TDS, or Tax Deducted at Source, may seem complicated at first glance, but is it really as challenging as it’s made out to be, or is it just hype?
Before delving into the main purpose of this article, let’s first understand what TDS (Tax Deducted at Source) truly is.
According to the Income Tax Department, the concept of TDS was introduced with the aim of collecting tax directly from the source of income. Under this concept, a person (deductor) who is liable to make payments of a specified nature to any other person (deductee) shall deduct tax at the 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 for the deducted amount based on Form 26AS or the TDS certificate issued by the deductor.
MOTIVE OF THIS ARTICLE :
As a CA Intermediate student, I encountered numerous challenges in comprehending the intricacies of TDS concepts. The syllabus is replete with an array of rates, thresholds, provisions, and various other complexities related to TDS. Often, we tend to forget certain aspects or inadvertently mix them up across different sections.
In this article, I aim to provide a helpful cheatsheet on TDS. This resource is intended to assist in consolidating key sections covered in the CA Intermediate syllabus prescribed by the esteemed ICAI.
LET’S START !
1] WHEN IS TDS DEDUCTED ?
*Generally TDS is deducted at the earliest of when due or at the time of payment (almost in all cases ) BUT ONLY in following cases TDS is deducted at the time of payment :
^ TDS under section 192
^ TDS under section 192A
^ TDS under section 194
^ TDS under section 194B
^ TDS under section 194BB
^ TDS under section 194DA
^ TDS under section 194EE
^ TDS under section 194LA
^ TDS under section 194N
HERE ALSO COMES A SINGLE UNIQUE CASE WHERE TDS IS DEDUCTED BEFORE PROVIDING THE BENEFIT OR PERQUISITE i.e., TDS under section 194R .
2 ] IN WHICH SECTIONS DO WE HAVE TO CHECK THE THRESHOLD LIMITS OF TURNOVER ?
In following sections we have to check for the threshold turnover limits as to whether TDS will be applicable or not .
^ TDS under section 194A [check turnover of SELLER ]
^ TDS under section 194C [check turnover of SELLER ]
^ TDS under section 194H [check turnover of SELLER ]
^ TDS under section 194I [check turnover of SELLER ]
^ TDS under section 194J [check turnover of SELLER ]
^ TDS under section 194M [check turnover of SELLER ]
^ TDS under section 194R [check turnover of SELLER ]
^ TDS under section 194Q [check turnover of BUYER ]
3] WHETHER TDS IS TO BE DEDUCTED ON AMOUNT EXCESS OF THRESHOLD OR ON WHOLE AMOUNT?
TDS generally is deducted on whole amount , but only in following two cases TDS is deducted on amount which is excess of the threshold limit .
^ TDS under section 194N
^ TDS under section 194Q
4 ] WHAT IS THE TDS RATE WHEN PAN IS NOT FURNISHED ?
GENERALLY when PAN is not furnished , TDS is deducted at HIGHER of the following .
c) Asper finance act
b) Actual provisional TDS rate
c) 20 %
But in the following cases, TDS rate on non-furnishing of PAN is different:
- TDS under section 192A…. TDS is deducted at 42.744%
- TDS under section 194IC…. TDS is deducted at 20%
- TDS under section 194O…. TDS is deducted at 5%
- TDS under section 194Q…. TDS is deducted at 5%
NOTE :
In this article, it is assumed that the reader has gone through all the provisions of TDS once, and hence only section numbers of TDS are written, and not the complete explanation of sections.
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