Every specified person is responsible for deducting the tax at source. The TDS compliance of the financial year 2019-20 would be started from 1 April 2019, in light of the concern I have prepared the brief about TDS and tax provision along with important details.
TDS stands for tax deducted at source. As per the Income Tax Act, any company or person making a payment is required to deduct tax at source if the payment exceeds certain threshold limits. TDS has to be deducted at the rates prescribed by the tax department.
The company or person that makes the payment after deducting TDS is called a deductor and the company or person receiving the payment is called the deductee. It is the deductor’s responsibility to deduct TDS before making the payment and deposit the same with the government. TDS is deducted irrespective of the mode of payment–cash, cheque or credit–and is linked to the PAN of the deductor and deductee.
TDS is deducted on the following types of payments:
- Salaries
- Interest payable by Assessee
- Rent payments
- Consultation fees
- Professional fees
The Assessee is mandatorily required to deduct tax at source (“TDS”) in applicable cases on various payments (by way of salaries, payment to vendors, rent, etc.) and deposit the same with the Government, within the stipulated time. A short deduction of TDS or non-deduction results in the Assessee being treated as an ‘assessee-in-default’ and consequently, the Assessee is liable for payment of interest on TDS, penalty, etc. Also, such payments are disallowed as a deduction under the Income-tax Act, 1961 where there is a default in deduction and/or deposit of TDS.
1) Finance Act, 2019 has brought some minor changes in the TDS provisions. For your ready reference, TDS rate chart for FY 2019-20 is provided below:
- 194A the interest limit is enhanced from Rs. 10,000/- to Rs. 40,000/- in case of payer is bank, co-operative society and post office. If the payee is senior citizen, the limit is Rs. 50,000.
- 194-I the monetary limit enhanced to Rs. 2,40,000/- from Rs. 1,80,000/-. Accordingly, if the rent payment does not exceed Rs. 2,40,000/- in a financial year, deductor is not require to deduct the TDS.
A) Commonly used TDS Provision for payments made to persons resident in India (Individuals, Firms, Companies, etc.):-
| Section | Nature of Payment for Domestic Transactions | Threshold Limit | Individual / HUF | Others | 15G-15H |
| Rs. | TDS Rate (%) | Allowed | |||
| 192 | Salaries (Annexure-I) | – | Basis on Slab | – | No |
| 192A | Premature withdrawal from EPF | 50,000 | 10 | – | YES |
| 193 | Interest on Securities/ Debentures | 10,000 | 10 | 10 | No |
194A
| Interest (Banks, co-operative society and post office)/ For Senior Citizen Rs. 50000 | 40,000/
50000
| 10 | 10 | YES |
| Interest (Others) | 5,000 | 10 | 10 | YES | |
194C
| Contractor – Single Transaction | 30,000 | 1 | 2 | No |
| Contractor – During the F.Y. | 1,00,000 | 1 | 2 | No | |
| Transporter (44AE) declaration with PAN | – | – | – | – | |
| 194H | Commission / Brokerage | 15,000 | 5 | 5 | No |
194I
| Rent of Land and Building – F&F | 2,40,000 | 10 | 10 | YES |
| Rent of Plant / Machinery / Equipment | 2,40,000 | 2 | 2 | YES | |
| 194IB | Rent by Individual / HUF (wef 01.06.2017) | 50000/PM | 5 | – | No |
| 194IA | Transfer of certain immovable property other than agriculture land | 50,00,000 | 1 | 1 | No |
194J
| Professional Fees / Technical Fees /Director fees/ royalty | 30,000 | 10 | 10 | No |
| Payment to Call Centre Operator
(w.e.f. 01.06.2017)
| 30,000 | 2 | 2 | No | |
Conditions for being a resident senior citizen:
(i) Individual of 60 years or more at any time during the year
(ii) An individual is said to be resident in any previous year if he satisfies any one of the following conditions:
a. He stays in India in the relevant previous year for a period of 182 days or,
b. He stays in India for at least 60 days during the relevant previous year and at least 365 days for 4 years preceding that previous year.
- 194A the interest limit is enhanced from Rs. 10,000/- to Rs. 40,000/- in case of payer is bank, co-operative society and post office. If the payee is senior citizen, the limit is Rs. 50,000.
- u/s194-I the monetary limit enhanced to Rs. 2,40,000/- from Rs. 1,80,000/-. Accordingly, if the rent payment does not exceed Rs. 2,40,000/- in a financial year, deductor is not require to deduct the TDS.
B) All TDS Provision for payments made to persons resident/ non resident in India (Individuals, Firms, Companies, etc.)
| Section | Nature of Payment for Domestic Transactions | Threshold Limit | Individual / HUF | Others | 15G-15H | Deduction At the time of |
| Rs. | TDS Rate (%) | Allowed | ||||
| 192 | Salaries (Annexure-I)
(resident & non resident)
| – | Basis on Slab | – | No | payment |
| 192A | Premature withdrawal from EPF | 50,000 | 10 | – | YES | payment |
| 193 | Interest on Securities/ Debentures | 10,000 | 10 | 10 | No | Credit or payment (earlier) |
| 194 | Dividends (other than listed Companies) | – | 10 | 10 | YES | payment |
194A
| Interest (Banks)/ For Senior Citizen Rs. 50000 | 40,000 | 10 | 10 | YES | Credit or payment (earlier) |
| Interest (Others) | 5,000 | 10 | 10 | YES | Credit or payment (earlier) | |
| 194B | Winning from Lotteries
(resident & non resident)
| 10,000 | 30 | 30 | No | payment |
| 194BB | Winning from Horse Race
(resident & non resident)
| 10,000 | 30 | 30 | No | payment |
194C
| Contractor – Single Transaction | 30,000 | 1 | 2 | No | Credit or payment (earlier) |
| Contractor – During the F.Y. | 1,00,000 | 1 | 2 | No | Credit or payment (earlier) | |
| Transporter (44AE) declaration with PAN | – | – | – | – | ||
| 194D | Insurance Commission | 15,000 | 5 | 10 | YES | Credit or payment (earlier) |
| 194DA | Life insurance Policy | 1,00,000 | 1 | 1 | YES | payment |
| 194E | Non-Resident Sportsmen or Sports Association | 20 | 20 | No | Credit or payment (earlier) | |
| 194EE | NSS
(resident & non resident)
| 2,500 | 10 | 10 | YES | payment |
| 194F | Repurchase Units by MFs
(resident & non resident)
| 20 | 20 | No | Credit or payment (earlier) | |
| 194G | Commission – Lottery
(resident & non resident)
| 15,000 | 5 | 5 | No | Credit or payment (earlier) |
| 194H | Commission / Brokerage | 15,000 | 5 | 5 | No | Credit or payment (earlier) |
194I
| Rent of Land and Building – F&F | 2,40,000 | 10 | 10 | YES | Credit or payment (earlier) |
| Rent of Plant / Machinery / Equipment | 2,40,000 | 2 | 2 | YES | Credit or payment (earlier) | |
| 194IB | Rent by Individual / HUF (wef 01.06.2017) | 50000/PM | 5 | – | No | Credit or payment (earlier) |
| 194IA | Transfer of certain immovable property other than agriculture land | 50,00,000 | 1 | 1 | No | Credit or payment (earlier) |
194J
| Professional Fees / Technical Fees /Director fees/ royalty | 30,000 | 10 | 10 | No | Credit or payment (earlier) |
| Payment to Call Centre Operator | 30,000 | 2 | 2 | No | Credit or payment (earlier) | |
194LA
| Compensation on transfer of certain immovable property other than agricultural land | 2,50,000 | 10 | 10 | No | payment |
| Immovable Property (TDS exempted under RFCTLARR Act (w.e.f. 01.04.2017) | – | – | – | – | ||
| 194LB | Income by way of interest from from infrastructure debt fund(non- resident) | 5 | 5 | No | Credit or payment (earlier) | |
| 194LC | Income by way of interest by an Indian specified company to a non-resident / foreign company on foreign currency approved loan / long-term infrastructure bonds from outside India (applicable from July 1, 2012) | 5 | 5 | No | Credit or payment (earlier) | |
| 194LD | Interest on certain bonds and Govt. Securities (from 01-06-2013)
(non resident)
| 5 | 5 | No | Credit or payment (earlier) | |
| 195 | Other sum (payable to non Resident) | |||||
| a) Income in respect of investment made by a Non-resident Indian Citizen | 20 | 20 | No |
Credit or payment (earlier)
| ||
| b) Income by way of long-term capital gains referred to in Section 115E in case of a Non-resident Indian Citizen | 10 | 10 | No | |||
| c) Income by way of long-term capital gains referred to in sub-clause (iii) of clause (c) of sub-section (1) of Section 193 | 10 | 10 | No | |||
| d) Income by way of short-term capital gains referred to in Section 111A | 15 | 15 | No | |||
| e) Any other income by way of long-term capital gains [not being long-term capital gains referred to in clauses (33), (36) and (38) of Section 10] | 20 | 20 | No | |||
| f) Income by way of interest payable by Government or an Indian concern on money 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 | No | |||
| Any other income | 30 | 30 | No | |||
Notes:
a) No TDS on Goods & Service Tax: As per circular no. 23/2017 dated 19.07.2017 of CBEC, TDS is not applicable on Goods and Service Tax (GST) where GST is shown separately.
b) No Surcharge, Health & Education Cessis not deductible on payments made to residents, other than salary
c) Deduction of TDS at a lower rate or non-deduction of TDS:
d) Deduction of TDS at a lower rate:
In case where a certificate for deduction of TDS at a lower rate u/s. 197 is obtained from the customer/ vendor, it should be confirmed whether the amount of payment is within the limit and valid for the period specified in the certificate u/s. 197 along with the certificate no. using the ‘197 Validation’ facility on the TRACES website.
ii) Non-deduction of TDS:
Please note that Form No. 15G can be accepted by the Assessee only when the total interest amount payable is less than the minimum exemption limit, which is Rs. 2,50,000 for financial year 2018-19. In case the same exceeds the above limit, then TDS is to be deducted as per the applicable provisions.
In case of Form No. 15H, the same is not acceptable if the total taxable income of the customer/ vendor including the interest income after claiming deductions under chapter VI(A) exceeds the minimum exemption limit, which is Rs. 3,00,000 for senior citizen/ Rs. 5,00,000 for super senior citizen for financial year 2018-19.
e) TDS at higher rate:If a person fails to furnish PAN to the Assessee whose receipts are subject to TDS, then, the TDS is to be deducted at higher of the following rates”
i) The rates in force or
ii) 20%
Exemption for deduction of TDS at a lower rate or non-deduction of TDS as discussed in Point 1-C is not admissible in case of Invalid PAN/ No-PAN.
f) TDS on Good Transport:TDS shall be applicable on payment to transporters, i.e., contractors in the business of plying, hiring or leasing goods carriages. However, TDS exemption will be available to transporter owning 10 (ten) or less goods carriage at any time during the previous year. For claiming such exemption, transporter would also need to furnish a declaration to the Assessee along with a copy of PAN. For transporter not covered above, TDS is to be deducted at normal rates as given in above table.
g) TDS on interest u/s 194A paid to resident senior citizen:Finance Act, 2018 has increased the threshold limit u/s section 194A of the Income Tax Act, 1961 for “resident” Senior Citizens to Rs. 50,000/-.
2) Due dates for deposit/remittance of TDS to Central Government are as under:
Other than Section 194IA/194IB
- For the months of April to February (Monthly) – on or before 7th day from the end of the month in which tax is deducted.
- For the month of March – 30th April
Section 194IA/194IB
- For any month – on or before 30th day from the end of the month in which tax is deducted.
3) Interest on non-deduction/ non-payment of TDS:
As per Sec. 201(1A) of the Income-tax Act, 1961, if the Assessee does not deduct the whole or any part of the TDS or after deducting fails to pay the TDS as required by or under the Act, then the Assessee is liable to pay simple interest on the amount of such TDS, for every month or part of a month, at the rate of:
- 1% from the date on which such TDS was deductible up to the date on which such TDS is deducted; and
- 5% from the date on which such TDS was deducted up to the date on which such TDS is paid
4) Late filing Levy:
As per Sec 234E of Income tax Act 1961, where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues, maximum to the amount of tax deducted.
5) Due dates for filing of e-TDS returns & issue of TDS certificates:
a) In respect of any other TDS (other than TDS u/s. 194-IA):
| Quarter | Period | Due Date for filing of e-TDS Return | Due Date for issuing TDS certificate [in Form no. 16A] |
| Q-1 | 1st April to 30th June | 31st July | 15th August |
| Q-2 | 1st July to 30th September | 31st October | 15th November |
| Q-3 | 1st October to 31st December | 31st January | 15th February |
| Q-4 | 1st January to 31st March | 31st May | 15th June |
b) In respect of TDS u/s 194IA
i) A challan-cum-statement in Form No.26QB is to be filed within 30 days from the end of the month in which the deduction is made
ii) TDS certificate in Form no.16B is to be issued to the payee within 15 days from due date of furnishing statement in Form no. 26QB
c) In respect of TDS u/s 194IB
i) A challan-cum-statement in Form No.26QC is to be filed within 30 days from the end of the month in which the deduction is made
ii) TDS certificate in Form no.16C is to be issued to the payee within 15 days from due date of furnishing statement in Form no. 26QC
Annexure-I
TAX SLABS FOR FY 2019-20 AY 2019-20
a) Income Tax Slab for Individual Tax Payers & HUF (Less Than 60 Years Old)
| Income Tax Slab | Tax Rate |
| Income up to Rs 2,50,000 | No tax |
| Income from Rs 2,50,000 – Rs 5,00,000 | 5% |
| Income from Rs 5,00,000– 10,00,000 | 20% |
| Income more than Rs 10,00,000 | 30% |
Surcharge: 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore.
Surcharge: 15% of income tax, where the total income exceeds Rs.1 crore.
Health & Education Cess: 4% of Income Tax.
b) Income Tax Slab for Senior Citizens (60 Years Old or More but Less than 80 Years Old)
| Income Tax Slab | Tax Rate |
| Income up to Rs 3,00,000 | No tax |
| Income from Rs 3,00,000 – Rs 5,00,000 | 5% |
| Income from Rs 5,00,000– 10,00,000 | 20% |
| Income more than Rs 10,00,000 | 30% |
Surcharge: 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore.
Surcharge: 15% of income tax, where the total income exceeds Rs.1 crore.
Health & Education Cess: 4% of Income Tax.
c) Income Tax Slab for Senior Citizens (80 Years Old or More)
| Income Tax Slab | Tax Rate |
| Income up to Rs 5,00,000 | No tax |
| Income from Rs 5,00,000– 10,00,000 | 20% |
| Income more than Rs 10,00,000 | 30% |
Surcharge: 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore.
Surcharge: 15% of income tax, where the total income exceeds Rs.1 crore.
Health & Education Cess: 4% of Income Tax.
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