TDS Compliance

Last Updated On: June 24, 2020, 2:52 p.m.
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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?

  • Not Deducting TDS or Not Depositing TDS on time
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

 

  • Delay Filing in TDS Returns

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:

  1. The tax deducted or collected at source is paid to the credit of the government.
  2. Late filing fees and interest (if any) is paid to the credit of the government.
  3. The TDS return is filed before the expiry of a period of one year from the due date specified in this behalf.

 

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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