TDS and TCS

Particulars Section 192 194 194A 194B 194C
Nature of payment Salary Dividends paid by Indian companies Interest Winnings from Lottery or crossword puzzles more than Rs.10,000/- Payments to contractors
When is TDS to be deducted? At the time of payment of salary At the time of payment of dividend At the time of payment of interest or transfer to the interest payable account of the deductor At the time of payment At the time of payment or passing entry in accounts whichever is earlier
When is TDS to be deposited? Within 07 days from the end of the month in which TDS is deducted or if the payment is made in March, then before 30th April of next F Y Within 07 days from the end of the month in which TDS is deducted or if the payment is made in March, then before 30th April of next F Y Within 07 days from the end of the month in which TDS is deducted or if the payment is made in March, then before 30th April of next F Y Within 07 days from the end of the month in which TDS is deducted or if the payment is made in March, then before 30th April of next F Y Within 07 days from the end of the month in which TDS is deducted or if the payment is made in March, then before 30th April of next F Y
Applicable Rate of TDS (% of the gross amount paid pr payable) Depends upon the income of payee. Rate is not specified Rate is not specified. TDS is deducted at the applicable rates in force 10 30 In case payments to HUF and individuals: 1%

For others: 2%

Applicable to NR? Yes No Yes Yes No
Low/No TDS certificate applicable Yes Yes Yes No Yes
Form of TDS Return Form No. 24Q Form No. 26Q Form No. 26Q Form No. 26Q Form No. 26Q
Important remarks TDS is not applicable in respect of Dividend Distribution Tax In case of interest payment by banks, co-operative societies and post office deposits TDS is deductible if the interest amount exceeds Rs.10,000/- or Rs. 50,000/- in case of senior citizens In case where the winnings are partly or wholly in kind, then the person responsible for paying the winnings must ensure that tax has been paid in respect of those winnings. TDS is not required if the single payment does not exceed Rs.30000/- or the total annual payments do not exceed Rs. 100,000/-.

In case of transport contractor of he is owning less than 10 trucks and furnishes the declaration with PAN, then TDS is not necessary.

Particulars Section 194BB 194D 194DA 194EE 194F
Nature of payment Winnings from horse races provided such winnings are more than Rs. 10,000/- Insurance Commission more than Rs. 15,000/- annually Payments including bonus under a life insurance policy Payments of deposits made under National Savings Certificates Payments in return of amounts invested under ELSS or in Mutual Funds
When is TDS to be deducted? At the time of payment At the time of payment At the time of payment At the time of payment At the time of payment
When is TDS to be deposited? Within 07 days from the end of the month in which TDS is deducted or if the payment is made in March, then before 30th April of next F Y Within 07 days from the end of the month in which TDS is deducted or if the payment is made in March, then before 30th April of next F Y Within 07 days from the end of the month in which TDS is deducted or if the payment is made in March, then before 30th April of next F Y Within 07 days from the end of the month in which TDS is deducted or if the payment is made in March, then before 30th April of next F Y Within 07 days from the end of the month in which TDS is deducted or if the payment is made in March, then before 30th April of next F Y
Applicable Rate of TDS (% of the gross amount paid pr payable) 30 5 1 10 20
Applicable to NR? Yes No No Yes Yes
Low/No TDS certificate applicable No Yes Yes Yes Yes
Form of TDS Return 26Q 26Q 26Q 26Q 26Q
Important remarks Rate is 10% in case the payments are made to the company The amount which is not includible in the incomes under section 10(10)(D) may not be considered for TDS In case the payments are made to heirs of the taxpayer, then TDS is NOT applicable.
Particulars 194G 194H 194I 194IA 194IB 194IC
Nature of payment Commission, remuneration or prize on sale of lottery tickets, exceeding Rs. 15,000 Payment of any income by way of commission or brokerage more than Rs. 15000/- Payment of Rent Payment for purchase of immovable property Payment of Rent by Individuals and HUF Payment of consideration against Joint Development Agreements
When is TDS to be deducted? At the time of payment of or transfer to the payable account of the deductee in the books of deductors whichever is earlier At the time of payment of or transfer to the payable account of the deductee in the books of deductors whichever is earlier At the time of payment of or transfer to the payable account of the deductee in the books of deductors whichever is earlier At the time of payment of or transfer to the payable account of the deductee in the books of deductors whichever is earlier At the time of payment of rent of last month of the F Y or the last month of tenancy whichever is earlier. At the time of payment of or transfer to the payable account of the deductee in the books of deductors whichever is earlier
When is TDS to be deposited? Within 07 days from the end of the month in which TDS is deducted or if the payment is made in March, then before 30th April of next F Y Within 07 days from the end of the month in which TDS is deducted or if the payment is made in March, then before 30th April of next F Y Within 07 days from the end of the month in which TDS is deducted or if the payment is made in March, then before 30th April of next F Y Within 07 days from the end of the month in which TDS is deducted. Within 07 days from the end of the month in which TDS is deducted. Within 07 days from the end of the month in which TDS is deducted.
Applicable Rate of TDS (% of the gross amount paid pr payable) 5 5 In case of machinery: 2

In case of Land or building or furniture: 10

1 5 10
Applicable to NR? Yes No No Yes No No
Low/No TDS certificate applicable Yes Yes Yes No No No
Form of TDS Return 26Q 26Q 26Q 26QB 26QC
Important remarks This is different than the Insurance commission. TDS is applicable only in case the rent exceeds Rs.180,000/- for a year. If the rent is paid by Individual and HUF, then TDS is not applicable in case the books are not audited. TDS is not applicable in case the total amount of consideration does not exceed Rs.50,00,000/-. The deductor of TDS does not need TAN but the TDS can be remitted using PAN of the deductor Not applicable if total amount of rent doesn’t exceed Rs.50,000/-. The deductor of TDS does not need TAN but the TDS can be paid using PAN of the deductor This is not applicable in case the consideration against Joint Development Agreement is paid in kind.

 

Particulars 194J 194LA 194LBA 194LBB 194LBC
Nature of payment Payments of fees for professional services, technical services, royalty, non-compete fee, remuneration/commission to the director, non-disclosure fees for patents etc. in excess of Rs. 30,000/- Payment of any sum, in the nature of compensation or the enhanced compensation or the consideration or the enhanced consideration on account of compulsory acquisition, of any immovable property Payments of distributed income of a business trust Income from venture capital Investment Fund Income payable to an investor, in respect of investment in a Securitization Trust
When is TDS to be deducted? At the time of payment of or transfer to the payable account of the deductee in the books of deductors whichever is earlier. At the time of payment or at the time of credit, whichever is earlier At the time of payment or at the time of credit, whichever is earlier At the time of payment or at the time of credit, whichever is earlier At the time of payment or at the time of credit, whichever is earlier
When is TDS to be deposited? Within 07 days from the end of the month in which TDS is deducted or if the payment is made in March, then before 30th April of next F Y Within 07 days from the end of the month in which TDS is deducted or if the payment is made in March, then before 30th April of next F Y Within 07 days from the end of the month in which TDS is deducted or if the payment is made in March, then before 30th April of next F Y Within 07 days from the end of the month in which TDS is deducted or if the payment is made in March, then before 30th April of next F Y Within 07 days from the end of the month in which TDS is deducted or if the payment is made in March, then before 30th April of next F Y
Applicable Rate of TDS (% of the gross amount paid pr payable) 10 10 10 10%

 

 

In case of Individual and HUF 25%

AND 30% in case of other person

Applicable to NR? (Rates will be different) No No Yes Yes Yes
Low/No TDS certificate applicable Yes Yes No Yes Yes
Form of TDS Return 26Q 26Q 26Q 26Q 26Q
Important remarks This does not include agricultural land including urban agricultural land

This is not applicable to land acquired under Right to Fair Compensation Act, 2013.

When the aggregate amount of total compensation does not exceed Rs. 2,50,000/-, no deduction of TDS.

 

Overview of TDS on salary

The employer who is responsible to pay salary to the employee is also responsible to deduct tax on the amount of salary paid by him to the employee at the time of payment of salary.  Such TDS is deducted at the rates of tax applicable for that particular financial year in respect of which the salary is paid. The employer may seek details of salary from other employer if an employee was employed with more than one employer during a particular financial year. The employee may also furnish the details of income under different heads other than salary to an employer so that the employer may deduct an appropriate amount of TDS as well as may decide on an appropriate rate of tax for deduction of such tax. The tax so deducted has to be deposited by an employer in the Government Account

After deduction of tax, the employer is expected to provide the employee the statement of deduction and deposit of such TDS into Government Account through a prescribed form which is called as Form 16. The details of TDS deducted and deposited and any other tax including advance tax and self assessment tax can be seen by the taxpayer whose TDS is deducted on www.incometaxefiling.gov.in or www.tin-nsdl.gov.in in a form known as Form 26AS.

What are the rates of deduction of tax (TDS) on salary?

Unlike other incomes such as rent and commission the Income tax Act does not specify the rate of deduction but says that TDS is to be done at the rate of tax applicable for that particular financial year. The deductor (employer) has to decide the rate of TDS based on the particulars of other incomes (rent, interest or capital gains etc.). The employee should give the correct details of all such incomes, TDS and tax paid to the employer within time so that the employer may decide on the rate of TDS in case of the employee. Such details should be provided in a

Income and tax Statement (prepare my income and tax statement)

Is it possible NOT to deduct TDS on salary?

It is the responsibility of the employer to deduct tax on the salary paid. If he does not deduct tax, he is liable to penal action as per law. However, if the employee shows that he has already paid the applicable tax or he does not need to pay tax or he has obtained the No TDS certificate from the Income Tax Authorities, then the employer may not deduct tax. But the employer has to mention such details of non-deduction in the TDS statement filed by him in

Form No. 24Q.

How is the tax deducted on the perquisites provided by employer like rent free accommodation and motor car?

When the perquisites are paid to the employee NOT involving monetary payments, the employer may or may not deduct tax or has the option to pay tax on such income without deducting any tax on such income from perquisites.

I was employed with more than one employer during a particular F. Y. How will my TDS deduction be done by my employers?

The employer with whom you were employed in the first part of the F Y shall deduct TDS normally. Then when you switch to another employer, you need to provide the details of the income received from erstwhile employer and the details of tax deducted (TDS) on such an income. Such details may be provided to the current new employer in a Form No. 12B prescribed under Rule 26A of the Income tax Rules. In case, you have received perquisites from erstwhile employer then you may need to provide complete details of valuation of such perquisites through an annexure attached with Form No. 12B.

What is Form No. 16?

The employer deducts tax on the income from salary paid to an employee. The employer is required to deposit such TDS into a Government Account and furnish a statement of TDS to the Government. The employer is also required to furnish the details of such income and TDS deducted to an employee in a prescribed manner. Such a manner is prescribed as Form No. 16. The employer is required to furnish details of TDS to an employee in Form No. 16 before 31st May of the F Y immediately next Financial Year. This statement in Form No. 16 is very important for an employee to furnish his Income tax returns and he must examine each and every column and the details furnished by the employer in such columns and fields.

What are the components and structure of Form No. 16?

Form No. 16 is having two (2) parts i.e. Part A and Part B. The Part A comprises of the details of the tax deposited by the employer to the Government Account. If the employer is a Government or a Government undertaking, the payment is made by it via book entry and identified through Book Identification Number and if the employer is other than Government and semi-Government bodies, the payments are done through Challans and identified via Challan identification Number (CIN).

The part A of the Form No. 16 is as follows:

The part A of Form No. 16 is to be automatically generated by the employer from TRACES portal of Income tax Department. This Part A has the unique number generated from this portal. Know more about Form No. 16.

I have lost my Form No. 16. Can I get another Form No. 16?

Yes. You can get another Form No. 16, however the same may be marked as duplicate as ‘Duplicate’ by your employer. The duplicate Form No. 16 is the same as original Form No. 16.

What are the absolutely essential details in Form No. 16?

  • Valid permanent account number (PAN) of the deductee/employee
  • Valid tax deduction and collection account number (TAN) of the deductor/employer
  • Book Identification Number (BIN) or numbers where deposit of tax deducted is without production of challan in case of an office of the Government
  • Challan Identification Number (CIN) or numbers in case of payment through bank
  • Receipt numbers of all the relevant quarterly statements of tax deducted at source (TDS)

When is the TDS on salary to be deducted?

At the time of payment of salary, the employer is required to deduct TDS on such income from salary.

What are the particulars/documents to be furnished in support of various deductions and claims by the employee taxpayer to the employer to ensure proper TDS deduction?

Sl. No Nature of claims / deductions Evidence or particulars to be furnished
1 House Rent Allowance. Name, address and permanent account number of the landlord/landlords where the aggregate rent paid during the previous year exceeds rupees one lakh.
2 Leave travel concession or assistance. Evidence of expenditure.
3 Deduction of interest under the head “Income from house property”. Name, address and permanent account number of the lender.
4 Deduction under Chapter VI-A. Evidence of investment or expenditure.

 

These particulars are to be furnished in Form No. 12BB. The details furnished herewith in this Form must be verified before submitting to the deductor employer.

Prepare my Income tax statement and Form No. 12BB for TDS deduction

I am having income other than an income from salaries. Do I need to inform about the same to my employer who is responsible for deducting TDS on my salary income?

Yes. As per section 192(2B) and Rule 26B, if the employee taxpayer is having any income he may inform to the employer about the same and any tax deducted on such income. However, loss under any head other than loss from house property is not needed to be informed.

26B. (1) The assessee may send to the person responsible for making payment under sub-section (1) of section 192, a statement of any income chargeable under any head of income other than “Salaries” (not being a loss under any such head other than the loss under the head “Income from house property”), received by the assessee for the same financial year, and of any tax deducted on such income.

(2) A verification in the following form shall be annexed to the statement referred to in sub-rule (1),—

FORM OF VERIFICATION

I, …………………..(name of the assessee), do declare that what is stated above is true to the best of my information and belief.]

 

I am receiving the salary in a foreign currency and not in INR. How is TDS done on my income from Salary?

In such case, the employer is required to deduct tax (TDS) in INR after adopting the exchange rate as adopted by SBI for purchasing such a foreign currency on the date when TDS is required to be deducted by an employer.

Who is responsible for issuing Form No. 16 to pensioners who are drawing their pensions through banks?

The CBDT has issued a clarification through Circular No. 761 dated 13.01.1998 as per which the deductee bank has to issue Form No. 16 to the pensioner who is drawing the pension through a particular bank.

How is the tax deducted (TDS) on the withdrawal of the accumulated balance of provident fund due to an employee?

When the employee seeks to withdraw the accumulated balance of PF and it is more than INR 50,000/- then the trustees of such a fund shall deduct TDS at the rate of 10% on such amount of accumulated balance of PF. In case PAN is not furnished by the deductee, then the TDS shall be done at the maximum marginal rate of tax.

 

TDS Rates for various payments

 

Sr. No. Section Nature of payments Where deductee is a person ‘Other than a Company’ Where the deductee is a Company
      Resident in India Other than resident in India Resident in India Other than resident in India
1 192 Payment of Salary Slab Rate Slab rate NA NA
2 192A Payment of accumulated balance of Provident Fund 10 10 NA NA
3 193 Payment of interest on securities 10 10 10 NA
4 194 Payment of dividends NA NA 10 NA
5 194A Payment of interest other than interest on securities 10 10 10 NA
6 194B Winnings of lotteries, crossword puzzles, card games or other games of any sort 30 30 30 30
7 194BB Winnings from horse races 30 30 30 30
8 194C Payments to contractors and sub-contractors Individuals and HUF: 1 NA Individuals and HUF: 1 NA
Others : 2 Others : 2
9 194D Insurance commission 5 NA 10 NA
10 194DA Payment in respect of Life Insurance policy 1 NA 1 NA
194E Payment to a Non-resident sportsperson/sports association NA 20 NA 20
11 194EE Payment in respect of deposits under National Savings Scheme 10 10 10 NA
12 194F Payment on account of repurchase of units of MF 20 20 20 NA
194G Commission on sale of lottery tickets 5 5 5 5
13 194H Commission or brokerage 5 NA 5 NA
14 194I Payment of rent Immovable property: 10 NA Immovable property: 10 NA
Machinery : 2 Machinery : 2
15 194IA Payment on transfer of immovable property other than agricultural land 1 NA 1 NA
16 194IB Payment of rent by individual or HUF who is not liable to audit in immediately preceding year 5 NA NA NA
17 194IC Payment of monetary consideration under Joint Development Agreements 10 NA 10 NA
18 194J Payment against professional fees, technical fees, royalty, remuneration to a director and non-compete fees etc. 10 NA 10 NA
19 194LA Payment of compensation on acquisition of certain immovable property 10 NA 10 NA
194LB Payment of infrastructure debt fund NA 5 10 5
20 194LBA Payment on distribution of income of a business trust 10 5/30 10 5/40
21 194LBB Payment to an unit holder by an Investment Fund 10 30 10 40
22 194LBC Income in respect of an investment in a Securitization Trust Ind.HUF: 25 30 10 40
Others : 30
23 194LC Payment by an Indian company of interest on money borrowed on loan NA 5 NA 5
24 194LD Payment of interest on denominated bond of an Indian Company or a Government Security to an FII or a Qualified Foreign Investor NA 5 NA 5
25 195 NA Know more about section 195 NA Know more about section 195

 

TDS as per Section 195

 

Sr. No. Particulars or nature of payments made Other than company Company
1 Income in respect of investment made by a Non-resident Indian Citizen 20 NA
2 Income by way of long-term capital gains referred to in Section 115E in case of a Non-resident Indian Citizen 10 NA
3 Income by way of long-term capital gains referred to in Section 112 10 10
4 Income by way of long-term capital gains as referred to in Section 112A 10 10
5 Income by way of short-term capital gains referred to in Section 111A 15 15
6 Any other income by way of long-term capital gains [not being long-term capital gains referred to in clauses 10(33), 10(36) and 112A] 20 20
7 Income by way of interest payable by Government or an Indian concern on moneys borrowed or debt incurred by Government or the Indian concern in foreign currency (not being income by way of interest referred to in Section 194LB or Section 194LC) 20 20
8 Income by way of royalty payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern where such royalty is in consideration for the transfer of all or any rights (including the granting of a license) in respect of copyright in any book on a subject referred to in the first proviso to sub-section (1A) of Section 115A of the Income-tax Act, to the Indian concern, or in respect of any computer software referred to in the second proviso to sub-section (1A) of Section 115A of the Income-tax Act, to a person resident in India 10 10
9 Income by way of royalty [not being royalty of the nature referred to points above payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy 10 10
10 Income by way of fees for technical services payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy 10 10
11 Any other income 30 40