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.
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.
*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%||NilNil|
|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|
|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-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||Payment of monetary consideration under Joint Development Agreements||Any sum paid by way of||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%|
- 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 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.
|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|