduction of tax under section 192 in Form No. 24Q

(b) Statement of deduction of tax under sections 193 to 196D in :

  1. Form No. 27Q in respect of the deductee who is a non-resident not being a company or a foreigncompany or resident but not ordinarily resident; and
  2. Form No. 26Q in respect of all other deductees.

Due Dates for submitting Quarterly Statements of Tax Deducted at Source (Rule 31A)

Date of ending of the quarter of the financial year Due date, if deductor is an office of the Government Due Date for others
30th June 31st July of the financial year 15th July of the financial year
30th September 31st October of the financial year 15th October of the financial year
31st December 31st January of the financial year 15th January of the financial year
31st March 15th May of the financial year immediately following the financial year in which deduction is made 15th May of the financial year immediately following the financial year in which deduction is made.
Penal Provisions for failure / default in submitting returns /statements
Section 272A(2) Failure to submit returns prescribed under Section 200(3) Penalty of Rs. 100/- every day during which the failure continues upto a maximum of TDS amount.
Section 234E Failure to TDS return in time Fine of Rs. 200/- every day during which the failure continues will be levied on deductor as long as the default continues, subject to a maximum of TDS amount.
Section 271H (i) If deductor defaults for more than 1 year in filing TDS Statement(ii) If deductor furnishes incorrect details like PAN, TDS amount, Challan particulars etc. Penalty which shall not be less than ten thousand rupees but which may extend to one lakh rupees.

Click here to Read Other Articles of CA Kapil Goel

More Under Income Tax

Posted Under

Category : Income Tax (24908)
Type : Articles (13945) Featured (4135)
Tags : CA Kapil Goel (13) Rate Chart (63) TDS (883)

24 responses to “TDS – Rate Chart, Provisions, Penalty, Return Due Date”

  1. Deepanshu Kaushik says:

    Dear Sir, Kindly Update the Revised Rate. Thanks in Advance

  2. JAYRAMA G says:

    I have borrowed from private persons for house construction.For them annual interest is paid thro’.cross cheque.There are four such persons–two with ₹30,000& another two with₹40000/-each.I have taken 15G from them and TDS is not made.W whether I correct and what other compliance has to be meted out by me.

  3. CHANDRA SHEKAR .R says:

    in case of firm filed 4qtr nil ofter six month revised with int.paid is their any penalty for this

  4. U.Adithan says:

    I am in a company and responsible for making payment to contractors.We entered into an agreement to pay an amount on monthly basis to a contractor. As per that agreement I have to keep the first month’s due as security deposit for the entire contract period.
    My question is,
    1. Whether TDS is deductable on the security deposit made?

    2. If payment for the first month is due in December and the same is transferred to SD and TDS not deducted in December, but recovered in January and deposited to Govt. on or before 7th of January, Whether I can include this TDS deduction in Q3 return itself? and whether the TDS so deducted will attract interest?

    Will anyone answer for my query please.

  5. koushi says:

    Defaults and / or PAN Errors have been identified in the Correction statement filed by you for Q1 of FY 2010-11 for Form 27Q and processed by ITD u/s 154. pls advice me

  6. rajesh says:

    Its necessary to shown in TDS RETURN if in any quarter no tds deducted u/s 192B.

  7. GIRIJA says:

    sir pls send the reply as fast as you can.
    thank you

  8. GIRIJA says:

    Sir,
    just wanna ask that return filling date – 15/7/15 but TDS payment is done on 20/7/15 of Q1 then return can be filed in 2nd quater or not?

  9. amjad says:

    Dear sir/madam
    I has doubt regarding TDS That is in case wrongly filed TDS (Ie assessment year)will not rectify before ending of financial year.the TDS amount gone to suspension account of IT department.and it will never created to account of concerns person

  10. Anjan says:

    Sir,
    I would like to know whether provisions of Section 206AA will be applicable on assessee having a recurring deposit which is maturing in December 2015 with a cumulative interest below Rs 5000 earned over a period of 2 years i.e. if the assessee haven’t declared his/her PAN to the bank will TDS be deductible @ 20% or not at all.

  11. Dwarak says:

    Is TDS to be deducted on payment basis or on due basis for payments made u/s 194J?

  12. ajith says:

    Salaried people having other monthly income , how and when to pay the tax for other income.how returns file, when please reply

  13. Gaurav says:

    Sir I want to know the exact interpretation of late deduction of TDS? What does it mean? If there is a single bill of Rs.1000000 and full and final payment has been made. TDS has not been deducted on this amount. Since TDS has not been deducted on this, it shall be disallowed u/s 40(a)(ia). I want to know what accounting treatment i should do so that my client could get this amount not disallowed and i must mention that there are rare chances of further transactions from that party to whom payment has been made.
    THANK YOU

  14. KAUSIK says:

    WHO WILL SOLVE THE CPC’S WRONG CALCULATION METHOD FOR DELAY PAYMENT OF TDS AMOUNT. IS THEY JUSTIFY WITH SO MANY EMPLOYER WHO PAY TAX TO GOV. REGULARLY BUT SOME TIME DELAY 2-10 DAYS AND CPC PENALIZED THEM 3% FOR 2 DAYS DELAY DEPOSIT THE TAX INTO GOV.DEP. WHY NOT CPC GET A SIGHT WHERE SUFFERER PROVIDE THERE DETAILS ON EXCEL SHEET OR WORD SHEET AND SUBMIT. BY WHICH THEY CAN REPLY TO THE SUFFERER.

  15. c jyothi says:

    It is very use ful sir thankyou so much sir

  16. kavita meti says:

    Thank you sir. It is very basic knowledge for us.

  17. Hardik says:

    Please tell me reply from F.Y. 2014-2015 TDS Nil Return regarding ?Is It possible Nil TDS Return per day 200 penalty ?

  18. MOHAN says:

    what is the penalty for filing and submitting delayed tds other than interset on security for an amount of Rs334000.00 for fy 2012-13.

  19. s sudarshana says:

    Is it necessary to download the 26AS form? If so by whom? I think there is no need to download them at all.
    Coming to the interest payment for late filing of TDS, Form 16/16A, it should be same as the interest the department gives for late refund, a fair deal.
    But late filing of TDS, by the deductor, should be stringent as the delay by teh deductor indirectly affects the AAMADMI, the assessee!

  20. HARSHADRAI says:

    P.M. MODIJI desire paperless work but Finance Ministry Dept. of Revenue TRACES compelled to download,2-3 pages, Form No 16 & 16A from website.SUGESSTION; Introduce TDS CHALLAN-CUM-FORM NO.16A so consumption of paper is less. Deductor is UNPAID SERVANT OF GOVT. so no fees U/s 234E etc. Govt. should earn GOOD MONEY.

  21. Balasubramanian K says:

    After 1-7-2012 no penalty is leviable u/s 272A(2)(k)

  22. Rajesh, Mumbai says:

    ” Interest @ 1.5% of tax not deposited is payable U/s 201(A). Punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine under Section 276(B).”

    Provisions of Penalty,Fine and Imprisonment are very harsh.Same provisions must be applied in case refund is delayed beyond three months of filing of Returns.

    I will give one example how Law with such provisions exploit tax payers.
    I had deducted TDS on 31st Dec which was to be paid before 7th January. For some reasons, it was delayed by 3 days and I paid it on 10th. I received a notice from department which required me to pay 4.5% interest (for a delay for 3 days.). It is ridiculous.

    Department pays interest on refunds at 6% pa but charges 15% pa on delay of tax payment.Is it fair ?.In fact, it should be vice versa because department has unlimited powers to recover due taxes but poor tax payers has to get its refunds at department’s mercy like department is highly obliging him. In India, there are hardly 3% regular income tax payers and government in spite of increasing tax base, continues to make such draconian and redundant laws to loot existing tax payers.

  23. vamsi says:

    Why due date for filing TDS returns are more period compare to others.
    Just because its government

  24. s sudarshana says:

    Why not section 192 included above? I have seen TDS from salary is not booked properly or booked under different head. Pl include the consequence of not filing or filing late u/s 192 from salary income and within how many days the deductor has to give the TDS to the employee.

Leave a Reply

Your email address will not be published. Required fields are marked *