TDS (Tax Deducted At Source) Rates and Its Applicability By Sarah Bhandari

Sarah Bhandari | 280525 Views | 15 Aug 2018 Bookmark

TDS,

Dear Friends,

TDS is deducted from the payments made by the individuals as per Income Tax Act 1961.

TDS is a direct tax which is collected from the people at the time of payment like Salary, Rent, and commission etc. The Central Board of Direct Taxes (CBDT) governs the provisions of TDS under the Income TaxActT, 1961.

There are two parties involved while deducting the Tax and the payment is made at the specified rate prescribed:

Deductor (Payer) - Deductor is referred to the person deducting the tax; and
Deductee (Payee) - Deductee is the person from whom the tax is deducted. No tax is deducted in case the amount doesn’t exceed the specified limit.

Provisions related to tax deducted at source:

Section	Provision	Applicability		Status /TDS exemption limit/ Rate of TDS
192	An employer is required to deduct TDS from the salary payable to the employees, under the head “Salaries” he is responsible of deducting Tax on an average rate of Income tax based on the prescribed rate during the FY year by considering the estimated income of the assessee.	For the applicability of section 192, there must be an employer- employee relationship between payer and payee, in the absence of such a relationship. If an employee is engaged with more than one employer simultaneously, he may provide details about his salary and TDS in from 12B to any one of the employers. Similarly, if the employee resigns and joins another employer, he may provide the details of his previous employment in form 12B to his subsequent employer.		The status of the employer is irrelevant for TDS on salary under section 192. Hence, whether the employer is an Individual, partnership firm, HUF or corporate entity, section 192 is applicable for payment of salary. Penalty: Late filing fee under section 234E penalty of Rs 200 per day will be levied till the time failure continues subject to the maximum amount of TDS.
194	Dividend u/s 2(22)(e)	Payer of TDS will be Domestic companies and the payee will be resident, before making payment by the company to shareholders other than dividend declared U/S 115-0 when the amount exceeds Rs 2500/- during the financial year in case of an individual.		Rate of TDS – 10%
194A	Interest other than Interest on securities	Interest other than interest on securities like Interest on Fixed Deposits, Interest on loans and advances other than banks. Applicable to a resident, payments made to non-residents are also covered under TDS mechanism. However, tax in such case isthe to be deducted as per section 195.		Exemption limit : Rs 10,000 P.a and Rate of TDS will be 10%
194B	Winning from the lottery, crossword puzzles or card game and other game of any sort		Applicable to any person	Exemption Limit: 10,000 and Rate of TDS: 30%
194BB	Wining from Horse races		TDS payer - Book maker, a person having a license for horse racing or arranging a wager or bet in any race course applicable to any person.	Exemption Limit: upto 10,000/- Rate of TDS: 30%
194C	Payment to the contractor for carrying out any work (Including supply of labor for carrying out any work) in pursuance of a contract between the contractor and any specified person		Payer: a Specified person Payee: Resident contractor (Note: “contract” shall include sub-contrat. Hence, contractor shall include sub-contractor)	No TDS deduction In case of payment in course of business of plying, hiring or leasing goods carriage, where such contractor owns 10 or less goods carriages at any time during the previous year and furnishes declaration to that effect along with his PAN, to the person paying or crediting such sum. Limit: Single payment is exceeding Rs 30,000 or aggregate sums paid in the FY exceeding Rs 1,00,000 TDS Rate: Individual/ HUF= 1% of the sum paid. Any other person = 2% of the sum paid
194D	Insurance commission		Payer: Any person Payee: Resident	Limit: 15,000 During a Financial Year. TDS Rate: 5%
194DA	Payment in respect of Life Insurance Policy		Payer: Any person Payee: Resident	Limit: Less than 1,00,000/- Rate of TDS: 1%
194E	Payment to nonresident sportsmen or sports association of income referred to u/s 115BBA. Or entertainer		Payer: Any person Payee: Non Resident Sportsmen being a foreign citizen; or Sports association; or Entertainer being foreign citizen.	No threshold limit Rate of TDS: 20%
194EE	Payments in respect of deposits under National Savings Scheme, etc.		Payer: Any Person Payee: Any Person	Exemption Limit: Upto 2,500 Rate of TDS: 10%
194G	Commission, remuneration or prize for stocking, distributing, purchasing/ selling lottery tickets.		Payer: Any Person Payee: Any Person	Exemption Limit: Upto 15,000 TDS Rate: 5%
194H	Commission or brokerage		Payer: Any person other than an Individual or HUF Payee: Resident	Exemption Limit: Upto 15,000 TDS Rate: 5%
194-I	Rent on Plant/Machinery		Payer: Any person other than an Individual or HUF Payee: Resident	Exemption Limit: Upto Rs 1,80,000 during a financial Year. Where the income by way of rent is credited or paid to a business trust, being a real estate investment trsut, in respect of any real estate asset, referred to in section 10 (23FCA), owned directly by such business trust. Rate of TDS: Rent for use of any machinery or Plant or equipment : 2%; Any other case 10%
194-IA	Consideration on transfer of immovable property other than agricultural land		Payer: Any Person Payee: Resident	Exemption Limit: Less than Rs 50,00,000
194-IB	Payment of rent by certain individuals or HUF		Payer: Individual or HUF other than those covered/s 194-I Payee: Resident *[Inserted by Finance Act, 2017 w.e.f 01-06-17]*	Exemption Limit: Rs 50,000 Rate of TDS: 5%
194-IC	Any sum by way of consideration (not being a consideration in kind) under a joint development		Payer: Any Person Payee: Resident *[Inserted by Finance Act, 2017 w.e.f 01-06-17]*	No threshold Limit TDS Rate: 10%
194J	Fees for professional services Fees for technical services; Royalty; or Any remuneration or fees or commission to a director of a company; or Non-competing or exclusively fees referred u/s 28(va)		Payer: Any person other than an individual or HUF Payee: Resident	Exemption Limit: Rs 30,000 during a financial year for each kind of payment separately. TDS rate: 10% *(2% in the case of a payee, engaged only in the business of operation of call centre.) [Amended by Finance Act, 2017* *w.e.f 01-06-2017]*
194-LA	Compensation on compulsory acquisition		Payer: Any Person Payee: Resident	Exemption Limit: Upto Rs 2,50,000 during a financial year. TDS Rate: 10%
194-LC	Interest from Indian company		Payer: Indian company or business trust Payee: Non-resident (not being a company), Or a foreign company	Rate of TDS: 5% The income by way of interest shall be the interest payable on or after 1-7-2012 but before 1-7-2020 in respect of investment made by the payee.
195	Interest or Ø Any other sum (other than income taxable as ‘salaries’)		Payer: Any person Payee: Non-resident, not being a company Foreign company	Exemption Limit: Dividend referred in section 115-o TDS Rate: As specified the Finance Act.
196B	Long-term capital gains on units referred u/s 115AB		Payer: Any Person Payee: Offshore Fund	Exemption Limit: NIL TDS Rate: 10%
196C	Interest or Long-term capital gains on Bonda or GDRs referred u/s 115AC.		Payer: Any Person Payee: Non-Resident	Exemption Limit: NIL TDS Rate: 10%
196D	Income from securities referred u/s 115AD(1)(a)		Payer: Any Person Payee: Foreign institutional investors	Exemption: Dividend falling u/s 115-O; and Capital gains on transfer thereof. Rate of TDS: 20%

However, no TDS is deducted when

The amount is paid to RBI, Government or any such Body.
Finance corporation of central or state
Mutual fund u/s 10(23D)
When Deductee has no-deduction certificate u/s 192 of Income Tax Act
Interest paid or credited to:

Banking Company;
LIC, UTI or other Insurance Company;
Co-operative Society having banking business;
Body notified for non-deduction of tax;
NRE account;
NSC, KVP or Indira Vikas Party;
Banks or cooperative society’s recurring deposits or saving account; etc

Notes:

TDS cannot be paid through Credit Card
Surcharge & Educational Cess will not be considered for the purpose of TDS except in case of TDS on salary payment.
Higher rate of (20%) TDS will be applicable for not furnishing correct PAN
Form 15G/15H received for non deduction of TDS (Including NIL return) – Needs to report online on Quarterly basis
Quarterly statement of TDS 31^st July, 31^st Oct, 31^st Jan and 31^st May
Issue of TDS/TCS certificate- Within 15 days from the due date of filing of Quarterly TDS return salary certificate in Form- 16 upto 15^th June of succeeding financial
In case of failing to file TDS return within one year of due date or furnishing incorrect information penalty Rs 10,000/- shall be liable
8. Fees of Rs 200/- per day for late filing of TDS and TCS Return
9. Online generation of TDS certificate is mandatory in case of every person whose accounts are required to be audited u/s 44AB.