TDS Rates for FY 2018-19

Tax Deduction At Source, its Provisions and its revise rates for FY: 2018-19 

TDS: 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.

TDS is one of the several modes of recovery of tax and liability of TDS is without prejudice to other modes of recovery. TDS is not an alternative tax to direct levy, it is rather a supplement. The provisions of TDS have been enacted for the purpose of easy collection of taxes and to avoid evasion thereof by suitable tailoring of accounts.

In the recent past, the scope of Tax Deduction at Source (hereinafter referred to as ‘TDS’) has been widened by enlarging the scope of ‘work’ in relation to contractors/sub-contractors, and by extending TDS on rent, fees for professional and technical services, and payment on compulsory acquisition, etc It is very likely that tax. TDS would be extended to certain more payments, in future, as TDS has the triple advantage of augmenting government revenue, checking tax evasion and widening the tax base.     

Objective of TDS : (i) Recovery of Tax Income Tax is primarily a tax on income and the person earning income is liable to pay tax by way of advance tax, self-assessment tax and tax on regular assessment. In this system of direct levy, the Tax Department comes into picture almost one year after the income has been earned. If the income earned has been spent away by that time, making of assessment would get reduced to a mere academic exercise, and the department would be a helpless spectator. Hence the system of direct levy has been gradually supplemented by the Tax Deduction at Source Scheme, wherein tax is deducted at specified rates from income/other payments made to the payee. The objective underlying Tax Deduction at Source is to collect taxes before disbursements are made so as to ensure collection or revenue at the earliest opportunity. In fact, this system operates as a form of forced savings.

(ii) Widening of Tax Net The other important function of the TDS system is to provide information about tax payers and help tax administration in broad basing the tax net. This objective is achieved by scrutiny of return statements filed by the persons who deduct tax at source. Some tax payers, non-filers too, come to the tax department for claiming credit of TDS which gives an opportunity to the tax department to enquire about the tax paying status of such persons

Liability to Deduct TDS : The persons responsible for making payment of specified incomes/sums (such as salary, interest, rent, professional/technical fees” etc) are, liable to deduct tax at source from such payments, In respect of certain sums, the liability to deduct TDS arises only if the payment exceeds the specified amount. Certain payments or payments made to certain persons have been specifically exempted from TDS provisions.       

                                Rates for Tax Deduction at source

                                                     AY: 2019-20

Particulars	TDS Rates (in %)	Explanation
1. In the case of a person other than a company
1.1 where the person is resident in India-
Section 192: Payment of salary	Normal Slab Rate
Section 192A: Payment of accumulated balance of provident fund which is taxable in the hands of an employee.	10	When the amount exceed Rs. 50,000/-
Section 193: Interest on securities
a) any debentures or securities for money issued by or on behalf of any local authority or a corporation established by a Central, State or Provincial Act;	10	when the amount exceeds Rs. 10,000/-In case of Debentures Threshold limit is Rs. 5000/-
b) any debentures issued by a company where such debentures are listed on a recognised stock exchange in accordance with the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and any rules made thereunder;	10
c) any security of the Central or State Government; [i.e. 8% Savings (Taxable) Bonds, 2003 and 7.75% Saving (Taxable) Bonds, 2018]	10
d) interest on any other security	10
Section 194A: Income by way of interest other than “Interest on securities”	10	when the amount exceeds Rs. 5,000/-. However, limit is Rs. 10,000/- in case of interest credited by banks including co‑operative banks to its members.
Section 194B: Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort	30	When the amount exceed Rs. 10,000/-
Section 194BB: Income by way of winnings from horse races	30	When the amount exceed Rs. 10,000/-
Section 194C: Payment to contractor/sub-contractor
a) HUF/Individuals	1	when the amount of a particular contract exceeds Rs. 30,000/- or the total amount of contract during the whole year exceeds Rs. 1,00,000/-
b) Others	2
Section 194D: Insurance commission	5	when the amount exceeds Rs. 15000
Section 194DA: Payment in respect of life insurance policy	1	when the amount or the total amount during the whole year exceeds                  Rs. 1,00,000/-
Section 194EE: Payment in respect of deposit under National Savings scheme	10	when the amount exceeds Rs. 2500/-
Section 194F: Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India	20
Section 194G: Commission, etc., on sale of lottery tickets	5	when the amount exceed Rs. 15,000/-
Section 194H: Commission or brokerage	5	when the amount exceed Rs. 15,000/-
Section 194-I: Rent
a) Plant & Machinery	2
b) Land or building or furniture or fitting	10	when the amount exceeds Rs. 1,80,000/-
Section 194-IA: Payment on transfer of certain immovable property other than agricultural land	1	when the land is situated in specified area when amount exceeds Rs. 50 lacs
Section 194-IB:Payment of rent by individual or HUF not liable to tax audit Note: This provision is applicable from June 1, 2017	5	When amount of Rent exceeds Rs. 50,000/- per month. )
Section 194-IC:Payment of monetary consideration under Joint Development Agreements	10	No minimum limit
Section 194J: Any sum paid by way of a)  Fee for professional services, b)  Fee for technical services c)  Royalty, d)  Remuneration/fee/commission to a director or e)  For not carrying out any activity in relation to any business f)  For not sharing any know-how, patent, copyright etc. Note: With effect from June 1, 2017 the rate of TDS would be 2% in case of payee engaged in business of operation of call center.	10 2 ( in case of call Center)	When the amount exceed Rs. 30,000
Section 194LA: Payment of compensation on acquisition of certain immovable property Note: With effect from April 1, 2017, no deduction of tax shall be made on any payment which is exempt from levy of income-tax under Right to Fair Compensation Act, 2013.	10	When the amount exceed Rs. 250,000
Section 194LBA(1): Business trust shall deduct tax while distributing, any interest received or receivable by it from a SPV or any income received from renting or leasing or letting out any real estate asset owned directly by it, to its unit holders.	10
Section 194LBB: Investment fund paying an income to a unit holder [other than income which is exempt under Section 10(23FBB)]	10
Section 194LBC: Income in respect of investment made in a securitisation trust (specified in Explanation of section115TCA)	25% in case of Individual or HUF 30% in case of other person
Any Other Income	10
1.2 where the person is not resident in India*-
Section 192: Payment of Salary	Normal Slab Rate
Section 192A: Payment of accumulated balance of provident fund which is taxable in the hands of an employee.	10	When the amount exceed Rs. 50,000/-
Section 194B: Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort	30	When the amount exceed Rs. 10,000/-
Section 194BB: Income by way of winnings from horse races	30	When the amount exceed Rs. 10,000/-
Section 194E: Payment to non-resident sportsmen/sports association	20
Section 194EE: Payment in respect of deposits under National Savings Scheme	10	When the amount exceed Rs. 2500 /-
Section 194F:Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India	20
Section 194G: Commission, etc., on sale of lottery tickets	5	when the amount exceed Rs. 15,000/-
Section 194LB: Payment of interest on infrastructure debt fund	5
Section 194LBA(2): Business trust shall deduct tax while distributing any interest income received or receivable by it from a SPV to its unit holders.	5
Section 194LBA(3): Business trust shall deduct tax while distributing any income received from renting or leasing or letting out any real estate asset owned directly by it to its unit holders.	30
Section 194LBB: Investment fund paying an income to a unit holder [other than income which is exempt under Section 10(23FBB)].	30
Section 194LBC: Income in respect of investment made in a securitisation trust (specified in Explanation of section115TCA)	30
Section 194LC: Payment of interest by an Indian Company or a business trust in respect of money borrowed in foreign currency under a loan agreement or by way of issue of long-term bonds (including long-term infrastructure bond) Note: With effect from April 1, 2018 benefit of such concessional TDS rate has been further extended by three years. Now TDS at concessional rate of 5% will be applicable for borrowings made before July 1, 2020.	5
Section 194LD: Payment of interest on rupee denominated bond of an Indian Company or Government securities to a Foreign Institutional Investor or a Qualified Foreign Investor Note: With effect from April 1, 2018 benefit of such concessional TDS rate has been further extended by three years. Now TDS at concessional rate of 5% will be applicable for borrowings made before July 1, 2020.	5
Section 195: Payment of any other sum to a Non-resident
a) Income in respect of investment made by a Non-resident Indian Citizen	20
b) Income by way of long-term capital gains referred to in Section 115E in case of a Non-resident Indian Citizen	10
c) Income by way of long-term capital gains referred to in sub-clause (iii) of clause (c) of sub-Section (1) of Section 112	10
d) Income by way of long-term capital gains as referred to in Section 112A	10
e) Income by way of short-term capital gains referred to in Section 111A	15
f) Any other income by way of long-term capital gains [not being long-term capital gains referred to in clauses 10(33), 10(36) and 112A	20
g) Income by way of interest payable by Government or an Indian concern on moneys borrowed or debt incurred by Government or the Indian concern in foreign currency (not being income by way of interest referred to in Section 194LB or Section 194LC)	20
h) Income by way of royalty payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern where such royalty is in consideration for the transfer of all or any rights (including the granting of a licence) in respect of copyright in any book on a subject referred to in the first proviso to sub-section (1A) of Section 115A of the Income-tax Act, to the Indian concern, or in respect of any computer software referred to in the second proviso to sub-section (1A) of Section 115A of the Income-tax Act, to a person resident in India	10
i) Income by way of royalty [not being royalty of the nature referred to point g) above E] payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy	10
j) Income by way of fees for technical services payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy	10
k) Any other income	30
Section 196B: Income from units (including long-term capital gain on transfer of such units) to an offshore fund	10
Section 196C: Income from foreign currency bonds or GDR of an Indian company (including long-term capital gain on transfer of such bonds or GDR)	10
Section 196D: Income of foreign Institutional Investors from securities (not being dividend or capital gain arising from such securities)	20
2. In the case of a company-
2.1 where the company is a domestic company-
Section 193: Interest on securities
a) any debentures or securities for money issued by or on behalf of any local authority or a corporation established by a Central, State or Provincial Act;	10
b) any debentures issued by a company where such debentures are listed on a recognized stock exchange in accordance with the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and any rules made thereunder;	10	when the amount exceeds Rs. 10,000/-In case of Debentures Threshold limit is Rs. 5000/-
c) any security of the Central or State Government; [i.e. 8% Saving (Taxable) Bonds, 2003 and 7.75% Saving (Taxable) Bonds, 2018]	10
d) interest on any other security	10
Section 194: Dividend	10	when amount exceeds Rs. 2,500/-
Section 194A: Income by way of interest other than “Interest on securities”	10	when the amount exceeds Rs. 5,000/-. However, limit is Rs. 10,000/- in case of interest credited by banks including co‑operative banks to its members.
Section 194B: Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort	30	when the amount exceeds Rs. 10,000/-.
Section 194BB: Income by way of winnings from horse races	30	when the amount exceeds Rs. 10,000/-.
Section 194C: Payment to contractor/sub-contractor
a) HUF/Individuals	1	when the amount of a particular contract exceeds Rs. 30,000/- or the total amount of contract during the whole year exceeds Rs. 1,00,000/-
b) Others	2
Section 194D: Insurance commission	10	when the amount exceeds Rs. 15,000/-.
Section 194DA: Payment in respect of life insurance policy	1	when the amount or the total amount during the whole year exceeds Rs. 1 ,00,000/-
Section 194EE: Payment in respect of deposit under National Savings scheme	10	when the amount exceeds Rs. 2500/-
Section 194F: Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India	20
Section 194G: Commission, etc., on sale of lottery tickets	5	when the amount exceeds Rs. 15000/-.
Section 194H: Commission or brokerage	5	when the amount exceeds Rs. 15000/-.
Section 194-I: Rent
a) Plant & Machinery	2	when the amount exceeds Rs. 1,80,000/-
b) Land or building or furniture or fitting	10
Section 194-IA:Payment on transfer of certain immovable property other than agricultural land	1	when the land is situated in specified area when amount exceeds Rs. 50 lacs
Section 194-IC:Payment of monetary consideration under Joint Development Agreements	10
Section 194J: Any sum paid by way of a)  Fee for professional services, b)  Fee for technical services c)  Royalty, d)  Remuneration/fee/commission to a director or e)  For not carrying out any activity in relation to any business f)  For not sharing any know-how, patent, copyright etc. Note: With effect from June 1, 2017 the rate of TDS would be 2% in case of payee engaged in business of operation of call center.	10	when the amount exceeds Rs. 30,000/-
Section 194LA: Payment of compensation on acquisition of certain immovable property Note: With effect from April 1, 2017, no deduction of tax shall be made on any payment which is exempt from levy of income-tax under Right to Fair Compensation Act, 2013.	10	When the amount exceed Rs. 2,50,000
Section 194LBA(1): Business trust shall deduct tax while distributing, any interest received or receivable by it from a SPV or any income received from renting or leasing or letting out any real estate asset owned directly by it, to its unit holders.	10
Section 194LBB: Investment fund paying an income to a unit holder [other than income which is exempt under Section 10(23FBB)] .	10
Section 194LBC: Income in respect of investment made in a securitisation trust (specified in Explanation of section115TCA)	10
Any Other Income	10
2.2 where the company is not a domestic company*-
Section 194B: Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort	30	When the amount exceed Rs. 10,000/-
Section 194BB: Income by way of winnings from horse races	30	When the amount exceed Rs. 10,000/-
Section 194E: Payment to non-resident sports association	20
Section 194G: Commission, etc., on sale of lottery tickets	5	When the amount exceed Rs. 15,000/-
Section 194LB: Payment of interest on infrastructure debt fund	5
Section 194LBA(2): Business trust shall deduct tax while distributing any interest income received or receivable by it from a SPV to its unit holders.	5
Section 194LBA(3): Business trust shall deduct tax while distributing any income received from renting or leasing or letting out any real estate asset owned directly by it to its unit holders.	40
Section 194LBB: Investment fund paying an income to a unit holder [other than income which is exempt under Section 10(23FBB)].	40
Section 194LBC: Income in respect of investment made in a securitisation trust (specified in Explanation of section115TCA)	40
Section 194LC: Payment of interest by an Indian Company or a business trust in respect of money borrowed in foreign currency under a loan agreement or by way of issue of long-term bonds (including long-term infrastructure bond) Note: With effect from April 1, 2018 benefit of such concessional TDS rate has been further extended by three years. Now TDS at concessional rate of 5% will be applicable for borrowings made before July 1, 2020.	5
Section 194LD:Payment of interest on rupee denominated bond of an Indian Company or Government securities to a Foreign Institutional Investor or a Qualified Foreign Investor Note: With effect from April 1, 2018 benefit of such concessional TDS rate has been further extended by three years. Now TDS at concessional rate of 5% will be applicable for borrowings made before July 1, 2020.	5
Section 195: Payment of any other sum
a) Income by way of long-term capital gains referred to in sub-clause (iii) of clause (c) of sub-section (1) of Section 112	10
b) Income by way of long-term capital gains as referred to in Section 112A	10
c) Income by way of short-term capital gains referred to in Section 111A	15
d) Any other income by way of long-term capital gains [not being long-term capital gains referred to in clauses 10(33), 10(36) and 112A	20
e) Income by way of interest payable by Government or an Indian concern on moneys borrowed or debt incurred by Government or the Indian concern in foreign currency (not being income by way of interest referred to in Section 194LB or Section 194LC)	20
f) Income by way of royalty payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 31st day of March, 1976 where such royalty is in consideration for the transfer of all or any rights (including the granting of a licence) in respect of copyright in any book on a subject referred to in the first proviso to sub-section (1A) of Section 115A of the Income-tax Act, to the Indian concern, or in respect of any computer software referred to in the second proviso to sub-section (1A) of Section 115A of the Income-tax Act, to a person resident in India	10
g) Income by way of royalty [not being royalty of the nature referred to in point e) above C] payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy—
A. where the agreement is made after the 31st day of March, 1961 but before the 1st day of April, 1976	50
B. where the agreement is made after the 31st day of March, 1976	10
h) Income by way of fees for technical services payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy—
A. where the agreement is made after the 29th day of February, 1964 but before the 1st day of April, 1976	50
B. where the agreement is made after the 31st day of March, 1976	10
i) Any other income	40
Section 196B: Income from units (including long-term capital gain on transfer of such units) to an offshore fund	10
Section 196C: Income from foreign currency bonds or GDR of an Indian company (including long-term capital gain on transfer of such bonds or GDR)	10
Section 196D: Income of foreign Institutional Investors from securities (not being dividend or capital gain arising from such securities)	20

 The rate of TDS shall be increased by applicable surcharge and Health & Education cess.

There are various TDS Forms have been set depending on the reason of deduction. Different TDS forms as follows:

Particulars	Form Type
Statement for Tax Deducted at Source from salaries	24Q
Statement for Tax deducted at source on all payments except salaries	26Q
Statement for deduction of tax payable to Non-Resident of India	27Q
Statement of collection of tax at source	27E Q

 Interest on late payment of TDS

Interest is chargeable on short payment/late payment of TDS. There can be following scenarios :-

• When TDS is not deducted
  Interest at the rate of 1% per month or part thereof, for the period from the date on which TDS is deductible/collectible to the date on which TDS/TCS is actually deducted/collected.
• When TDS is deducted but payment is made lately
  Interest at the rate of 1.5% per month or part thereof, for the period from the date on which TDS is actually deducted/collected to the date on which such TDS/TCS is actually paid.

As per define law, Calendar month is considered in calculating interest therefore if you delay payment by one day, you have to pay interest for two months. For example, if TDS is deducted in month of July and deposited on 8th of August then you have to pay interest for 2 month i.e. July and August. Total interest payable shall be 3%.

As per traces calculation if TDS is deducted in month of July and deposited on 8th of August then you have to pay interest for 1 month i.e. July and August. Total interest payable shall be 1.5%. if the payment is made on the last day of July i.e. 31^st July

Interest paid on delay in deposit of TDS is not allowed as a expenditure under Income Tax Act. 

Notes – Interest on late payment of TDS can be paid before furnishing TDS return or after demand raised by Traces. Such interest can be adjusted from amount remaining in any TDS Challan (under any section). 

Non – Applicability

TDS can be avoided by submitting Form 15G or 15H. Form 15H is for senior citizens and they can submit if there is no tax on total income. Form 15G is for everybody else and they can file if the tax on total income is nil and total interest income is less than the basic exemption limit except NRIs. 

TDS Certificates

Form 16 is your salary Tax Deducted at Source certificate issued by the employer deducting the tax while making payment to an employee. If an employer deducts Tax Deducted at Source on salary as per the Income tax rules of India then he must issue Form 16.

Form 16A TDS Certificate which declares or certifies TDS amount deducted and deposited on all other payments except salary.

Tax Deducted at Source on salaries is deducted at the average rate of estimated income (as per the Slab rates), TDS on interest, Rent etc. is to be deducted at the rates specified by the government.

All details that are there in Form 16A are available on Form 26AS. This can be used to file your return. But the same is not in the case of Form 16. All the Details of Form 16 that are available in Form 26AS is only deducted by the employer.

Requirement for deducting TDS

Under the Section of 206AA, if PAN No. is not furnished by the taxpayer then the withholding tax rate would be at 20% or at the rates in force or whichever is higher. PAN is not mandatory for the Non-residents where taxes have been deducted.

PENALTIES:

Late filing fees under section 234E

As per section 234E, where a person fails to file the TDS/TCS return on or before the due date prescribed in this regard, then he shall be liable to pay, by way of fee, a sum of Rs. 200 for every day during which the failure continues. The amount of late fees shall not exceed the amount of TDS.

TDS/TCS return cannot be filed without payment of late filing fees as discussed above. In other words, the late filing fees shall be deposited before filing the TDS return. It should be noted that Rs. 200 per day is not penalty but it is a late filing fee.

Penalty under section 271H

As per section 271H, where a person fails to file the statement of tax deducted/collect at source i.e. TDS/TCS return on or before the due dates prescribed in this regard, then assessing officer may direct such person to pay penalty under section 271H. Minimum penalty can be levied of Rs. 10,000 which can go upto Rs. 1,00,000. Penalty under section 271H will be in addition to late filing fees prescribed under section 234E.

Apart from delay in filing of TDS/TCS return, section 271H also covers cases of filing incorrect TDS/TCS return. Penalty under section 271H can also be levied if the deductor/collector files an incorrect TDS/TCS return. In other words, minimum penalty of Rs. 10,000 and maximum penalty of upto Rs. 1,00,000 can be levied if the deductor/collector files an incorrect TDS/TCS return.

No penalty will be levied under section 271H for the failure to file the TDS/TCS return, if the person proves that after paying tax deducted/collected by him, along with the late-filing fee and interest (if any), to the credit of the Central Government, he had filed the TDS/TCS return before the expiry of a period of one year from the due date of filing the TDS/TCS return. In other words, no penalty under section 271H will be levied in case of delay in filing the TDS/TCS return if following conditions are satisfied:

• The tax deducted/collected at source is paid to the credit of the Government.
• Late filing fees and interest (if any) is paid to the credit of the Government.
• The TDS/TCD return is filed before the expiry of a period of one year from the due date specified in this behalf.

It should be noted that the above relaxation is applicable only in case of penalty levied under section 271H for delay in filing the TDS/TCS return and not in case of filing incorrect TDS/TCS statement.

Apart from above relaxation, in following two cases the taxpayer can get relief from penalty under section 271H:

• Under section 273A(4) the Principal Commissioner of Income-tax or Commissioner of Income-tax has power to waive or reduce the penalty levied under the Income-tax Act. Penalty can be waived or reduced by the Commissioner of Income-tax if the conditions specified in section 273A (4) in this regard are satisfied.

• Apart from shelter of section 273A (4), section 273B also provides immunity from penalty in genuine cases. As per section 273B, penalty under section 271H will not be levied if the taxpayer proves that there was a reasonable cause for failure.

Main idea while draft this article is to provide the Complete information from the point of view Tds revise rates and its provisions in FY 2018-19 , for any doubt or further clarifications you can write us on vivekmalhotra492@gmail.com or you can  call us on 9780754114