In this article we will discuss in detail about Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) along with updated TDS Rate Chart and TCS Rate rate chart amidst the outbreak of COVID-19 and lockdown:
TDS Compliances And Impact of Covid-19 Thereon
- TDS Deductor and Deductee
TDS is basically income tax deducted by a person while making certain specified payments such as rent, commission, salary, professional fees, interest etc. The person making the payments is required to deduct the tax and deposit it with the Government.
The person who deducts the tax is called deductor and the person whose tax is deducted is called deductee.
- Point of TDS deduction
The TDS should be deducted at specified rates while making the payment or date of credit which ever is earlier.
- Person responsible for deducting TDS
TDS should be deducted by every person making the specified payments except by individual and HUF whose books are not required to be audited. However, in case of rent payments made by individuals and HUF exceeding Rs 50,000 per month, are required to deduct TDS @ 5% even if the individual or HUF is not liable for a tax audit.
- TAN
Every Person Deducting/Collecting tax at source is required to obtain a unique number called as Tax Deduction Account Number (TAN). The Number has to be quoted to the deductor/collector in every correspondence related to TDS/TCS.
- Due date for depositing TDS
The tax deducted at source must be deposited by 7th day of subsequent month. For the Tax deducted in month of March the due date for deposit is 30th April.
- Form and frequency for issuance of TDS certificate
| Form | Certificate of | Frequency | Due date |
| Form 16 | TDS on salary payment | Yearly | 31st May* |
| Form 16 A | TDS on non-salary payments | Quarterly | 15 days from due date of filing return |
| Form 16 B | TDS on sale of property | Every transaction | 15 days from due date of filing return |
| Form 16 C | TDS on rent | Every transaction | 15 days from due date of filing return |
*Amidst outbreak of corona Pandemic and lockdown, the due date for filing returns has been extended till 30th June, 2020 for due dates falling between 20.03.2020 to 30.06.2020.
- Challan to be filled for payment of TDS
The TDS needs to be deposited by filling Challan ITNS-281.
- Due date for TDS returns be filing
The TDS returns needs to be filed as per below chart.
| Form No | Transactions reported in the return | Due date |
| Form 24Q | TDS on Salary | Q1 – 31st July
Q2 – 31st October Q3 – 31st January Q4 – 31st May* |
| Form 27Q | TDS on all payments made to residents except salaries | Q1 – 31st July
Q2 – 31st October Q3 – 31st January Q4 – 31st May* |
| Form 26QB | TDS on sale of property | 30 days from the end of the month in which TDS is deducted |
| Form 26QC | TDS on rent | 30 days from the end of the month in which TDS is deducted |
*Amidst outbreak of corona Pandemic and lockdown, the due date for filing returns has been extended till 30th June, 2020 for due dates falling between 20.03.2020 to 30.06.2020.
- Form 26AS and TDS credit:
Form 26AS is a consolidated tax statement which is available to all PAN holders. Since all TDS is linked to assessee’s PAN, this form lists out the details of TDS deducted on your income by each deductor for all kinds of payments made to assessee – whether those are salaries or interest income – all TDS linked to assessee’s PAN is reported here. This form also has income tax directly paid by assessee – as advance tax or self assessment tax.
- Procedure to claim credit for TDS deducted
Assessee would be required to calculate his annual income by aggregating income from all sources. The actual tax liability would be calculated on the total taxable income.
From the taxes calculated, assessee can claim credit for TDS deducted on various receipts. Reduce the tax deducted at source from actual tax liability to know the balance to be paid to the income tax department. Assessee may have a refund too. In both cases, an income tax return needs to be filed and tax due be paid or refund if any be claimed.
- The Consequences of TDS Defaults And Non-Payment To Government
Failure to deduct tax or short deduction of tax or failure/delay in payment of the tax deducted to the credit of Government by the due date, would make the deductor an assessee in default in respect of such tax and also liable to penalty which is equal to the amount for which the assessee is a deemed defaulter.
In case of non-deduction/short deduction or delay in deduction of tax, interest @ 1% per month or part of the month is levied on the fix deductible amount and in case of delay in payment of tax after deducting, interest @ 1.5% per month or part of the month, till such time the tax deducted is not credited to the Government shall also be payable.
*Note – Amidst lockdown the rate of interest is reduced to 0.75% for delayed deduction and payment for due dates falling between 20.03.2020 to 30.06.2020.
- What if the Pan no. is not provided to the deductor by the deductee? Is there any relief amidst the COVID-19 outbreak and lockdown?
If the deductee does not furnish PAN or furnishes incorrect PAN to the deductor/collector, the deductor/collector shall deduct tax at source at higher of the following rates:
- the rate prescribed in the Act; or
- at the rate in force, i.e.. the rate mentioned in the Finance Act; or
- at the rate of 20%.
There shall be no reduction in rates of TDS or TCS, where the tax is required to be deducted or collected at higher rate due to non-furnishing of PAN/Aadhaar. For example, if the tax is required to be deducted at 20% under section 206AA of the Income-tax Act due to non-furnishing of PAN/Aadhaar, it shall be deducted at the rate of 20% and not at the rate of 15%.
- Rates of deduction and relief provided to cope up with COVID – 19 pandemic
In order to provide more funds at the disposal of the taxpayers for dealing with the economic situation arising out of COVID-19 pandemic, the rates of Tax Deduction at Source (TDS) for the following non-salaried specified payments made to residents has been reduced by 25% for the period from 14th May, 2020 to 31st March, 2021:-
| Section | Nature of payment | Threshold Limit | Applicable from 01/04/2020 to 13/05/2020 | Applicable from 14/05/2020 to 31/03/2021 | ||
| Re
sident |
Non-re
sident * |
Re
sident |
Non-re
sident * |
|||
| Rs. | TDS Rate (%) | TDS Rate (%) | TDS Rate (%) | TDS Rate (%) | ||
| 192 | Salaries | – | Normal slab rate | Normal slab rate | Normal slab rate | Normal slab rate |
| 192A | Premature withdrawal from EPF | 50000 | 10 | 10 | 10 | 10 |
| 193 | Interest on securities – 8% Savings (Taxable) Bonds, 2003 or 7.75% Savings (Taxable) Bonds, 2018 during the financial year | 10000 | 10 | – | 7.5 | – |
| 193 | Interest on securities – Interest on securities for money issued by or on behalf of any local authority/statutory corporation, listed debentures of a company(other than demat form), any other interest on securities | 5000 | 10 | – | 7.5 | – |
| 194 | Dividends | 5000 | 10 | – | 7.5 | – |
| 194A | Interest (Banking co., co-operative society engaged in banking, post office) | 40000 | 10 | – | 7.5 | – |
| 194A | Interest (Any other person) | 5000 | 10 | – | 7.5 | – |
| 194B | Winning from lotteries | 10000 | 30 | 30 | 30 | 30 |
| 194BB | Winning from Horse race | 10000 | 30 | 30 | 30 | 30 |
| 194C | Contractor-Single
transaction-Individual/HUF -Others |
30000 | 1
2 |
–
– |
0.75
1.5 |
–
– |
| 194C | Contractor – Consolidated Payment During the F.Y.
– Individual/HUF – Others |
100000 | 1
2 |
–
– |
0.75
1.5 |
–
– |
| 194D | Insurance commission
– Other than Company – Company |
15000 | 5
10 |
–
– |
3.75
10 |
–
– |
| 194DA | Maturity of Life insurance policy | 100000 | 5 | – | 3.75 | – |
| 194E | Non-resident sportsmen or sports association | – | – | 20 | – | 20 |
| 194EE | NSS | 2500 | 10 | 10 | 7.5 | 10 |
| 194F | Repurchase units by MFs | – | 20 | 20 | 15 | 20 |
| 194G | Commission-Lottery | 15000 | 5 | 5 | 3.75 | 5 |
| 194H | Commission/
Brokerage |
15000 | 5 | – | 3.75 | – |
| 194I | Rent of – Plant/Machinery /Equipment
– Land and Building/Furniture & Fixture |
240000 | 2
10 |
–
– |
1.5
7.5 |
–
– |
| 194IA | Transfer of certain immovable property other than agriculture land | 50 lakh | 1 | – | 0.75 | – |
| 194IB | Rent by Individual/HUF | 50000 per month | 5 | – | 3.75 | – |
| 194IC | Payment under Joint Development Agreements to Individual/HUF | – | 10 | – | 7.5 | – |
| 194J | Professional Fees | 30000 | 10 | – | 7.5 | – |
| 194J | Technical Fees (w.e.f. 01.04.2020) | 30000 | 2 | – | 1.5 | – |
| 194J | Payment to call centre operator (w.e.f. 01.06.2017) | 30000 | 2 | – | 1.5 | – |
| 194J | Director’s fees | – | 10 | – | 7.5 | – |
| 194K | Payment of any income in respect of
(a) units of a mutual fund as per section 10(23D); or (b) the units from the administrator; or (c) units from specified company (w.e.f. 01.04.2020) |
5000 | 10 | – | 7.5 | – |
| 194LA | Compensation on transfer of certain immovable property other than agriculture land
(TDS exempted if covered under RFCTLARR Act w.e.f. 01.04.2017) |
250000 | 10 | – | 7.5 | – |
| 194LB | Income by way of interest from infrastructure debt fund | – | – | 5 | – | 5 |
| 194LBA | Income from units of business trust
– interest received or receivable from a special purpose vehicle; or – dividend referred to in sub-section (7) of section 115-O |
– | 10
10 |
5
10 |
7.5
7.5 |
5
10 |
| 194LBA | Distribution of rental income to unit holders
– Other than Comapany – Company |
– | 10
10 |
30
40 |
7.5
7.5 |
30
40 |
| 194LBB | Income in respect of units of investment fund
– Other than Company – Company |
– | 10
10 |
30
40 |
7.5
7.5 |
30
40 |
| 194LBC | Income in respect of investment in securitization fund
– Individual/HUF – Company – Other Person |
– | 25
30 30 |
30
40 30 |
18.75
22.5 22.5 |
30
40 30 |
| 194LC | Income by way of interest by an Indian specified company to a non-resident/foreign company on foreign currency approved loan / long-term infrastructure bonds from outside India | – | – | 5 | – | 5 |
| 194LC | Income by way of interest by an Indian specified company on rupee denominated bond / any long-term bonds from outside India, which is listed only on a recognized stock exchange located in any International Financial Services Centre | – | – | 4 | – | 4 |
| 194LD | Interest on certain bonds from Govt. securities | – | – | 5 | – | 5 |
| 194M | Certain payments by Individual/HUF | 50 lakh | 5 | – | 3.75 | – |
| 194N | Payment of certain amount in cash | 1 Crore | 2 | 2 | 2 | 2 |
| 194N | Payment of certain amount in cash (first proviso of section 194N)if-
– Amount is more than Rs.20 lakh but up to Rs. 1 crore – Amount exceeds Rs. 1 crore (Applicable from 01.07.2020) |
N.A.
N.A. |
N.A.
N.A. |
2
5 |
2
5 |
|
| 194-O | Applicable for e-commerce operator for the sale of goods or provision of services facilitated by it through its digital or electronic facility or platform (Applicable from 01.10.2020) | – | N.A | – | 0.75 | – |
| 195 | Income of Investment made by an NRI | – | – | 20 | – | 20 |
| 195 | Long-term capital gain
– Under Section – 115E/ 112(1)(c)(iii)/112A – Any Other Gains |
– | –
– |
10
20 |
–
– |
10
20 |
| 195 | Short-term capital gain – 111A | – | – | 15 | – | 15 |
| 195 | Royalty | – | – | 10 | – | 10 |
| 195 | Fees for technical services | – | – | 10 | – | 10 |
| 195 | Interest income payable by Govt./Indian concern (other than section 194LB or 194LC) | – | – | 20 | – | 20 |
| 195 | Any Other Income – Other than Company
– Company |
– | –
– |
30
40 |
–
– |
30
40 |
| 196A | Income in respect –
– of units of a Mutual Fund specified under clause (23D) of section 10; or – from the specified company referred to in the Explanation to clause (35) of section 10 |
– | – | 20 | – | 20 |
| 196B | Income from units to an offshore fund | – | – | 10 | – | 10 |
| 196C | Income from foreign currency bonds or GDR of an Indian company | – | – | 10 | – | 10 |
| 196D | Income of foreign Institutional Investors from securities (not being dividend or capital gain) | – | – | 20 | – | 20 |
TCS Compliances And Impact of Covid-19 Thereon
- TCS, Collector, Collectee
TCS is Tax collected at source from the buyer by the seller at the time of selling some prescribed goods. The person who collects the tax is called ‘collector’ and the person whose tax is collected is called ‘collectee’.
- Persons to collect tax at source
There are some specific people or organizations who have been classified as sellers for tax collected at source. No other seller of goods can collect tax at source from the buyers apart from the following list :
1. Central Government
2. State Government
3. Local Authority
4. Statutory Corporation or Authority
5. Company registered under Companies Act
6. Partnership firms
7. Co-operative Society
8. Any person or HUF who is subjected to an audit of accounts under Income tax act for a particular financial year.
Similarly, only a few buyers are liable to pay the tax at source to the sellers.
Let us know who are those buyers:
1. Public sector companies
2. Central Government
3. State Government
4. Embassy of High commision
5. Consulate and other Trade Representation of a Foreign Nation
6. Clubs such as sports clubs and social clubs
- The due date for depositing TCS with the government
The tax collected at source must be deposited by 7th day of subsequent month.
TCS certificate
When a tax collector files his quarterly TCS return i.e Form 27EQ, he has to provide a TCS certificate to the purchaser of the goods.
Form 27D is the certificate issued for TCS returns filed. This certificate contains the following details:
1. Name of the Seller and Buyer
2. TAN of the seller i.e who is filing the TCS return quarterly
3. PAN of both seller and buyer
4. Total tax collected by the seller
5. Date of collection
6. The rate of Tax applied
This certificate has to be issued within 15 days from the date of filing TCS quarterly returns.
- Due date for TCS return filing
The due dates for return filing in as per chart given below –
| Quarter | Period | Due Date of filing |
| 1st Quarter | 1st April to 30th June | 15th July |
| 2nd Quarter | 1st July to 30th September | 15th Oct |
| 3rd Quarter | 1st Oct to 31st Dec | 15th Jan |
| 4th Quarter | 1st Jan to 31st March | 15th May*** |
***Amidst outbreak of corona Pandemic and lockdown, the due date for filing returns has been extended till 30th June, 2020 for due dates falling between 20.03.2020 to 30.06.2020.
- Consequences Of TCS Defaults And Non-Payment To Government?
In case of delay in payment of tax after collecting, interest @1% per month or part of the month till such time the tax is not paid.
*Note – Amidst lockdown the rate of interest is reduced to 0.75% for delayed deduction and payment for due dates falling between 20.03.2020 to 30.06.2020.
- Penalties and prosecution for default in compliance with TDS or TCS rules?
Penalty (Sec 234E): The TDS deductor will be accountable to pay a penalty of INR 200/- per day to the IT department till the date the complete TDS amount is being paid. However, the penalty shall be limited to the actual TDS amount and cannot be more than that.
Penalty u/s 271H – As per this section, when an individual fails to file the TDS/TCS return before the due dates, the Assessing Officer may direct him/her to pay penalty under section 271H along with the late fee applicable as per section 234E.
The penalty under section 271H starts from INR.10,000 and can be extended to INR 1,00,000 when the Deductor/Collector files a wrong return.
Conditions when no penalty is levied for delayed filing or payment of TDS/TCS return as per section 271H.
- The tax deducted at source is paid to the credit of the government.
- The interest along with late filing fees is paid to the credit of the government.
- The TDS/TCS return is filed prior to the expiry of one year period from the due date as stated (provided that the return submitted is correct)
Prosecution under Section 276B
Section 276B states that if a person fails to pay to the credit of the Central Government within the specified time, as mentioned above, the TDS by him according to the provisions of Chapter XVII-B, he shall be penalized with fine along with severe imprisonment for a time period between 3 months and 7 years. The punishment will be based upon the circumstances or the inspection done by the concerned tax authority or assessment officer.
- The rates of collection and relief provided to cope up with COVID – 19 pandemic?
In order to provide more funds at the disposal of the taxpayers for dealing with the economic situation arising out of COVID-19 pandemic, the rates of Tax Deduction at Source (TDS) for the following non-salaried specified payments made to residents has been reduced by 25% for the period from 14th May, 2020 to 31st March, 2021:-
TCS Rate Chart for F.Y. 2020-21 (A.Y: 2021-22)
| Section | Nature of payment | Applicable from 01/04/2020 to 13/05/2020
TCS Rate (%) |
Applicable from 14/05/2020 to 31/03/2021
TCS Rate (%) |
| 206C | Scrap | 1 | 0.75 |
| 206C | Tendu leaves | 5 | 3.75 |
| 206C | Timber obtained under a forest lease or other mode | 2.5 | 1.875 |
| 206C | Any other forest produce not being a timber or tendu leaves | 2.5 | 1.875 |
| 206C | Alcoholic liquor for human consumption and Indian made foreign liquor | 1 | 1 |
| 206C | Parking lot, toll plaza, mining and quarrying (other than mining and quarrying of mineral oil, petroleum and natural gas) | 2 | 1.5 |
| 206C | Minerals, being coal or lignite or iron ore | 1 | 0.75 |
| 206C | Sale of motor vehicle of the value exceeding Rs. 10 Lacs | 1 | 0.75 |
| 206C | Remittance out of India under the Liberalized Remittance Scheme of the RBI of the value exceeding 7 Lacs in a financial year (Applicable from 01.10.2020) – TCS will be charged on excess amount over 7 lacs | N.A. | 5 |
| 206C | Sale of overseas tour programme package (Applicable from 01.10.2020) | N.A. | 5 |
| 206C | Remittance out of India for education under the Liberalized Remittance Scheme of the RBI of the value exceeding 7 Lacs in a financial year (Applicable from 01.10.2020) – TCS will be charged on excess amount over 7 lacs | N.A. | 0.5 |
| 206C | Sale of any goods (other than goods exported out of India or goods given in the above points) of the value exceeding 50 Lacs (Applicable from 01.10.2020) – TCS will be charged on excess amount over 50 lacs | N.A. | 0.075 |
Note: In case of non-furnishing of PAN/Aadhaar by collectee, TCS will be charged at twice of the normal rate applicable or 5% {1% in case of sale of any goods (given in the last point) of the value exceeding 50 Lacs}, whichever is higher.
Hope you found the article helpful.
(The author is a Chartered Accountant and can be reached at [email protected])
Author Bio
Sir, Form 26QB TDS-sale on property, For late deduction; e.g. On Sept 3, 2020 i have paid X (say 100000/1L) amount to seller, but i missed to file TDS for 1% of X amount which is 1000Rs and not even deducted this TDS (1%) amount from source while paying to seller, i paid the seller the whole amount (100000/1L).
Now i want to file 26QB by now Mar 9, 2020 for that installment X/1L paid amount.
since i already paid TDS also to the seller, do i still need to pay to government? if yes do i need to ask seller to repay that TDS amount to me, or can i adjust this TDS on next installment while paying the seller?
It is not very clear whether an individual tenant / lessee is required under section 194IB to deduct and remit the TDS @5% ( 3,75% for FY 20-21 from May 20 ) on monthly rental exceeding Rs 50,000/- every month from the rental payable or it is to be deducted lump sum @ 5% ( or 3.75@ ) for 12 months during the last month of the Financial year from the rental payable for the last month and paid to the Govt before 31st March .
Sir, The article is well written.
In view of COVID-19 the 26AS stands stationary as in Jan 2020. It has not moved one millimeter. Could you let me know if CBDT has given an extension for submission of INCOME TAX RETURNS for AY 2020-21. Many of the people have not deposited the collected TDS to CBDT (even after deduction of TDS). As all money seems to have evaporated, what is the solution? Pl give a detailed response to my email .Thanks you.