TDS COMPLIANCE
What is TDS?
TDS or Tax Deducted at Source is basically income tax reduced from the money paid at the time of making specified payments such as commission, salary, rent, professional fees, interest, etc. by the persons making such payments. Any person who will make payment as specified under the Income Tax Act is liable to deduct TDS at the time of making such payment.
Usually, the person receiving income is liable to pay income tax, But the government with the help of Tax Deducted at Source (TDS) provisions makes sure that income tax is deducted in advance from the payments received by an assessee. The recipient of income receives the net amount (Amount Received = Gross Amount – TDS at source). The recipient will add the gross amount to his income and the amount of TDS is adjusted against his final tax liability. The recipient takes the credit for the amount already deducted and paid on his behalf i.e. TDS amount.
For Example- ABC Private limited makes a payment for professional fees of Rs. 80,000 annually then, he shall deduct TDS @ 10% and make the net payment. Thus the recipient of income i.e. the professional would get Rs. 72,000 (i.e. Rs. 80,000 – Rs. 8,000) after deduction of tax at source. He will add gross amount i.e. Rs 80,000 to his income and can take credit of the amount already deducted i.e. Rs 8,000 by ABC Private limited against his final tax liability.
When TDS needs to be Deducted?
Any person making specified payments mentioned under the Income Tax Act are required to deduct TDS at the time of making such a specified payment. However, not required in case of individual or HUF whose books of accounts are not required to be audited.
However, in case of rent payments made by individuals and HUF exceeding Rs 50,000 per month, are required to deduct TDS @ 5% even if the individual or HUF is not liable for a tax audit. Also, such Individuals and HUF liable to deduct TDS @ 5% need not apply for TAN.
Where to deposit TDS Deducted?
Tax Deducted at Source has to be deposited using Challan ITNS-281 on the government portal. It is very simple to deposit TDS online.
Due Date for Depositing TDS Deducted?
For any month except March – 7th of the subsequent month
For the month of March – 30th April
For Rent & Purchase of Property - 30 days from the end of the month in which TDS is deducted
Due Date for filing TDS Returns?
SL. No. | Nature of Transaction | Form No. | Due Date |
1. | TDS on Salary | Form 24Q |
Q1 – 31st July Q2 – 31st October Q3 – 31st January Q4 – 31st May |
2. | TDS on all payments made to non-residents except salaries | Form 27Q |
Q1 – 31st July Q2 – 31st October Q3 – 31st January Q4 – 31st May |
3. | TDS on sale of property | Form 26QB |
30 days from the end of the month in which TDS is deducted |
4. | TDS on rent | Form 26QC | 30 days from the end of the month in which TDS is deducted |
What will happen if TDS not Deposited?
When your employer has not paid the TDS to the income tax department, the TDS would not be available against your PAN in your Form 26AS. Hence, you cannot take tax credit of the TDS while filing your income tax return. However, if you take the tax credit for this amount, you will receive a notice from the income tax department for the mismatch in the TDS claimed and taxes paid.
Remedies under the Income Tax Act?
To avoid the delay from companies in depositing TDS, the Central Board of Direct Taxes (CBDT) has become more vigilant and started imposing penalties on companies that are not complying with the deadlines (i.e. not deducting/depositing TDS or not filing TDS Returns). CBDT has announced that if there is a mismatch in the TDS or tax credit information due to deductor delay in payment, the taxpayer will not be made responsible anymore.
Penalty for Non-Compliance?
Default under Section | Nature of such Default | Interest on Default | Period of Interest Payment |
201A | Not deducting of TDS, either full or any part | 1 % per month | From the date on which tax was to be deducted to the actual date of deduction |
201A | Non-payment of TDS (after deduction TDS) | 1.5 % per month | From the date of deduction to the date of actual payment |
As per section 234E of the Income Tax Act, All companies, irrespective of government or private, must bear a penalty of Rs.200/day, for the delay in filing TDS after the specified due date. However, such a penalty will not exceed the amount of TDS for which the statement was required to be filed.
As per section 271H of the Income Tax Act, a penalty of Rs. 10,000 up to Rs.1 lakh is leviable if a company provides incorrect information or fails to submit the returns within the specified due date. This penalty will be charged in addition to the penalty under Section 234E.
No penalty under Section 271H will be charged in case of delay in filing the TDS return if the following conditions are satisfied:
What is TDS Certificate?
TDS certificates have to be issued by a person deducting TDS to the assessee from whose income, TDS was deducted while making payment to such person.
SL. No. | Certificate | Form | Time Period | Due Date |
1. |
TDS on salary payment | Form 16 | Yearly | 31st May |
2. | TDS on non-salary payments | Form 16A | Quarterly | 15 days from the due date of filing return |
3. | TDS on sale of property | Form 16B | On every transaction done | 15 days from the due date of filing return |
4. | TDS on rent | Form 16C | On every transaction made | 15 days from the due date of filing return |
Note: Amidst outbreak of COVID-19 Pandemic and lockdown, the due date for filing returns has been extended till 30th June 2020 for due dates falling between 20.03.2020 to 30.06.2020.
TDS Rate Chart for the F.Y. 2020-21
Section | Nature of payment | Threshold Limit | Applicable from 01/04/2020 to 13/05/2020 | Applicable from 14/05/2020 to 31/03/2021 |
Resident | Non-Resident | Resident | Non-Resident | |||
Rs. | TDS RATE(%) | TDS RATE(%) | TDS RATE(%) | TDS RATE(%) | ||
192 | Salaries | - | Normal slab rate | Normal slab rate | Normal slab rate | Normal slab rate |
192A | Premature withdrawal from EPF | 50,000 | 10 | 10 | 10 | 10 |
193 | Interest on securities - 8% Savings (Taxable) Bonds, 2003 or 7.75% Savings (Taxable) Bonds, 2018 during the financial year | 10,000 | 10 | - | 7.5 | - |
193 | Interest on securities - Interest on securities for money issued by or on behalf of any local authority/statutory corporation, listed debentures of a company(other than Demat form), any other interest on securities | 5000 | 10 | - | 7.5 | - |
194 | Dividends | 5000 | 10 | - | 7.5 | - |
194A | Interest (Banking co., co-operative society engaged in banking, post office) | 40000 | 10 | - | 7.5 | - |
194A | Interest (Any other person) | 5,000 | 10 | - | 7.5 | - |
194B | Winning from lotteries | 10.000 | 30 | 30 | 30 | 30 |
194BB | Winning from Horse race | 10,000 | 30 | 30 | 30 | 30 |
194C |
Contractor-Single transaction-Individual/HUF -Others |
30,000
|
1 2 |
- - |
0.75 1.5 |
- - |
194C |
Contractor – Consolidated Payment During the F.Y. - Individual/HUF - Others |
1,00,000
|
1 2 |
- - |
0.75 1.5 |
- - |
194D |
Insurance commission - Other than Company - Company |
15000
|
5 10 |
- - |
3.75 10 |
- - |
194DA | Maturity of Life insurance policy | 1,00,000 | 5 | - | 3.75 | - |
194E | Non-resident sportsmen or sports association | - | - | 20 | - | 20 |
194EE | NSS | 2500 | 10 | 10 | 7.5 | 10 |
194F | Repurchase units by MFs | - | 20 | 20 | 15 | 20 |
194G | Commission-Lottery | 15000 | 5 | 5 | 3.75 | 5 |
194H | Commission/Brokerage | 15000 | 5 | - | 3.75 | - |
194I |
Rent of - Plant/Machinery /Equipment - Land and Building/Furniture & Fixture |
2,40,000
|
2
10
|
-
-
|
1.5
7.5
|
-
-
|
194IA | Transfer of certain immovable property other than agriculture land | 50 lakh | 1 | - | 0.75 | - |
194IB | Rent by Individual/HUF | 50,000/month | 5 | - | 3.75 | - |
194IC |
Payment under Joint Development Agreements to Individual/HUF |
- | 10 | - | 7.5 | - |
194J |
Professional Fees |
30,000 | 10 | - | 1.5 | - |
194J | Technical Fees (w.e.f. 01.04.2020) | 30,000 | 2 | - | 1.5 | - |
194J | Payment to call centre operator (w.e.f. 01.06.2017) | 30,000 | 2 | - | 1.5 | - |
194J | Director's Fees | - | 10 | - | 7.5 | - |
194K |
Payment of any income in respect of (a)units of a mutual fund as per section 10(23D); or (b)this units from the administrator;or (c)units from specified company (w.e.f. 01.04.2020) |
5000
|
10
|
-
|
7.5
|
-
|
194LA |
Compensation on transfer of certain immovable property other than agriculture land (TDS exempted if covered under RFCTLARR Act w.e.f. 01.04.2017) |
2,50,000
|
10
|
-
|
7.5
|
-
|
194LB | Income by way of interest from infrastructure debt fund | - | - | 5 | - | - |
194LBA |
Income from units of business trust - interest received or receivable from a special purpose vehicle; or - dividend referred to in sub-section (7) of section 115-O |
-
|
10
10 |
5
10 |
7.5
7.5 |
5
10 |
194LBA |
Distribution of rental income to unit holders - Other than Comapany - Company |
- |
10 10 |
30 40 |
7.5 7.5 |
30 40 |
194LBB |
Income in respect of units of investment fund - Other than Company - Company |
-
|
10 10 |
30 40 |
7.5 7.5 |
30 40 |
194LBC |
income in respect of investment in securitization fund - Individual/HUF - Company - Other Person |
-
|
25 30 30 |
30 40 30 |
18.5 22.5 22.5 |
30 40 30 |
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 | - | - | 5 | - | 5 |
194LC | Income by way of interest by an Indian specified company on rupee denominated bond / any long-term bonds from outside India, which is listed only on a recognized stock exchange located in any International Financial Services Centre | - | - | 4 | - | - |
194LD | Interest on certain bonds from Govt. securities | - | - | 5 | - | - |
194M | Certain payments by Individual/HUF | 50 Lakh | 5 | - | 3.75 | - |
194N | Payment of certain amount in cash | 1 Crore | 2 | 2 | 2 | 2 |
194N |
Payment of certain amount in cash (first proviso of section 194N)if- - Amount is more than Rs.20 lakh but up to Rs. 1 crore - Amount exceeds Rs. 1 crore (Applicable from 01.07.2020) |
N.A
N.A |
N.A
N.A |
2
5 |
2
5 |
|
194-O | Applicable for e-commerce operator for the sale of goods or provision of services facilitated by it through its digital or electronic facility or platform (Applicable from 01.10.2020) |
-
|
N.A
|
-
|
0.75
|
-
|
195 | Income of Investment made by an NRI | - | - | 20 | - | 20 |
195 |
Long-term capital gain - Under Section - 115E/ 112(1)(c)(iii)/112A - Any Other Gains |
-
|
-
- |
10
20 |
-
- |
10
20 |
195 | Short-term capital gain - 111A | - | - | 15 | - | 15 |
195 | Royalty | - | - | 10 | - | 10 |
195 | Fees for technical services | - | - | 10 | - | 10 |
195 | Interest income payable by Govt./Indian concern (other than section 194LB or 194LC) | - | - | 20 | - | 20 |
195 |
Any Other Income - Other than company - Company |
- | - |
30
40 |
- |
30
40 |
196A |
Income in respect – - of units of a Mutual Fund specified under clause (23D) of section 10; or - from the specified company referred to in the Explanation to clause (35) of section 10 |
- | - | 20 | - | 20 |
196B | Income from units to an offshore fund | - | - | 10 | - | 10 |
196C | Income from foreign currency bonds or GDR of an Indian company | - | - | 10 | - | 10 |
196D | Income of foreign Institutional Investors from securities (not being dividend or capital gain) | - | - | 20 | - | 20 |
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