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 (wef A.y 2017-18 this limit has been increased to Rs 50 Lakhs) 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 Form 15H as the case may be.
- On certificate issued by ITO.
- Payment to Government/RBI/ Corporation established by or under Central Act which is exempt from income tax by virtue of any law/ Mutual Fund specified under section 10(23D).
- Exempt Incomes.
- Interest Payment by Offshore Banking Units.
- Payment to New Pension System Trust.
- Notified payment to Notified Institutions / Associations.
Detailed TDS Rate Chart for Financial Year 2016-17, Financial Year 2017-18 and Financial Year 2018-19 can be checked at below links-
TDS Rates and Returns for Assessment Year 2019-20 (Financial Year 2018-19)
Page Contents
- TDS Rate on Payment of Salary and Wages:
- TDS Rates on Payments other than Salary and Wages to Residents/Non-Resident
- Point of Deduction of TDS
- Consequences of Failure to deduct tax / TDS
- Due Dates for depositing TDS
- Issue of TDS Certificate
- Penalty on Failure to Issue TDS Certificate
- Forms for submitting Quarterly Statements of Tax Deducted at Source (Rule 31A)
- Due Dates for submitting Quarterly Statements of Tax Deducted at Source (Rule 31A)
- Penal Provisions for failure / default in submitting TDS returns /statements
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 Section 80C, Section 80CCC, Section 80CCD, Section 80D, Section 80DD, Section 80DDB, Section 80E, Section 80G, Section 80 GGA, Section 80TTA. 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. 2,50,000/- in case of Individual, HUF, AOP, BOD and AJP) |
| TDS Rate | As per Income Tax, Surcharge and Education Cess rates applicable on the estimated income of employee for the year. |
| Section 192A (inserted wef June 2015) | Payment of Accumulated Balance Due of Employees’ Provident Fund Scheme,1952 to employees |
| Criterion of Deduction | Tax is to be deducted by the trustees of Employees’ Provident Fund Scheme,1952 or any other person authorised under the scheme to make such accumulated payments to employees and the amount of such payment is Rs 50,000 or more |
| TDS Rate | In case of Resident Payee-10%(no surcharge or health and education cess)
In case of Non-Resident-10%(will be increased by surcharge and health and education cess) |
TDS Rates on Payments other than Salary and Wages to Residents/Non-Resident
| Section | For Payment of | On Payments Exceeding | Individual / HUF | Others |
| 193 | Interest on Securities | Rs. 5000/-
However the limit is Rs 10,000 for the securities mentioned below: i) Any security of the central government / state government ii) 8% savings taxable bond,2003 iii) Wef 1st April,2018 on 7.75% savings (taxable) Bonds, 2018
|
10% | 10% |
| 194 | Deemed Dividend | Rs 2500 | 10% | 10% |
| 194A | Interest other than on securities by banks | Rs. 10000/-
However this limit has been increased to Rs 50,000 wef 1st April 2018 if the payee is senior citizen. |
10% | 10% |
| 194A | Interest other than on securities by others | Rs. 5,000/- | 10% | 10% |
| 194B | Winnings from Lotteries / Puzzle / Game | Rs. 10,000/- | 30% | 30% |
| 194BB | Winnings from Horse Race | Rs. 10,000/- | 30% | 30% |
| 194C | Payment to Contractors/ Sub-Contractors
|
Rs. 30000/- for single payment Rs. 1,00,000/- for aggregate payment during Financial Year |
1% | 2% |
| 194 D | Payment of Insurance Commission | Rs. 15,000/- | 5% | 10% |
| 194DA | Payment of Life Insurance Policy | Rs 100,000 | 1% | 1% |
| 194E | Payment to Non- Resident Sportsman/sports association/ entertainer | – | 20% | 20% |
| 194 EE | Payment of NSS Deposits | Rs. 2500/- | 10% | NA |
| 194 F | Repurchase of units by Mutual Funds / UTI | – | 20% | 20% |
| 194 G | Commission/ Remuneration on Sale of Lottery tickets | Rs. 15,000/- | 5% | 5% |
| 194 H | Commission or Brokerage | Rs. 15,000/- | 5% | 5% |
| 194I | Rent of Land, Building or Furniture | Rs. 180000/- | 10% | 10% |
| Rent of Plant & Machinery | Rs. 180000/- | 2% | 2% | |
| 194IA | Transfer of Immovable Property (w.e.f. 01.06.2013) | Rs. 50 lacs or more | 1% | 1% |
| 194IB
|
Payment made by the individual/ Huf whose books of accounts are not required to be audit u/s 44AB in the immediately preceding financial year for rent on land or building to any resident .(w.e.f 1st June 2017) | Rs 50,000 per month or part of the month | 5% | 5% |
| 194IC
|
Any person responsible for paying to a resident any sum by way of consideration (not being in kind)under a joint development agreement.
|
– | 10% | 10% |
| 194 J | Professional/ technical services, royalty | Rs. 30,000/- | i)10%
ii) 2% in case the payee is engaged in the business of operation of call centre |
1i)10%
ii) 2% in case the payee is engaged in the business of operation of call centre % |
| 194 J (1) | 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 LA | Compensation/ Enhanced compensation on acquisition of certain immovable property. | Rs. 2,50,000/- | 10% | 10% |
| 194 LB | Interest to non- resident by infrastructure | – | 5% | 5% |
| 194LBA | Income from units of business trust. TDS is applicable if a business trust distributes any income referred to in section section 115UA or to its unit holders being in the nature of Section 10(23FC) | – | 10% (for resident) and 5% (for non- resident) | 10% (for resident) and 5% (for non- resident) |
| Payment Received u/s 10(23FCA) – Rental Income received by the real estate distributed to the unit holders | – | 10% (for resident) and 30% (Surcharge + HEC) {for non- resident} | 10% (for Indian company) and 40% (Surcharge + HEC) {for foreign company} | |
| 194LBB | Payment of income in respect of units of Investment Fund | 10% (for resident) and 30% (Surcharge + HEC) {for non- resident} | 10% (for Indian company)and 40% (Surcharge + HEC) {for foreign company} | |
| 194LBC | Payment of income in respect of Investment Fund in securitization fund | i. 25% ( for resident individual/HU F)
ii. 30% (Surcharge + HEC) for non resident other than foreign company.
|
i. 30-For resident
ii. 40% (Surcharge + HEC) for foreign company |
|
| 194LC | Payment of interest on (approved by C.G) amount borrowed in foreign currency during 01.07.2012 to 01.07.2020) by a specified company or business trust to NON-Resident/Foreign company | 5% (surcharge+HEC) | 5% (surcharge + HEC) | |
| 194LD` | Payment of interest To Foreign institutional Investors, qualified foreign investors between 01.06.2013 to 01.07.2020 | 5% (surcharge + HEC) | 5% (surcharge + HEC) |
Notes:
1. For the financial year 2018-19 there is no surcharge or health and education cess on amount 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. However if the recipient is non resident the rate of TDS will be increased by surcharge or health and education
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 Income Tax 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 / TDS
Interest – at 1% for every month or part of the month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and
Penalty – equal to the amount of tax deductible but not deducted u/s 271C
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 in Payment of TDS:
Interest @ one and one-half percent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid. Section 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 15th day of June 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 foreign company or resident but not ordinarily resident; and
2. Form no. 26QB for tax deduction u/s 194-IA
3. Form no. 26QC for tax deduction u/s 194-IB
4. 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 | 31st July of the financial year |
| 30th September | 31st October of the financial year | 31st October of the financial year |
| 31st December | 31st January of the financial year | 31st January of the financial year |
| 31st March | 31st May of the financial year immediately following the financial year in which deduction is made | 31st May of the financial year immediately following the financial year in which deduction is made. |
However the above due date shall not apply to Form 26QB/26QC as in these cases challan of electronic deposit of TDS is itself considered as return
Penal Provisions for failure / default in submitting TDS 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 file TDS return on 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 in in filing TDS Statement within the prescribed time
(ii) If deductor furnishes incorrect details like PAN, TDS amount, Challan particulars etc. |
Penalty of sum which shall not be less than ten thousand rupees but which may extend to one lakh rupees. No penalty shall be levied for the failure to file TDS/TCS return on time,if the person proves that after paying tax deducted or collected along with the fee and interest, if any, to the credit of the Central Government, he has filed the return before the expiry of a period of one year from the time prescribed for delivering or causing to be delivered such statement. |
Click here to Read Other Articles of CA Kapil Goel
(Republished With Amendments)
SIR,
OSL PROVISION TDS 1000000
5 INVOICES TDS AMOUNT 1001000
HOW I CAN ATTESTED 5 INVOICES IN THIS OSL TDS
SIR,
WE HAVE PAID CHALLAN FOR AY 2020-21 ON BEHALF OF AY 19-20 .CAN WE USE THOSE CHALLAN AY 19-20 4TH QTR.PLEASE REPLY
cab we file the income tax return of 217-18 under 10(46)
Sir, GST TDS REGISTRATION COMPLETE. LOCAL AUTHORITIES… MY DDO IS TRANSFER. HOW TO CHANGE NOW
Sir, Need a clarification on TDS return. I have to move a deductee from QTR 1 18-19 to Qtr 4 in 17-18 and revise my returns accordinglyfor both qtrs . Pl advise me as to how do i go about it. I have got both the conso files. shall be grateful for your help.
Due dates for the Month of March . May Pls check ..
Dear Sir
Please suggest me .
We are supplied our material trough a local vehicle like auto in local market . So how to make a journal entry of this . And what a document are needed for audit .
IMPROMPTU
TDS u/s 194 IA, not-so-obvious Implications of Sec 201, And Refund of, TDS /Collection in cases where Excess deducted or collected, partially or wholly, though not warranted by law, need special focus; ideally require to be covered !
Re. TDS u/s 194 IA, unintended anomalies have been left unplugged , as yet- see for discussion, in detail, the 2 published articles on this webside itself, besides elsewhere .
if tds deducted and deposited after deadline given, will it result in expense disallow. plus intrest and penalty.
Dear Sir, Kindly Update the Revised Rate. Thanks in Advance
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.
in case of firm filed 4qtr nil ofter six month revised with int.paid is their any penalty for this
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.
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
Its necessary to shown in TDS RETURN if in any quarter no tds deducted u/s 192B.
sir pls send the reply as fast as you can.
thank you
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?
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
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.
Is TDS to be deducted on payment basis or on due basis for payments made u/s 194J?
Salaried people having other monthly income , how and when to pay the tax for other income.how returns file, when please reply
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
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.
It is very use ful sir thankyou so much sir
Thank you sir. It is very basic knowledge for us.
Please tell me reply from F.Y. 2014-2015 TDS Nil Return regarding ?Is It possible Nil TDS Return per day 200 penalty ?
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.
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!
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.
After 1-7-2012 no penalty is leviable u/s 272A(2)(k)
” 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.
Why due date for filing TDS returns are more period compare to others.
Just because its government
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.