Under Income Tax Act, Tax Deducted at Source (TDS) is really a Tedious for all the assesses. There are different sections 192 to 194 having subsections, analyses as under:
| Section 192 | TDS on Salary |
| Section 193 | TDS on interest on securities |
| Section 194 | TDS on Dividends |
| Section 194A | TDS on Interest other than Interest on securities payable by persons other than Individual and HUF |
| Section 194B | Winning from lottery or cross word puzzle or card Game and other game. |
| Section 194BB | Winning from horse race |
| Section 194C | Payment to contractors/sub contractors (payable by Persons other than individual and HUF) |
| Section 194D | Payment of Insurance Commission |
| Section 194DA | Payment in respect of Life Insurance Policy (other Than an amount exempt u/s 10(10D) |
| Section 194EE | Payments out of deposits under National Savings Scheme refer to in Section 80CCA |
| Section 194G | Payment of Commission etc. on Sale of lottery tickets |
| Section 194H | Payment of commission or brokerage payable by persons other than Individual and HUF |
| Section 194I | Payment of Rent payable by persons other than individual and HUF |
| Section 194J | Payment of fee for
(a) profession or technical services or (b) royalty or (c) any sum referred to in section 28(va) Payable by persons other than individual and HUF |
| Section 194LA | Payment of compensation and enhanced compensation on acquisition of land (other than agricultural) and building |
| Section 194IA | Payment of consideration transfer of land or building (other than agricultural land) |
| Section 194IB | Rent payable by Individual or HUF(other than those referred to in 2nd proviso to Section 194I) |
| Section 194K | Income in respect of units |
| Section 194N | Payment of certain amount in cash |
| Section 194O | Payments of certain sums by e-commerce operator to e-commerce participants |
These are the different sections under which tax is to be deducted. The limit for when to deduct tax is different in different sections, the rate of TDS is also different. The rate of TDS is minimum 1% to 10%, but in case of Section 194B and 194BB i.e. winning from lottery or cross word puzzle or Card game and games and winning from horse race is 30%.
Section 192: TDS on Salary: Let’s start with section 192 in detail. Under this section title itself suggest TDS on Salary, that means it applicable to salaried assesses and not any other assesses.
In this section the responsibly of deduction of tax lies with an employer, on Salary payable to their employees.
When to deduct Tax?
The following are the main condition for deducting tax on salary.
- There must establish the relationship of employer – employee.
- Payment made by employer to employee should me in form of salary, which includes all types of perquisites. Any kind of honorarium received for service provide occasionally is not considered as salary.
- The payment of salary should be in excess of minimum amount chargeable to tax, i.e. more than Rs. 2,50,000/
Persons responsible for deducting TDS:
We know that there are different types of employers, but who is responsible for deduction of tax? The following are the categories of employers and who is responsible person.
| Proprietorship Concern | Proprietor |
| Hindu Undivided Family | Karta |
| Firm / LLP | Managing Partner/partner of the firm/LLP |
| Limited Companies | Secretary, Treasurer, Manager or Principal officer of the company |
| Trusts | Managing trustee or Trustees |
The question may arise, when a person is doing part time job with different
employers or has change the job during the year, who will deduct Tax? It is the duty of employee that he has to submit Form No 12B, prescribed under Rule 26 of Income Tax Rules, wherein he has to give full details of his all jobs and if any employer had deducted tax or not to his present employer. On the basis of Form No 12B, present employer either deduct tax if necessary or may not deduct tax if already deducted by previous employer. If employee fails to submit Form 12B, all the employers may deduct tax or may not deduct tax on their employment arrangements.
At what point of Time Tax has to be deducted?
As per the provisions of TDS, tax is to be deducted, at the time of credit or payment, whichever is earlier. But in the case of salary tax is to be deducted only at the time of payment.
Salary covers the advance salary and arrear salary, but liable to deduction of tax only at the time of payment.
Example: Mr. A, an employee at the company since last 15 years and regularly tax was deducted from his salary. At the time of salary for the month of March, 2021, he requested his employer to give him salary of April, 2021 in March, 2021 and he got it. In this situation tax is to be deducted on 13 months salary and not on 12 months salary, because TDS is based on payment base.
Under the above example, if Mr. A, received increment of salary of last two years, during month of March, 2021,though the salary pertaining to earlier years, tax is to be deducted when it has been paid in the month of March, 2021.
While deducting tax on salary payment, employer has to considered deduction claimed by an employee under chapter VI A of the Income Tax Act, relief claim by an employee and other exempted income.
Author Bio
Very very informative especially for tax practitioners.