tds

This Post Explains about Important provisions of Tax Deducted at source under Income Tax Act 1961.

INTRODUCTION

What is meant by TDS and TCS under Income Tax act ?

TDS stands for tax deducted at source. According to the income tax act, in case of certain prescribed payments (for e.G. Interest, commission, brokerage, rent, etc.), the person making payment is required to deduct tax at source (tds) if payment exceeds certain threshold limits.

TDS has to be deducted at the rates prescribed by the tax department.

The company or person that makes the payment after deducting tds is called a deductor and the company or person receiving the payment is called the deductee.

TDS Rate Chart for Assesment Year 2021-22

Kindly click the Section number for Detailed explanation

TDS Rates Applicable for Resident of India

Section	Nature of Payment	TDS Rate %	TDS Rate % (Applicable from 14/05/2020 to 31/03/2021)
192	Payment of salary	Normal Slab Rate	Normal Slab Rate
192A	Payment of accumulated balance of provident fund which is taxable in the hands of an employee	10	10
193	Interest on securities	10	7.5
194	Income by way of dividend	10	7.5
194A	Income by way of interest other than "Interest on securities"	10	7.5
194B	Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort	30	30
194BB	Income by way of winnings from horse races	30	30
194C	Payment to contractor/sub-contractor a) HUF/Individuals b) Others	1 2	0.75 1.5
194D	Insurance commission	5	3.75
194DA	Payment in respect of life insurance policy w.e.f. 1/9/2019, the tax shall be deducted on the amount of income comprised in insurance pay-out	5	3.75
194EE	Payment in respect of deposit under National Savings scheme	10	7.5
194F	Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India	20	15
194G	Commission, etc., on sale of lottery tickets	5	3.75
194H	Commission or brokerage	5	3.75
194-I	Rent a) Plant & Machinery b) Land or building or furniture or fitting	2 10	1.5 7.5
194-IA	Payment on transfer of certain immovable property other than agricultural land	1	0.75
194-IB	Payment of rent by individual or HUF not liable to tax audit	5	3.75
194-IC	Payment of monetary consideration under Joint Development Agreements	10	7.5
194J	Fees for professional or technical services: i) sum paid or payable towards fees for technical services ii) sum paid or payable towards royalty in the nature of consideration for sale, distribution or exhibition of cinematographic films; iii) Any other sum Note: With effect from June 1, 2017 the rate of TDS would be 2% in case of payee engaged in business of operation of call center.	2 2 10	1.5 1.5 7.5
194K	Income in respect of units payable to resident person	10	7.5
194LA	Payment of compensation on acquisition of certain immovable property	10	7.5
194LBA(1)	Business trust shall deduct tax while distributing, any interest received or receivable by it from a SPV or any income received from renting or leasing or letting out any real estate asset owned directly by it, to its unit holders.	10	7.5
194LBB	Investment fund paying an income to a unit holder [other than income which is exempt under Section 10(23FBB)]	10	7.5
194LBC	Income in respect of investment made in a securitisation trust: (i) Individual or HUF (ii) other Person	25 30	18.75 22.5
194M	Payment of commission (not being insurance commission), brokerage, contractual fee, professional fee to a resident person by an Individual or a HUF who are not liable to deduct TDS under section 194C, 194H, or 194J. Tax shall be deducted under Section 194M with effect from 1/09/2019 when aggregate of sum credited or paid during a financial year exceeds Rs. 50 lakh.	5	3.75
194N	Cash withdrawal during the previous year from one or more account maintained by a person with a banking company, co-operative society engaged in business of banking or a post office: i) in excess of Rs. 1 crore ii)(first proviso of section 194N)if- –  The amount is more than Rs.20 lakh but up to Rs. 1 crore –  The amount exceeds Rs. 1 crore (Applicable from 01.07.2020	2 2/5	2 2/5
194-O	Payment or credit of amount by the e-commerce operator to e-commerce participant	1	0.75

Kindly click the Section number for Detailed explanation.

TDS Rates Applicable for Non-Resident of India

Section	Nature of Payment	TDS Rate %
192	Payment of salary	Normal Slab Rate
192A	Payment of accumulated balance of provident fund which is taxable in the hands of an employee	10
194B	Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort	30
194BB	Income by way of winnings from horse races	30
194E	Payment to non-resident sportsmen/sports association	20
194EE	Payment in respect of deposit under National Savings scheme	10
194F	Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India	20
194G	Commission, etc., on sale of lottery tickets	5
194LB	Payment of interest on infrastructure debt fund	5
194LBA(2)	Payment of the nature referred to in: (i)Section 10(23FC)(a) (ii)Section 10(23FC)(b)	5 10
194LBA(3)	Payment of the nature referred to in section 10(23FCA) by business trust to unit holders. In case of Foreign company- 40%	30
194LBB	Investment fund paying an income to a unit holder [other than income which is exempt under Section 10(23FBB)] In case of Foreign company- 40%	30
194LBC	Income in respect of investment made in a securitisation trust In case of Foreign company- 40%	30
194LC	Payment of interest by an Indian Company or a business trust in respect of money borrowed in foreign currency under a loan agreement or by way of issue of long-term bonds (including long-term infrastructure bond) In case where interest is payable in respect of Long-term bond or Rupee Denominated Bond listed on recognised stock exchange located in IFSC-4%	5
194LD	Payment of interest on rupee denominated bond of an Indian Company or Government securities to a Foreign Institutional Investor or a Qualified Foreign Investor	5
195	Payment of any other sum to a Non-resident	Rates in Force
196B	Income from units (including long-term capital gain on transfer of such units) to an offshore fund	10
196C	Income from foreign currency bonds or GDR of an Indian company (including long-term capital gain on transfer of such bonds or GDR)	10
196D	Income of foreign Institutional Investors from securities (not being dividend or capital gain arising from such securities)	20

#The rate of TDS shall be increased by applicable surcharge and Health & Education cess.

TCS Rate Chart

Section No	Nature of Payment	TCS Rates (%)	TCS Rates (%) [Applicable from  14/05/2020 to 31/03/2021]
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	1	1
206C	Parking Lot, toll plaza, mining and qurraying	2	1.5
206C	Minerals, being coal or lignite or iron ore	1	0.75
206C	Bullion if consideration ( excluding any coin / article weighting 10grams or less) exceeds Rs 2 Lakhs	1	1
206C	TCS on sale in cash of any goods (other than bullion/jewellery) Threshould limit- 2,00,000	1	1
206C	TCS on Providing of any services( other than Ch-XVII-B )  Threshould limit- 2,00,000	1	1
206C	TCS on Motor Vehicle  Threshould limit- 10,00,000	1	0.75

Complete Guide on TDS/TCS

TDS stands for tax deducted at source. According to the
income tax act, in case of certain prescribed payments
(for e.G. Interest, commission, brokerage, rent, etc.), the
person making payment is required to deduct tax at
source (tds) if payment exceeds certain threshold limits.
TDS has to be deducted at the rates prescribed by the tax
department.
The company or person that makes the payment after
deducting tds is called a deductor and the company or
person receiving the payment is called the deductee.

The one who deducts tax at source is required to obtain TAN and quote it in every correspondence related to TDS.

Note: The above is not mandatory in case of tax deduction on the purchase of immovable property and in case of TDS on rent (paid by non-auditable Individual and Hindu Unified Families).

Tax is deducted at the time of making the prescribed payment or credit of the income/payment to the deductee, whichever is earlier. In case of TDS on salary, the tax is deducted at the time of actual payment. In case of TDS on rent, tax is deducted at the time of credit of rent for the last month of the year.

Mode of TDS Payment	Due Date of Payment
When is the tax paid without an Income Tax Challan?	On the same day (applicable in case of book adjustment)
TDS made during the month of March	On or before 30 April.
TDS made during months other than March	On or before 7 days from the end of the month.
TDS on purchase of immovable property (194IA)*	On or before 30 days from the end of the month of deduction.
TDS on rent (1941B)*	On or before 30 days from the end of the month of deduction.

(*challan cum statement in Form 26QB 26QC needs to be filed)

Note: In certain cases, quarterly payment of TDS can be permitted with the prior approval of the Assessing Officer.

Every deductor has to issue a certificate to the deductee in respect of tax deducted by him in the following form:

Particulars	Form No.	The frequency of certificate issuance
TDS certificate on salary	Form 16	Annually
TDS certificate on payments other than salary	Form 16A	Quarterly
TDS certificate on purchase of immovable property	Form 16B	15 days of filing 26QB
TDS certificate on rent	Form 16C	15 days of filing 26QC
TCS certificate	Form 27D	Quarterly

Form No.	Due date
Annual Form No. 16	15th June following the Financial year

For Quarter  Ending on	Due date for  Form 16A	Due date for Form 27D
30 June	15 August	30 July
30 Sept	15 November	30 October
31 Dec	15 February	30 January
31 March	15 June	30 May

With effect from 01/04/2012, it mandatory to issue TDS certificate (only 16A which can be downloaded from www.tdscpc.gov.in). The deductor shall verify the accuracy of contents and authenticate it using a digital or manual signature. After authentication, it becomes a valid certificate.

The TDS certificate contains the following details:

(a) Valid PAN of the deductee
(b) Valid TAN of the deductor

(c) Challan Identification Number (CIN), which is number generated by a combination of BSR code of the bank where tax is deposited, date of deposit and the challan serial number allotted by the bank
(d) BIN Number consists of recipt number of 24G, DDO Serial Number in 24G, date of transfer voucher

The statement in respect of TDS	TDS statement form
TDS on salary	Form No. 24Q
TDS on payment other than salary to a non-resident or a foreign company or a resident but not ordinarily resident.	Form No. 27Q
TDS on payment other than salary to any person other than above.	Form No. 26Q
TDS on sale of immovable property	Form No. 26QB
TDS on payment of rent by certain individual or HUF	Form No. 26QC
Quarterly statement of collection of (TCS) tax at source.	Form No. 27EQ

• Every person responsible for deducting tax at source must furnish TDS statement

• TDS statement cannot be filed without quoting any valid challan and deductee row.

• Cancellation of TDS statement and deductee row is no longer permissible. Accordingly, it is very important to report correct and valid particulars (PAN/TAN/category etc.) in the quarterly TDS statement

• Download consolidated TAN-PAN file from the TRACES website, and use it and file a new statement to avoid quoting incorrect or invalid PAN.

• Validate PAN and name of new deductees from TRACES website before quoting it in TDS statement

• Quote correct and valid lower rate TDS Certificate Number in TDS statement in case of lower deduction. The deductor can verify the lower TDS Certificate Number online on the TRACES website www.tdscpc.gov.in.

File correction statements accurately promptly for incomplete and incorrect
reporting. The TRACES website, www.tdscpc.gov.in, provides the facility for Online Correction of Statements.

• Last provisional receipt number has to be quoted in regular TDS statements. While filing new regular (original) TDS statement, it is mandatory to quote the last
accepted provisional receipt number of the regular quarterly TDS statement of any form type.

• Government deductors should obtain BIN (Book Identification Number) from their Accounts Officer (AIN holder) in time and quote the same correctly in TDS statement.

Due dates for filing TDS statement are as given below:

For Quarter  Ending on	Due date for  TDS statement	Due date for TCS statement
30 June	31 July	15 July
30 Sept	31 October	15 October
31 Dec	31 January	15 January
31 March	31 May	15 May

If the deductee does not furnish PAN or furnishes incorrect PAN to the deductor, the deductor shall deduct tax at source at the higher of the following rates:
(a) The rate prescribed in the Aes or,
(b) At the rate in force, Le., the rate mentioned in the Finance Act or,

(c) At the rate of 20%.

•Failure to deduct tax, deducting less tax, delay in payment of the
deducted tax to the Government makes the deductor an assessee liable to penalty, which is equal to the amount for which the assessee is a deemed defaulter

• Failure on part of the deductor to pay the tax deducted at source, to the credit of Central Government makes him liable to rigorous imprisonment of a minimum period of three months but which may extend to seven years.

• In case of non-deduction or less deduction or delay in deduction of tax, an interest of 1% is levied on the tax per month or part of the month.

In case of delay in payment of tax after deducting, interest of 1.5% is levied per month or part of the month.

The interest is applicable till the time the tax deducted is not credited to the Government

• Delay in filing TDS quarterly statements attracts:
1. Late fee of Rs. 200/- per day for each day of default, subject to certain limits (u/s 234E).
2. Minimum penalty of Rs. 10, 000 (may be extended to Rs. 1 lakh) (u/s 271H)

• Failure to apply for TAN or quote correct TAN by the deductor may result in a penalty of Rs. 10, 000.

•Late filing fee u/s 234E, being statutory in nature, cannot be waived off

• Download the justification report to know the details of TDS defaults if any, on the processing of TDS statement, etc. from the TRACES website www.idscpc.gov.in.

• The PAN of an entity (Central Office, Headquarter etc.), having more than one TAN for its branches, associated with the referenced PAN, can review the ‘Aggregated TDS Compliance’ report on a regular basis for a summary of TDS compliance at organizational level.

• The feature will be extremely useful for the purpose of complying with the provisions of Section 10(a)(ia) of the Income Tax Act, 1961 by the concerned entity, to ensure that correct information is disclosed in paragraph 21(b) and 34(b) of the Tax Audit Report (Form 3CD /s 44AB the Act)

• This feature provides a summary of TDS defaults of all respective TAN
across all financial years, which assists in effective TDS administration,
monitoring, control and compliance at organizational level.

• To use this feature, the deductor needs to register on the TRACES website with its PAN.

The statement of TDS can be filed either in:
(1) Paper form (for less than 20 deductees).
(2) Electronic form: Form no. 27A is also to be furnished along with return on the electronic form.
Following deductors have to file the TDS statement in the form specified in electronic form only. Deductors can be:
(a) The office of the Government
(b) A company
(c) A person who is required to get his accounts audited under section
44AB in the immediately preceding financial year
(d) Where the number of deductee's records in the quarterly
statement for any quarter of the financial year is equal to or more
than twenty
Note: In case of any other deductor, furnishing the quarterly statement

in electronic form is optional.

• Registering on TRACES Reconciliation Analysis and Correction Enabling System or TRACES (www.tdscpc.gov.in) is mandatory before use

• The ‘Deductor Dashboard’ informs about TDS performance (statement
status, challan status, default payable, deductor compliance profile).

• Aggregated TDS Compliance Report is a consolidated default summary of all TANs corresponding to a PAN in case of corporates/banks (available in taxpayer login on TRACES).

• The ‘TDS CPC Communications’ on TRACES homepage gives access to
the communications sent CPC (TDS)

• The site also has e-tutorials, FAQs, circulars and notifications and CPC
(TDS) communications

• It is possible to make online and offline TDS statement corrections
directly on TRACES. The TDS certificates, Transaction Based Report (TBR) for non-PAN deductees reported in Form 27Q, consolidated file, justification report, TAN-PAN consolidated file can also be downloaded on the site

• Deductor can also make Grievance Module Request for Resolutions on

TRACES.

What challan is used to pay TDS?
TDS is credited to the government by using Challan No. ITNS-281.

What is a challan identification number or CIN?
Every Income Tax Challan is identified by CIN which contains the Bank BSR code, date of deposit and challan serial no.

How to Deposit TAX?
TDS is deposited as cash or cheque in the bank through challan either manually or through electronic transfer.

Electronic payment of TDS is mandatory for:
(a) All corporate assessees

(b) Non-corporate assessees who are subject to audit under section 44AB.