What is TDS?

 

TDS is an indirect collection scheme, where a person who is responsible for making payment of income is also required to deduct tax at source and deposit the same to the Government’s treasury within the stipulated time period.

 

Who is eligible to deduct TDS and When?

 

Tax Deduction & Collection Account Number is an alphanumeric number that is required to be obtained by all the persons who are required to Deduct Tax at Source (TDS) or collecting tax. TDS or Tax Deducted at source is treated as pre-paid taxes as it is paid in advance to the government. This will be the duty of the person who paid to someone for his services, goods etc. These payments are known as specified payments.

An individual making specified payments such as Salary, Rent, Professional fees, interest, brokerage, commission, contractual payment etc. is required to deduct TDS.

Persons making such specified payments are required to deduct TDS at the time of making such specified payment. Thus, TDS shall not be deducted in case the person making the payment is an individual or HUF and whose books are not required to be audited.

 

The person who deducts TDS is called deductor and whose tax is deducted is called deductee.

 

Therefore, An Individuals or an H.U.F. will not deduct TDS on such payment except where such individual or H.U.F. is carrying business or profession and accounts are required to be audited under section 44AB, in the immediately preceding financial year (FY).

 

A person is required to get its accounts audited u/s 44AB if during the relevant financial year its gross sales or gross receipts exceeds Rs. 1 Crore or Rs. 50 Lakhs in case of a profession.

 

Persons liable to deduct TDS must apply for ‘TAX DEDUCTION AND COLLECTION ACCOUNT NUMBER’ (TAN) in the form No. 49B within one month from the month end in which TDS was deducted. TAN number should be mentioned on all transaction related to TDS like TDS certificate, E-TDS Returns and other related documents. There is penalty of Rs. 10,000 on failure to apply TAN.

 

Apply for TAN

 

Rental payments made by individuals and HUF of more than Rs 50,000 per month, are required to deduct TDS at the rate of 5% even if the individual or HUF is not liable for a tax audit. For such Individuals and HUF liable to deduct TDS @ 5% are not required to apply for TAN.

 

Due date for depositing the TDS to the government?

 

The TDS deducted by the payer has to be deposited to the government by 7th of the subsequent month. Likewise, TDS deducted in the month of January must be paid to the government by 7th February. The TDS deducted in the March month can be deposited till 30th April.

TDS can be deposited by Challan/ITNS 281 on TIN-NSDL Website.

 

TDS deducted on the rent and purchase of property can be deposited within 30 days from the month end in which TDS is deducted.

In case of Payment of TDS on Rent of Property – The deducter is required to file Form26QC Challan.

 

In case of purchase of property- The Deducter or the purchaser of the property has to file Form 26QB Challan. Manual submission of the form is not allowed.

 

Form 26QB & 26QC has to be filed online on TIN-NSDL Website.


Process to Deposit TDS?

TDS has to be deposited using Challan 281 on TIN-NSDL Website.

 

Step-1 Select Challan /ITNS 281 for making payment of TDS.


Step-2 After that enter your details in E-Payment window:

 

1. Select (0020) in case Tax Deducted at source is from Company Deductees and Select (0021) in case Tax Deducted at source is from Non-Companies Deductees.

2. Enter your TAN No. and select assessment year for which your depositing your TDS.

3. After entering the correct TAN no., Full name will be displayed on confirmation screen (as per Income Tax Database).

4. Enter your address details in Challan 281 with Email ID and Mobile No.

5. Now, select the Type of Payment:

  • 200) for TDS/TCS Payable by Taxpayer
  • (400) for TDS/TCS Regular Assessment

6. Select the Nature of Payment from the dropdown list on E-Payment Challan.

For Example: *193 for Interest on Securities

                      *194I for Rent

                      *194J for Fees for professional & technical fees

 

7. After selecting the nature of payment, Select the mode of payment for depositing TDS.

8. On Successful TDS Payment, A Challan Counterfoil would be displayed containing the Challan Identification No.(CIN), payment details, bank name. You can also verify the challan details in the “Challan Status Enquiry” on the NSDL-TIN Website after a week of making payment.


 

Rates of TDS deducted

 

TDS Rates Applicable for Persons Resident in India

 

TDS u/s Section

Particulars

TDS Rate (%)

Limits

192

Salary

As per Income Tax Slab

Normal Tax Rate plus surcharge and education cess

Surcharge: 10% (if total income exceeds Rs. 50 lakh but doesn’t exceed Rs. 1 crore), 15% (if total income exceeds Rs. 1 crore)

EC: 2% and SHEC: 1%

192A

Payment of accumulated balance of PF (Provident Fund) taxable in the hands of an employee

 

10%

 

-

193

Interest on securities:

a) Interest on securities

b) Interest on Debentures

 

 

10%

10%

 

Nil

Nil

194

Payment of Dividend (Other than companies)

10%

Nil

194A*

Interest Income other than interest on the securities

 

10%

Rs.5000

194B

Winnings from lotteries/ puzzles/card games

 

30%

Rs.10000

194BB

Income from Winnings from horse races

 

30%

Rs.5000

 

194C

 

Payment to contractor/sub- contractor

a) HUF/Individuals

b) Others

 

1%

2%

 

Rs.30000

194D

Insurance commission

 

5%

Rs.20000

194DA

Payment of life insurance policy

1%

-

194EE

Payment of NSS Deposits

 

10%

Rs.2500

194F

Payment for repurchase of unit by Mutual Fund or Unit Trust of India

 

20%

Nil

194G

Commission on sale of lottery tickets

 

5%

Rs.1000

194H

Commission or Brokerage

5%

Rs.5000

194I*

Rent

a) Plant & Machinery

b) Land & Building or Furniture & fittings

 

2%

10%

 

Rs.1.8 Lakhs

194-IA

Payment made on transfer of certain immovable property other than agricultural land

1%

-

194-IB

Payment of rent by individual or HUF not liable to tax audit

5%

Rs.50

194-IC

Payment of monetary consideration under Joint Development Agreements

 

10%

-

194J

Any sum paid by way of

·      Professional services Fees

·      Technical services Fees

·      Royalty

·      Remuneration or commission or Fee to the director or

·      For not carrying out any activity in relation to any business.

·      For not sharing any patent, 

       copyright etc

 

 

 

 

 

10%

 

 

 

 

 

Rs.30000

194LA

Payment in respect of compensation on acquisition of certain immovable property

 

10%

Rs.1 Lakh

194LBA

Income distribution by a Business Trust u/s 115UA

 

10%

-

194LBB

Income distribution by an Investment Fund u/s 115UB

 

10%

-

194LBC

Income distribution by a Securitisation Trust u/s 115TCA

 

25% - Individual or HUF

30% - Other Individuals

 

-

 

ANY OTHER INCOME

10%

-



Budget 2019 Proposals:

  • Interest Income other than interest on the securities (Section 194A) - TDS threshold limit is increased from Rs.10,000 to Rs.40,000
  • Rental Income (Section 194I) - TDS threshold limit for tax deduction on rent is increased from Rs.1,80,000 to Rs.2,40,000.









Filing of TDS Returns

 

Form No.

Particulars

Form 24Q

TDS Statement for Salaries

Form 26 Q

TDS Statement for other than Salaries

Form 27 Q

TDS Statement to Non-Resident of India

Form 27 EQ

TCS Statement

 

Due Date for filing TDS Return

 

Quarter

Period

TDS Return Due Date

1st Quarter

1st April – 30th June

31st July 2018

2nd Quarter

1st July – 30th September

31st October 2018

3rd Quarter

1st October – 31st December

31st January 2019

4th Quarter

1st January – 31st March

31st May 2019

 

Interest on Late Payment of TDS


Under Section 201A, In case of Non-deduction of tax at source, either wholly or partially – Interest will be levied at 1% per month from the date on which tax deductible to the date on which it has to be deducted.

 

In case of after deduction of tax, non payment of tax either in whole or in part - Interest will be levied at 1.5% per month from the date of deduction to the date of payment.

 

Note: The interest on late payment should be paid before filing of TDS return. 

For example, your TDS payable amount is Rs 7000 and the date of deduction is 09th January and you pay the TDS amount on 22th May. Then the interest shall be levied of Rs 7000 x 1.5% p.m. x 5 months = Rs 525.

 

Penalty for late filing of TDS return:


  • Penalty under Section 234E: Deductor will be liable to pay a fee of Rs.200 per day till the failure to pay TDS continues. However penalty should not exceed the TDS amount for which statement was required to be filed.
  • Penalty under Section 271H: Assessing officer (AO) may direct a person who fails to file the TDS statement within due date to pay penalty minimum of Rs.10,000 which may extend to Rs.1,00,000.
  • This Penalty under this section is in addition to the penalty u/s 234E.
  • This section will also cover the cases of incorrect filing of TDS return.

Non-Applicability of TDS

 

You can avoid TDS by submitting Form 15G or 15H. Where, Form 15H is for senior citizens and they can submit if there is no tax liability on total income. Form 15G is for everyone, if the tax on total income is nil and total interest income is below than the basic exemption limit exception for NRIs.

 

TDS Certificates

 

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

On Every transaction

15 days from due date of filing return

Form 16 C

TDS on rent

On Every transaction

15 days from due date of filing return