Compliance of TDS and TCS provisions is one of the important aspects for every business. However, it is also a tricky issue since there are so many provisions and also due to frequent insertion of new provisions. Non Compliance with these provisions leads to payment of Interest, Late Filing Fee, Penalties and also punishable with imprisonment. Hence, it is advisable to comply with these provisions within the due dates specified. In this article we provide you with all the important TDS and TCS provisions in a simple manner.

Chapter XVII of the Income Tax Act, 1961 contains the provisions related to TDS and TCS.

A.  TDS Provisions and Rate Chart with requirements:

The following table depicts the various TDS Provisions and its requirements:

Section When to Deduct Tax Who are liable to deduct tax Exemption Limit Rate of Tds (AY 19-20)
192 At the time of Payment of Salaries Every Employer BEL as notified by relevant finance act Average rate of tax as notified by the relevant finance act
192A At the time of Payment of accumulated Provident Fund Balance Authorised Person Rs. 49,999 10%
193 At the time of Payment or Credit of Interest on Securities Whichever is Earlier Every Person Rs. 5,000 10%
194 At the time of Payment of Dividend Company Rs. 2,500 10%
194A At the time of Payment or Credit of Interest other than Interest on Securities Whichever is Earlier Every Person other than individual or huf whose t/o does not exceed 1 Crore/50lacs in the preceding FY, as the case may be. Rs. 5,000 10%
194B At the time of Payment of Winnings from lottery or cross word puzzle or other games Every Person Rs. 10,000 30%
Section When to Deduct Tax Who are liable to deduct tax Exemption Limit Rate of Tds (AY 19-20)
194BB At the time of Payment of Winnings from Horse race Every Person Rs. 10,000 30%
194C At the time of Payment or Credit of any sum to Contractors whichever is earlier Every person other than individual or huf who are liable for audit under clause (a) or (b) of Sec 44AB 30,000 per transaction and 1,00,000 aggregate during the year per contractor If contractor is (a) Individual or HUF – 1% (b) Others – 2%
194D At the time of Payment or Credit Of Insurance Commission whichever is earlier Every Person Rs. 15,000 5%
194DA At the time of Payment in respect of life insurance policy Every Person Rs. 1,00,000 1%
194E At the time of Payment or Credit Of any income to Non Resident Sportsman or an entertainer or sports association whichever is earlier Every Person Nil 20%
194EE At the time of Payments in respect of deposits under National Savings Scheme Every Person Rs. 2,500 10%
Section When to Deduct Tax Who are liable to deduct tax Exemption Limit Rate of Tds (AY 19-20)
194F At the time of Payments on account of repurchase of units by Mutual Fund or Unit Trust of India Every Person Nil 20%
194G At the time of Payment or Credit Of Commission on sale of lottery tickets whichever is earlier Every Person Rs. 15,000 5%
194H At the time of Payment or Credit Of Commission or Brokerage whichever is earlier Every Person other than individual or huf whose t/o does not exceed 1 Crore/50lacs in the preceding FY, as the case may be. Rs. 15,000 5%
194I At the time of Payment or Credit Of Rent whichever is earlier Every Person other than individual or huf whose t/o does not exceed 1 Crore/50lacs in the preceding FY, as the case may be. Rs. 1,80,000 In case of (a) Plant or Machinery or Equipment – 2% (b) Land or Buildings – 10%
194IA At the time of Payment or Credit Of Consideration for purchase of immovable property whichever is earlier Every Person Rs. 49,99,999 1%
194IB At the time of Credit for last month or payment of rent whichever is earlier Individual or HUF whose t/o does not exceed 1 Crore/50lacs in the preceding FY, as the case may be Rs. 50,000 per month 5%
Section When to Deduct Tax Who are liable to deduct tax Exemption Limit Rate of Tds (AY 19-20)
194IC At the time of Payment or Credit of any sum under specified agreement referred to in Sec 45(5A) whichever is earlier Every Person Nil 10%
194J At the time of Payment or Credit Of fees for professional or technical services whichever is earlier Every Person other than individual or huf whose t/o doesnot exceed 1 Crore/50lacs in the preceeding FY, as the case may be. Rs. 30,000 10%
194LA At the time of Payment of Compensation on Compulsory acquisition of Immovable Property Every Person Rs. 2,50,000 10%
194LB At the time of Payment or Credit Of interest by an infrastructure debt fund whichever is earlier Every Person Nil 5%
194LBA At the time of Payment or Credit Of distributed income by a business trust whichever is earlier Business Trust Nil For Non Resident – 5% For others – 10%
194LBB At the time of Payment or Credit Of income by a Investment Fund whichever is earlier Investment Fund Nil For Non Resident – 30% For others – 10%
194LBC At the time of Payment or Credit Of income by a Securitisation Trust whichever is earlier Securitisation Trust Nil For Resident Individual – 25% For others – 30%
Section When to Deduct Tax Who are liable to deduct tax Exemption Limit Rate of Tds (AY 19-20)
194LC At the time of Payment or Credit Of interest to a non resident on specified loans whichever is earlier Every Person Nil 5%
194LD At the time of Payment or Credit Of interest on rupee denominated bond or government securities whichever is earlier Every Person Nil 5%
195 At the time of Payment or Credit Of any other sum chargeable to tax to a non resident whichever is earlier Every Person Nil As per Annexure 1 Below
196B At the time of Payment or Credit Of income or LTCG fron units u/s. 115AB whichever is earlier Every Person Nil 10%
196C At the time of Payment or Credit Of income or LTCG from bonds or GDR u/s. 115AC whichever is earlier Every Person Nil 10%
196D At the time of Payment or Credit Of income from Securities u/s. 115AD(1)(a) other than interest refered u/s.194LD whichever is earlier Every Person Nil 20%

Annexure – 1:

Particulars Rate
(a) Income from investment made by a Non-Resident Indian Citizen 20%
(b) LTCG referred to in Section 115E 10%
(c) LTCG referred to in Section 112(1)(c)(iii) 10%
(d) LTCG referred to in Section 112A 10%
(e) STCG under Section 111A 15%
(f) Any other LTCG [not covered by Section 10(33), 10(36) and 10(38)] 20%
(g) Interest Income on moneys borrowed or debt incurred in foreign currency (not being interest referred to in Sec. 194LB or 194LC or 194LD) 20%
(h) Royalty for transfer of rights in respect of copyright in any book or computer software referred to in Section 115A(1A). 10%
(i) Royalty [not of the nature referred to in (g) above] payable in pursuance of an agreement approved by the Central Govt. / it is in accordance with industrial policy. 10%
(j) Fees for technical services payable in pursuance of an agreement approved by the Central Govt. / it is in accordance with industrial policy. 10%
(k) Any other income 30%

B.  TCS Provisions and Rate Chart with requirements

The following table depicts various transactions on which Tax has to be Collected at Source: Sec 206C of the Income Tax Act, 1961

S.No. Nature of Transaction Rate when to collect Tax
1 Sale of Alcoholic Liquor for Human Consumption 1% At the time of debit or receipt whichever is earlier
2 Sale of Tendu Leaves 5% At the time of debit or receipt whichever is earlier
3 Sale of Timber 2.5% At the time of debit or receipt whichever is earlier
4 Sale of Forest Produce 2.5% At the time of debit or receipt whichever is earlier
5 Sale of Scrap 1% At the time of debit or receipt whichever is earlier
6 Sale of Minerals, being Coal, Ignite & Iron Ore 1% At the time of debit or receipt whichever is earlier
7 Leasing of Parking Lot 2% At the time of debit or receipt whichever is earlier
8 Leasing of Toll Plaza 2% At the time of debit or receipt whichever is earlier
9 Mining and Quarrying 2% At the time of debit or receipt whichever is earlier
10 Sale of Motor Vehicle for a value exceeding 10 Lacs 1% At the time of Receipt

C. Tax collection at source is exempted in the following cases:

Sec 206C of the Income Tax Act, 1961

  • When the eligible goods are used for personal consumption
  • The purchaser buys the goods for manufacturing, processing or production and not for the purpose of trading of those goods and produces a declaration to this effect in Form No. 27C

D. The following are the persons who are liable to collect tax at Source:

Sec 206C of the Income Tax Act, 1961

  • Central Government
  • State Government
  • Local Authority
  • Statutory Corporation or Authority
  • Company registered under Companies Act
  • Partnership firms
  • Co-operative Society
  • Any individual or HUF whose turnover exceed 1 Crore/50lacs in the preceeding FY, as the case may be

E. Time Limit for depositing of Tax Deducted and Tax Collected:

Sec 200 & 206C of the Income Tax Act, 1961

Tax deducted shall be paid to the credit of the Central Government as follows:

a) Tds deducted in the month of April to February – On or before 7th of next month

b) Tds deducted in the month of March – On or before 30th April of the next Financial Year

However, Tds deducted u/s. 194IA & 194IB shall be paid to the credit of the Central Government within 30 days from the end of the month in which the deduction is made.

Tax collected at source shall be paid to the credit of the Central Government on or before 7th of next month.

F. Quarterly Statements:

Sec 200, 206C & 234E of the Income Tax Act, 1961

Every person responsible for Deduction or Collection of tax shall file quarterly statement as follows:

a) If tax deducted u/s.192 of the Act – Form No. 24Q

b) If tax deducted u/s. 193 to 196D of the Act:

i) If deductee is Resident – Form No. 26Q

ii) If deductee is Non Resident – Form No. 27Q

c) If tax deducted u/s.194IA of the Act – Form No. 26QB

d) If tax deducted u/s.194IB of the Act – Form No. 26QC

e) If tax collected u/s.206C of the Act – Form No. 27EQ

The Quarterly Statements for Tax deducted at Source shall be filed on or before the following dates:

Sl. No. Date of ending of quarter of financial year Due date
1 30th June 31st July of the financial year
2 30th September 31st October of the financial year
3 31st December 31st January of the financial year
4 31st March 31st May of the financial year immediately following the financial year in which the deduction is made

The Quarterly Statements for Tax Collected at Source shall be filed on or before the following dates:

Sl. No. Date of ending of quarter of financial year Due date
1 30th June 15th July of the financial year
2 30th September 15th October of the financial year
3 31st December 15th January of the financial year
4 31st March 15th May of the financial year immediately following the financial year in which the deduction is made

Late Filing Fee: where a person fails to deliver or cause to be delivered a statement within the due date he shall be liable to pay, by way of fee, a sum of

a. Two hundred rupees for every day during which the failure continues

b. amount of tax deductible or collectible, as the case may be, whichever is lower.

G. Certificate for Deduction at Lower Rate or No Deduction:

Sec 197 and 206C of the Income Tax Act, 1961

Any Assessee on whose income, tax is deductible or collectible, may make an application in Form No. 13 to Assessing Officer for grant of a Certificate for lower deduction or lower collection or for non deduction of Income Tax.

If the Assessing Officer is satisfied that the total income of the recipient justifies the deduction or collection of income-tax at any lower rates or no deduction of income-tax he shall give him such Certificate as may be Appropriate.

H. No Deduction to be made in Certain Cases:

Sec 197A of the Act, 1961

No deduction shall be made under the following provisions in the case of following persons who furnishes a declaration in writing in duplicate in the following form to the effect that the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil

Sec of the Income Tax Act, 1961 Person Form No.
194,194EE Resident Individual 1. Individual who is of the age of sixty years or more – Form No.15H

2. Others – Form No. 15G

192A,193,194A,194D,194DA,194I Any Person (not Being a Company or Firm)

I. Processing of Statements of Tax deducted or Collected at Source:

Sec 200A & 206CB of the Income Tax Act, 1961

The Statements of Tax deducted or Collected at Source or Correction Statements made by a person shall be processed after making the following adjustments:

(i) any arithmetical error in the statement or

(ii) an incorrect claim, apparent from any information in the statement

and an intimation shall be prepared and sent to the deductor or collector specifying the sum determined to be payable by or the amount of refund due to him

J. Consequences of failure to deduct or pay:

Sec 201 & 206C of the Income Tax Act, 1961

Any person who is required to deduct or collect tax fails to deduct or collect tax or after deducting or collecting fails to pay the tax shall be deemed to be an assessee in default.

However, such person shall not be deemed to be an Assessee in default if the Resident Assessee to whom the tax should have deducted or collected

  • has furnished his return of income under section 139
  • has taken into account such sum for computing income in such return of income and
  • has paid the tax due on the income declared by him in such return of income.

and the person furnishes a certificate to this effect from an accountant in Form No. 26A/27BA as the case may be.

Interest payable is as follows:

For Non or Short Deduction 1% p.m or part of the month from the date on which tax was deductible to the date of deduction
For Non or Short Payment 1.5% p.m or part of the month from the date on which tax was deducted to the date of payment
For Non or Short Collection or Payment 1% p.m or part of the month from the date on which tax was collectibe to the date of payment

If Assessee is not treated as Assessee in Default even though Assessee fails to deduct or collect or pay the tax as said above then interest for such Non Deduction or Short Deduction shall be calculated only up to the date of furnishing of the return of income by such resident.

K. Certificate of Deduction of Tax at Source:

Sec 203 & 206C of the Income Tax Act, 1961

Every Person responsible for deduction/collection of tax shall issue certificate of deduction/collection of tax at source as follows:

Sl. No. Section Form No. Due date
1 192 Form No.16 By 15th day of June of the financial year immediately following the financial year in which the income was paid and tax deducted.
2 Any other Form No.16A Within fifteen days from the due date for furnishing the statement of tax deducted at source.
3 194IA Form No.16B Within fifteen days from the due date for furnishing the challan cum statement of TDS in Form 26QB.
4 194IB Form No.16C Within fifteen days from the due date for furnishing the challan cum statement of TDS in Form 26QC.
5 206C Form No. 27D Within fifteen days from the due date for furnishing the statement of tax collected at source.

L. Tax Deduction and Collection Account Number (TAN):

Sec 203A & 206CA of the Income Tax Act, 1961

Every person responsible for deduction or collection of tax shall apply for Tax Deduction and Collection Account Number in Form No. 49B

However, Person who are liable to deduct tax under section 194IA or 194IB are not required to apply for Tax Deduction and Collection Account Number.

M. Furnishing of Statement of Tax Deducted by Income Tax Authority:

Sec 203AA & 206C of the Income Tax Act, 1961

The Income Tax Authority shall prepare and deliver to every person from whose income the tax has been deducted or collected or in respect of whose income the tax has been paid a statement in Form No. 26AS specifying the amount of tax deducted or collected or paid by 31st July following the financial year during which taxes were deducted or collected or paid.

N. Requirement to furnish Permanent Account Number:

Sec 206AA of the Income Tax Act, 1961

Where deductee fails to furnish his PAN to the deductor then the rate of TDS applicable is higher of the following:

a. Rate Specified in the Act or Rates in Force

b. 20%

However, this provision is not applicable on payment to Non Residents in the nature of interest, royalty, fees for technical services and payments on transfer of any capital asset, if the deductee furnishes the following details and the documents:

1 name, e-mail id, contact number
2 address in the country or specified territory outside India of which the deductee is a resident
3 a certificate of his being resident in any country or specified territory outside India from the Government of that country or specified territory if the law of that country or specified territory provides for issuance of such certificate;
4 Tax Identification Number of the deductee in the country or specified territory of his residence and in case no such number is available, then a unique number on the basis of which the deductee is identified by the Government of that country or the specified territory of which he claims to be a resident

Where collectee fails to furnish his PAN to the collector then the rate of TCS applicable is higher of the following:

a. Twice the Rate Specified in the Act

b. 5%

O. Penalties:

Section Particulars Penalty
271C Penalty for failure to Deduct Tax at Source An amount of tax which such person failed to deduct
271CA Penalty for failure to Collect Tax at Source An amount of tax which such person failed to collect
272BB Penalty for failure to Comply with the Provisions of Sec 203A Rs. 10,000
272BBB Penalty for failure to Comply with the Provisions of Sec 206CA Rs. 10,000

P. Offences: Sec 276B & 276BB of the Income Tax Act, 1961

If a person fails to pay to the credit of the Central Government the tax Deducted or Collected at Source by him he shall be 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.

Author Bio

Qualification: CA in Practice
Company: N/A
Location: Rajamahendravaram, Andhra Pradesh, IN
Member Since: 09 Sep 2018 | Total Posts: 1
Practicing Chartered Accountant in Rajahmundry View Full Profile

More Under Income Tax

Posted Under

Category : Income Tax (28798)
Type : Articles
Tags : tcs (221) TDS (1166)

Leave a Comment

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