OVERVIEW OF TDS

What is TDS Tax Deduction at Source or TDS is one of the modes of

collecting Income-tax. In simple terms, TDS is the tax getting deducted from the

person receiving the amount (Employee/Deductee) by the person paying such amount (Employer/Deductor).

The tax so deducted at source by the payer, has to be deposited in the Government treasury to the credit of Central Govt. within the specified time.

The tax so deducted from the income of the recipient is deemed to be payment of Income-tax by the recipient at the time of his assessment.

It is always considered as an Advance tax which is paid to the government.  

Who shall deduct tax at source Every person responsible for making payment of

nature covered by TDS provisions of Income Tax Act shall be responsible to deduct tax.

However in case of payments made under sec. 194A, 194C, 194H, 194I and 194J in respect of individual and HUF, only if the turnover or professional receipt exceeds Rs.1 crore or Rs. 25 Lakhs respectively in previous year, he is required to deduct tax at source.

These persons are mainly:

Principal Officer of a company for TDS purpose including the employer in case of private employment

DDO (Drawing & Disbursing Officer), In case of Govt. Office any officer designated as such.

In the case of "interest on securities" other than payments made by or on behalf of the Central govt. or the State Government, it is the local authority, corporation or company, including the Principal Officer thereof.

Tax must be deducted at the time of payment in cash or cheque or credit to the payee's account whichever is earlier.

Self declaration in Forms 15G and 15H can be filed by the Deductee if his income doesn't exceed the amount chargeable to tax. This self declaration can be filed for dividends, interest and mutual fund income only. In these cases no tax has to be deducted.

192 TDS on Salaries

Slab rate applicableBasis of estimated income

193 Interest on Securities

10000 if income from 8% Saving bonds5000 if interest on DebenturesResponsible any person issuing security

No TDS if:Securities is in DMAT formListed on Stock Exchange

194A Any interest other than interest on Securities10000 if Payer is Banking Company,

Co-Operative Society or Deposit with Post Office

5000 in other caseResponsible any person other than

Individual or HUF10%20%

194B Winnings from Lottery, Crossword Puzzle or Television Game1000030%

194BB Winnings from Horse Race500030%

194C Payment in Pursuance of any ContractResponsible Person Liable to get their

Books AuditedPayee is Individual or HUF 1%Other person 2%Contract exceeds 30000Total in a year with same contractor or

sub-contractor exceeds 75000

No TDS ifPayee is Transport operator and

Furnished his PAN to Payer

194D Insurance Commission

20000 10% 20%

194E payment to non-resident sportsman Nil 20%

194EE Sum out of National Savings Scheme u/s 80CCALimit 250020%

194F Repurchase relevant of units covered u/s 80CCBNil20%

194G Commission or Prize relating to Lottery tickets100010%Stocking, Purchasing or Selling Lottery

tickets

194H Commission or Brokerage

5000Other than individual and HUF10% PAN furnished20% PAN not furnished

194-I Rent

1,80,000Responsible other than individual and

HUF2% Machinery & Plant10% Land, Building, Furniture and

Fittings

194J Fees for Professional or Technical Services30000Responsible other than individual and

HUF10% PAN furnished20% PAN not furnish

194LA Immovable property acquisition compensationNot applicable for agricultural land2,00,000 ( w.e.f. 1-7-2012)Any resident10%

195 Any sum paid to non-resident or foreign companyRate as per Double Tax Avoidance

Agreement (DTAA) with that Country

Consequences of not deductingor not paying the amount of TDS

If any person has not deducted tax at source Interest shall be charged @1% p.m./part of the month for the period starting from the date when tax was deductible up to the date when tax was deducted.

If any person has deducted tax at source but it was not paid within the prescribed time period, Interest shall be charged at a rate of @1.5% p.m./part of the month for the period when tax was deducted at source up to the date of payment.

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