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Tax deducted at source (TDS) and Tax
collection at source (TCS), as the very
names imply aim at collection of revenue
at the very source of income. It is
essentially an indirect method of
collecting tax which combines the
concepts of “pay as you earn” and
“collect as it is being earned.”
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 80C, 80CC, 80D,
80DD, 80DDB, 80E, 80GG and 80U.
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.
2,70,000/- in case of
Individual, HUF, AOP, BOD and
AJP. Nil for others.) |
|
TDS
Rate |
As
per Income Tax, Surcharge and
Education Cess rates applicable
on the estimated income of
employee for the year. |
|
192A |
Payment of accumulated balance
due of Employees’ Provident Fund
Scheme, 1952, to Employees
(w.e.f 01-06-15)
when the
amount of
payment or aggregate amount of
payment exceeds Rs. 30,000/-
Rate will be 10% |
TDS Rates on Payments
other than Salary
and Wages to Residents (including
domestic companies)
|
Section |
For Payment of |
Payments Exceeding |
Individual/HUF |
Others |
|
193 |
Interest on Debentures |
Rs.
5000/- |
10% |
10% |
|
194 |
Deemed
Dividend |
Rs.
2500/- |
20% |
20% |
|
194
A |
Interest other than on
securities by banks |
Rs.
10000/- |
10% |
10% |
|
194
A |
Interest other than on
securities by others |
Rs.
5000/- |
10% |
10% |
|
194
B |
Winnings from Lotteries / Puzzle
/ Game |
Rs.
5000/- |
30% |
30% |
|
194
BB |
Winnings from Horse Race |
Rs.
2500/- |
30% |
30% |
|
194
C (1) |
Payment
to Contractors |
Rs.
30000/- for single payment
Rs. 75000/- for aggregate
payment during Financial Year |
1% |
2% |
|
194
C (2) |
Payment
to Sub-Contractors / for
Advertisements |
|
194
D |
Payment
of Insurance Commission |
Rs.
20000/- |
10% |
10% |
|
194
DA |
Payment
of Taxable Life Insurance Policy
(wef
01/10/2014) |
Rs.
100000/- |
2% |
2% |
|
194
EE |
Payment
of NSS Deposits |
Rs.
2500/- |
20% |
NA |
|
194
F |
Repurchase of units by Mutual
Funds / UTI |
Rs.
1000/- |
20% |
20% |
|
194
G |
Commission on Sale of Lottery
tickets |
Rs.
1000/- |
10% |
10% |
|
194
H |
Commission or Brokerage |
Rs.
5000/- |
10% |
10% |
|
194
IB |
Rent of
Land, Building or Furniture |
Rs.
180000/- |
10% |
10% |
|
Rent of
Plant & Machinery |
Rs.
180000/- |
2% |
2% |
|
194
IA |
Transfer of Immovable Property (w.e.f.
01.06.2013) other than
Agriculture Land |
Rs. 50
lacs / 20 lacs |
1% |
1% |
|
194
J |
Professional / technical
services, royalty |
Rs.
30000/- |
10% |
10% |
|
194
J (1) |
Remuneration / commission to
director of the company |
- |
10% |
10% |
|
194
J (ba) |
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
L |
Compensation on acquisition of
Capital Asset |
Rs.
100000/- |
10% |
10% |
|
194
LA |
Compensation on acquisition of
certain immovable property |
Rs.
200000/- |
10% |
10% |
|
206 C |
Collection on Sale of bullion
and Jewellery (If cash
consideration exceed of Rs. 2
lac) |
Rs.
200000/- |
1% |
1% |
Notes:
1.
No surcharge or education cess is
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.
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)
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/default:
Interest –
1% of the tax deductible.
Penalty -
equal to the amount of tax deductible
but not deducted.
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).
Issue of TDS Certificate
1. Section 192 (TDS on
Salary) :
The certificate on Form No. 16 should be
issued by the deductor by 31st day of
May 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. 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 |
15th July of the
financial year |
|
30th September |
31st October of the
financial year |
15th October of the
financial year |
|
31st December |
31st January of the
financial year |
15th January of the
financial year |
|
31st March |
15th May of the
financial year immediately
following the financial year in
which deduction is made |
15th May of the
financial year immediately
following the financial year in
which deduction is made. |
|
Penal Provisions for failure /
default in submitting 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 TDS return in
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
for more than 1 year in filing
TDS Statement
(ii) If deductor furnishes
incorrect details like PAN, TDS
amount, Challan particulars etc. |
Penalty which
shall not be less than ten
thousand rupees but which may
extend to one lakh rupees. |
|