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TDS Guides
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1) Payments covered under TDS provisions
There are different types of payments covered under the TDS provisions. The payments covered include residents and non-resident payments. The TDS rates for different types of payments are summarized below:
| Type of payment | TDS rate | Section | Exemption limit |
|---|---|---|---|
| Salary to employees (resident or non-resident) | Income slab rates as applicable to individual taxpayers | Section 192 | Rs 2.5 lakh for individuals less than 60 years. Rs 3 lakh for senior citizen. |
| Withdrawal from provident fund | 10% / MMR of 30% plus SC and cess in the absence of PAN | Section 192A | Rs 50,000 |
| Interest on securities (resident) | 10% | Section 193 | Rs 5,000 |
| Dividend (resident) | 10% | Section 194 | Rs 5,000 |
| Interest (other than Section 193 interest on securities) (resident) | 10% | Section 194A | Rs 10,000 |
| Lottery winning or crossword puzzles | 30% | Section 194B | Rs 10,000 |
| Winnings from race horses | 30% | Section 194BB | Rs 10,000 |
| Works contract or advertising contracts (resident) | 1% (individuals and HUF) and 2% (other persons) | Section 194C | Rs 30,000 per transaction and Rs 1,00,000 for aggregate transactions in a financial year. |
| Payment for transport to a contractor owning 10 or less goods carriages during the financial year. | |||
| Insurance commission (resident) | 5% (individual and HUF) and 10% (other person) | Section 194D | Rs 15,000 |
| Maturity proceeds of life insurance policy (resident) | 5% of income component | Section 194DA | Rs 1,00,000 |
| Payment to non-resident sportsmen or sports association | 20% | Section 194E | No exemption |
| Withdrawal from National Savings Scheme | 10% | Section 194EE | Rs 2,500 |
| Commission on sale of lottery tickets | 5% | Section 194G | Rs 15,000 |
| Commission or Brokerage (resident) | 5% | Section 194H | Rs 15,000 |
| Rent (resident) | 2% (plant and machinery) and 10% (land and building) | Section 194I | Rs 2,40,000 |
| Sale of immovable property other than agricultural land (resident) | 1% | Section 194IA | Rs 50,00,000 |
| Payment of Rent by Individuals and HUF (other than tax audit case) (resident) | 5% | Section 194IB | Rs 50,000 |
| Payment under joint development agreements (resident) | 10% | Section 194IC | No exemption |
| Fees for professional services or fees for technical services (resident) | 2% (fees for technical services and royalty on cinematographic films) and 10% (fees for professional services, other royalty and non-compete agreement) | Section 194J | Rs 30,000 (for each kind of payment) |
| Compensation for acquisition of immovable property (resident) | 10% | Section 194LA | Rs 2,50,000 |
| Interest from infrastructure debt fund to non-resident or foreign company | 5% | Section 194LB | No exemption |
| Income from units of a business trust | 10% (resident) and 5% (non-resident) | Section 194LBA | No exemption |
| Income in respect of units of investment fund | 10% (resident) and the Rates in force for for non-residents | Section 194LBB | No exemption |
| Income in respect of investment in securitization trust (resident and non-resident) | 25% (individual and HUF) and 30% (other case) | Section 194LBC | No exemption |
| Interest from Indian Company (non-resident) | 5% | Section 194LC | No exemption |
| Interest on certain bonds and Government securities (FII or foreign investor) | 5% | Section 194LD | No exemption |
| Contractual payments by Individual and HUF (other than tax audit cases) | 5% | Section 194M | Rs 50,00,000 |
| Cash payments and cash withdrawals | 2% and 5% ( for non-filers drawing above Rs 1 crore) | Section 194N | Rs 1 crore and Rs 20 lakh for non-filers |
| Payment by E-commerce to E-commerce participant | 1% | Section 194O | Rs 5 lakh (individual and HUF providing PAN or Aadhaar) |
| TDS on specified senior citizen | At the rates in force (slab rates) | Section 194P | No exemption |
| TDS on purchase of goods | 0.10% | Section 194Q | Rs 50,00,000 |
| Payment to non-resident | Specified rates specified in the Act or tax treaty | Section 195 | No exemption |
| Payment in respect of units of non-residents | 20% | Section 196A | No exemption |
| Income from units to a offshore fund | 10% | Section 196B | No exemption |
| Interest or dividend on bonds/GDR to a non-resident | 10% | Section 196C | No exemption |
| Income of FIIs from securities | 20% | Section 196D | No exemption |
2) Requirement for TDS
The tax should be deducted at the time of making payment or passing a credit entry to the account of the payee. The person making the payment is called the payor and the recipient of the payment is called the payee. A payor who is liable to deduct tax should apply for a TAN (Tax Deduction Account Number) for the purpose of depositing the TDS and filing the TDS returns.
A payor who fails to deduct tax or deposit the tax deducted is liable for interest and penal consequences.
3) Who is required to deduct tax?
A person making payment or crediting an amount to the ledger of the payee should deduct tax. The applicability of tax deduction depends on the type of payment, amount and person making the payment. Most payments made by individual and HUF are not liable for tax deduction except where such individual or HUF carry on business/profession liable for tax audit.
4) Quarterly TDS returns and deposit of TDS
The quarterly TDS returns in form 24Q (salaries), 26Q (other than salaries) and 27Q (non-resident payments) should be files as follows:
| Month | Quarter | Due date for deposit of TDS | Due date for filing TDS return |
|---|---|---|---|
| April | April to June | 7th of May | 31st July |
| May | 7th of June | ||
| June | 7th of July | ||
| July | July to September | 7th of August | 31st October |
| August | 7th of September | ||
| September | 7th of October | ||
| October | October to December | 7th of November | 31st January |
| November | 7th of December | ||
| December | 7th of January | ||
| January | January to March | 7th of February | 31st May |
| February | 7th of March | ||
| March | 30th of April |
5) Types of TDS returns
A summary of types of TDS returns and their submission:
| TDS return | Purpose of TDS return | Due date for TDS return |
|---|---|---|
| Form 24Q | Salary TDS return | Quarterly as above |
| Form 26Q | Other than salaries | Quarterly as above |
| Form 27Q | Non-resident | Quarterly as above |
| Form 26QB | Sale of immovable property | 30 days from the end of the month in which tax is deducted |
| Form 26QC | Rent paid by individuals and HUF | 30 days from the end of the month in which tax is deducted |
| Form 26QD | Contractual payments by individual and HUF | 30 days from the end of the month in which tax is deducted |
6) TDS certificates
TDS certificate is a document certifying the amount of income paid by way of salary, interest, commission etc. The deductor issues a TDS certificate each quarter to the deductee certifying the amount paid, TDS deducted with dates of payment/credit.
TDS certificate bears the PAN of the deductee. TDS certificate is an evidence of the TDS deducted and payments made to the deductee. Hence, the deductee must provide the correct PAN to ensure appropriate tax deduction. A deductee can also seek any corrections in the TDS certificate for incorrect PAN, amount or TDS.
| Type of payment | TDS certificate | Period |
|---|---|---|
| Salary | Form 16 | Annually |
| TDS other than salary | Form 16A | Quarterly |
| Sale of immovable property | Form 16B | Transaction based |
| Rent paid by individuals and HUF | Form 16C | Transaction based |
| Contractual payments by individual and HUF | Form 16D | Transaction based |
7) Procedure to deposit TDS and file TDS returns
A deductor of TDS should deposit TDS using challan no 281. The TDS challan is available on the https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp. While depositing TDS, the deductor should mention the Section under which tax is deducted, the type of deductee, assessment year relevant to financial year. The TDS returns can be filed online or offline in the respective forms.
In the case of Form 26QB, 26QC and 26QD, the TDS deposit is along with the TDS return (challan cum return).
8) Non-compliance with TDS provisions
The deductor who fails to deduct or deposit or file TDS returns is liable for interest and penal consequences:
| Default | Interest | Penalty | Prosecution |
|---|---|---|---|
| Non-deduction of tax | 1% p.m till date of deduction | Equal to the amount of TDS not deducted | Minimum 3 months, may extend up to 7 years with a fine |
| Failure to deposit TDS | 1.5% p.m till date of payment | Equal to the amount of TDS not deducted | |
| Failure to file TDS return | Rs 200 per day for the period of delay | Minimum Rs 10,000 not exceeding Rs 1 lakh |
9) Exemption from TDS
The payor is not liable to deduct tax on amount payable to a payee where the payee submits a form 15G (resident below 60 years of age and HUF) or 15H (resident senior citizen).