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TDS

192: TDS on salaries

  • Deductor: Any Person.
  • Deductee: Resident or Non-resident
  • Time of Deduction: At the time of payment
  • Rate of TDS : Average slab rate applicable to the estimated income of the employee.

Note:

  • Income from previous employer may be considered.
  • Relief u/s 89(1) shall also be considered while deducting TDS.
  • Income from all sources may be considered. And any TDS shall also be considered.
  • Only loss under the head house property shall be taken into account for the purpose of TDS and not any other loss.
  • The employer may from his own pocket pay tax on the non-monetary perquisites to employees. Such tax is exempt income in hands of employee and is disallowable expenditure to employer.

192A and 197A:

TDS from premature withdrawal from Employees’ Provident Fund Scheme (EPFS) (Effective from 1st June’2015)

  • When an employee participating in a Recognised Provident Fund (RPF) withdraws the accumulated balance lying to her/his credit in the said RPF account, that amount is not included in her/his total income and is considered as exempt provided certain conditions are met. The main condition is that such a person should have rendered continuous service with that employer for a period of 5 years or more. In case of cessation of employment, if the employee takes up an employment with another employer and the accumulated balance in her/his RPF account is transferred to her/his RPF account maintained by such other employer, and then also the exemption would be available.
  • It therefore follows that if the above mentioned conditions are not satisfied, the accumulated balance due to the employee is taxable in the hands of the employee. In such a case, tax is required to be calculated by re-computing the tax liability of the years for which the contribution to RPF has been made, by treating the same as contribution to unrecognised provident fund. The trustees of an RPF are required to deduct tax at source on such accumulated balance at the time it is paid, as if such withdrawn amount were income chargeable under the head Salaries. However, often, the trustees did not have the requisite information to be in a position to compute the TDS correctly. With a view to simplify the process of deduction in such cases, Section 192A is now inserted to provide that trustees of RPFs shall, at the time of payment of the accumulated balance due to the employee, deduct tax at source at the rate of 10%, where the aggregate withdrawal is 30,000/- or more.
  • At the same time, if the concerned employee fails to furnish her/his permanent account number (PAN) to the person responsible for deducting such tax, then tax shall be deducted at the maximum marginal rate as per Section 206AA. It has also been provided that tax shall not be deducted if the employee furnishes to the payer a self-declaration in the prescribed Form No. 15G/15H, declaring that the tax on her/his estimated total income of the relevant previous year would be nil.

193: TDS on Interest on securities

  • Deductor: Any Person
  • Deductee: Resident
  • Time of deduction: At the time of credit or payment, whichever is earlier.
  • Rate of Tax: 10%

TDS shall not be deducted in following cases:

  • If a listed company issues debentures whether in Physical or demat form and if such debentures are not listed on any stock exchange, then there will be no TDS on interest up to 5,000 payable in the financial year to an individual/HUF. Also if a listed company issues debentures in physical form and such debentures are listed on stock exchange, then there will be no TDS on interest up to 5,000 payable to individual/ HUF.
  • Interest payable on Central Govt. Or State Govt. Securities.
  • Interest paid to LIC, GIC or any other insurer, in respect of securities owned by it or held by it as beneficiary.
  • Interest paid on any listed security issued by a company held in dematerialized form.

194: TDS on dividend

  • Since dividend under section 115-O is exempt in the hands of shareholders, therefore, NO TDS is required to be deducted.
  • However, deemed dividend under section 2(22)(e) is taxable in the hands of shareholder and company is required to deduct TDS on the same.
  • Rate of Tax: 10%

194A: TDS ON INTEREST OTHER THAN “Interest on Securities”

  • Deductor: Any person, [other than individual or HUF (not liable to tax audit in preceding Financial Year)].
  • Deductee: Resident
  • Time of Deduction: At the time of credit or payment, whichever is earlier.
  • Rate of tax: 10%

TDS shall not be deducted if:

  • Interest paid does not exceed:
  • 10,000 where payer is Banking company.
  • 10,000 where payer is a cooperative society bank.
  • 10000 on deposit with post office.
  • 5,000 in any other case
  • Interest is credited or paid by the firm to its partner.
  • Interest on Zero Coupon Bond.
  • Interest paid by Government under Income Tax Act or Wealth Tax Act.
  • Interest not exceeding 50,000 on compensation awarded by Motor Accident Claim Tribunal.

Board’s Circular:

It is clarified that since no constructive credit to the depositor’s/payee’s account takes place while calculating interest on time deposits on daily or monthly basis in the interest on time deposits on daily or monthly basis in the CBS software used by banks, tax need not be deducted at source on such provisioning of interest by banks for the purposes of macro monitoring only. In such cases, tax shall be deducted at source on accrual of interest at the end of financial year or at periodic intervals as per practice of the bank.

Board’s Circular:

Sometime, court directs the litigant to deposit certain amount in court. Such deposits (usually time deposits) are kept in the bank in the names of Registrar/Prothonotary and Senior Master or any other name as per the order of the court. The bank shall in accordance with the provisions of the Act, deduct tax at source on the interest accruing on the above mentioned deposit(s) as per existing procedure and at the rates in force. The certificate of deduction of tax shall be issued by the bank in the name of ‘the depositor’. If more than one person has been directed to deposit any specified amount, the amount of TDS shall be corresponding to each such depositor for the portion of interest accrued in its respective share in the total amount deposited and TDS certificates shall be accordingly issued by the bank. At the time of making deposit of the amount ordered by the court, the depositor(s) shall submit a prescribed declaration with the court for record purpose and to facilitate the administration of TDS. The Registrar/ Prothonotary and Senior Master or any person authorised by the court will pass the information furnished therein to the bank concerned for TDS properly in the name of the depositor(s).

CBDT Notification

No TDS on the payments of the nature specified below, in case such payment is made by a person to a bank listed in the Second Schedule to the Reserve Bank of India Act excluding a foreign bank, namely:

  • Bank guarantee commission;
  • Cash management service charges;
  • Depository charges on maintenance of DEMAT accounts;
  • Charges for warehousing services for commodities;
  • Underwriting service charges;
  • Clearing charges (MICR charges);
  • Credit card or debit card commission for transaction between the merchant establishment and acquirer bank.

 

194B: TDS on winning from lottery or crossword puzzle or card game and other game of any sort

  • Deductor: Any Person
  • Deductee: Any person
  • Time of deduction: At the time of payment
  • Rate of TDS: 30 %

Note:

  • No TDS where amount does not exceed 10,000 during a Financial Year.
  • In a case where:

 

  • The winnings are wholly in kind; or
  • Partly in cash and partly in kind but the part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of the winnings,
  • The person responsible for paying shall, before releasing the winnings, ensure that tax has been paid in respect of the winnings.

194BB: TDS on winning from Horse race

  • Deductor: Any Person being the holder of license for the horse racing
  • Deductee: Any person
  • Time of Deduction: At the time of payment.
  • Rate of TDS: 30%

Note: No TDS where amount does not exceed 10,000 during a Financial Year.

194C: TDS on payment to contractors

  • Deductor: Any Person [other than individual or HUF (not liable to tax audit in preceding Financial Year)]
  • Deductee: Any resident
  • Time of Deduction: At the time of credit or payment, whichever is earlier.
  • Rate of TDS:
  1. 1% in case payee is individual or HUF
  2. 2% in case of any other assessee

Note:

  • No TDS where amount payable does not exceed:
  • 30,000 in case of a single contract
  • 1,00,000 in case of aggregate of contracts during a Financial Year. In case transporter not covered under section 44AE the aggregate of contracts during a Financial Year would be 75,000.
  • No TDS is required to be deducted by individual or HUF under a contract for personal purpose, even if he is subject to tax audit.
  • No TDS if the transporter of goods furnishes his PAN.
  • The definition of “work” shall include: “Manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer. However, it shall not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer.”
  • TDS shall be deducted:
  • On the invoice value excluding the value of material, if such value is mentioned separately in the invoice; or
  • On the whole of the invoice value, if the value of material is not mentioned separately in the invoice.
  • TDS under section 194C will be there on construction contracts even if material is purchased by the contractor from Third party.

194D: TDS on Insurance Commission

  • Deductor: Any Person
  • Deductee: Any resident
  • Time of deduction: At the time of credit or payment, whichever is earlier
  • Rate of TDS: 5%

Note: No TDS where amount does not exceed 15,000 during a Financial Year.

194DA: TDS on payment in respect of Life Insurance Policy (Added by Finance Act, 2014)

  • Deductor: Any Person
  • Deductee: Any resident
  • Time of deduction: At the time of payment
  • Rate of TDS: 1%

Note: 

  • No TDS on amount exempt under section 10(10D).
  • No TDS where amount does not exceed 1,00,000 during a Financial Year.

 

194E: TDS on payment to non-resident sportsmen or sportsmen association or entertainer

  • Deductor: Any Person
  • Deductee: Any non-resident sportsmen not citizen of India and non-resident sports association or non-resident entertainer
  • Time of deduction: At the time of credit or payment, whichever is earlier.
  • Rate of TDS: 10%

194G: TDS on commission, etc. On the sale of lottery tickets

  • Deductor: Any Person
  • Deductee: Any person
  • Time of deduction: At the time of credit or payment, whichever is earlier
  • Rate of TDS: 5%

Note: No TDS where amount does not exceed 15,000 during a Financial Year.

194H: TDS on commission (other than insurance commission) or brokerage:

  • Deductor: Any person,(other than individual or HUF(not liable to tax audit in the preceding Financial year))
  • Deductee: Any resident
  • Time of deduction: At the time of credit or payment, whichever is earlier.
  • Rate of TDS: 5%

Note: 

  • No TDS where the amount does not exceed 15,000 during a Financial Year.
  • Commission to employees and employee directors will form part of salary income and is liable to TDS under section 192 of the Act and not under this section.

194I: TDS on rent:

  • Deductor: Any person,(other than individual or HUF(not liable to tax audit in the preceding Financial year))
  • Deductee: Any resident
  • Time of deduction: At the time of credit or payment, whichever is earlier.
  • Rate of TDS:
  1. For use of Plant and Machinery -2%
  2. For use of Land, building, Furniture or fitting-10%

Note: 

  • No TDS where amount does not exceed 1,80,000 during a Financial Year.
  • TDS should also be deducted on advance rent, warehousing charges and non-refundable deposits.
  • Where the share of each co-owner in the property is definite and ascertainable, the limit of 1,80,000 will be applicable to each co-owner separately.

TDS on payment on transfer of certain immovable property

  • Deductor: Any purchaser (other than person referred to in section 194LA)
  • Deductee: Any seller being resident
  • Time of deduction: At the time of credit or payment, whichever is earlier
  • Rate of TDS: 1% of the total consideration for transfer of immovable property
  1. For use of Plant and Machinery -2%
  2. For use of Land, building, Furniture or fitting-10%

Note: 

  • Every person is liable to deduct tax at source @ 1% on payment made for purchase of immovable property to a person resident in India, except for: rural agricultural land(which is not coming in definition of capital asset), and where the sale consideration for the property is less than 50lacs Therefore, if the immovable property is purchased from a non-resident person for any value, no TDS is required to be deducted under this section. However, TDS shall be deducted under section 195.
  • It is not necessary that the land or building should be situated in India. If any person is purchasing property outside India from a person resident in India, he is liable to deduct tax at source on sale consideration @1 %.
  • In case section 194-IA is attracted then the purchaser isn’t required to obtain TAN, i.e., Tax Deduction Account Number i.e., section 203A is not applicable.
  • Every person who is purchasing property of 50 lacs or more would have to deduct TDS @1% of the payments made to the seller.
  • In case of non availability of PAN, TDS at the rate of 20% would be deducted.
  • In the case of property whose sale price is 50 lacs or more and in the event part payment is being made for the purchase, then such TDS would be required to be deducted on every part payment of consideration and not at the time tranche of payment.
  • If sellers jointly own a property and sells for a total consideration of 50 lacs or more, then section 194-IA is attracted even if each co-owner’s consideration is less than 50 lacs.
  • TDS is required to be deducted irrespective of the fact that immovable property is held as capital asset or stock-in-trade by the buyer and seller.
  • In case immovable property (other than agricultural land which is not capital asset) is acquired under any law in force, he provisions of section 194LA shall apply and provisions of section 194-IA is not applicable.

194J: TDS on *fees for professional services

  • Deductor: Any person (other than individual or HUF (not liable to tax audit in the preceding Financial Year)).
  • Deductee: Any resident
  • Time of deduction: At the time of credit or payment, whichever is earlier.
  • Rate of TDS: 10%

Note: 

  • No TDS where amount does not exceed 30,000 during a Financial Year for each type of payment referred above.
  • If any fee is paid through regular banking channels to any chartered accountant, lawyer, advocate or solicitor who is resident in India by the non-residents who do not have any agent or business connection in India, then no TDS is required to be deducted on such fees.
  • No TDS is required to be deducted by individual or HUF for professional fees paid for personal purpose, even if he is subject to tax audit.

194LA: TDS on payment of compensation on compulsory acquisition of any immovable property (other than agricultural land)

  • Deductor: Any Person
  • Deductee: Any person
  • Time of deduction: At the time of payment
  • Rate of TDS: 10%

Note: No TDS where amount does not exceed 2,50,000 during a financial year.

194LB: Income by way of interest from Infrastructure Debt Fund

  • Deductor: Infrastructure Debt Fund
  • Deductee: Non-resident or a foreign company
  • Time of deduction: At the time of credit or payment, whichever is earlier
  • Rate of TDS: 5%

194LC: Income by way of Interest from Long term Bonds and Loans from Indian Companies

  • Deductor: Indian Company
  • Deductee: Non-Resident or a foreign company
  • Time of deduction: At the time of credit or payment, whichever is earlier.
  • Rate of TDS: 5%

Conditions:

  • Loan/bonds should be issued on or after 1.7.2012 but before 1.7.2017
  • Money should be borrowed in foreign currency; and
  • Interest rate and loan/bond tenure is approved by Central Govt.

Note:

  • Section 206AA is not applicable even if foreigner does not give PAN.

194LD: TDS on income by way of interest on certain bonds and government securities

  • Deductor: Indian Company or government
  • Deductee: Foreign institutional Investor or Qualified Foreign Investor
  • Time of deduction: At the time of credit or payment, whichever is earlier
  • Rate of TDS: 5%

Note: The income by way of interest shall be the interest payable on or after the 1st day of June,2013 but before the 1st day of June,2015 in respect of investment made by the payee in-

  • A rupee denominated bond of an Indian company; or
  • A Government security Provided that the of interest in respect of bond referred to in clause (i) shall not exceed the rate as may be notified by the Central Government in this behalf.

195: TDS on any interest or other sum chargeable under the I.T. Act payable to non-resident or a foreign company (Other than interest under section 194LB/194LC/194LD)

  • Deductor: Any Person
  • Deductee: Non-resident or a foreign company
  • Time of deduction: At the time of credit or payment, whichever is earlier

Note:

  • The assessee can make an application to Assessing Officer for non-deduction of TDS where the sum payable to non-resident or foreign company, is not taxable in India.
  • The person responsible to deduct tax should furnish the particulars of payments in prescribed form.

196A: TDS on income in respect of units of Non-resident

  • Since income from units is exempt under section 10(35), no TDS is required to be deducted.

196B: TDS on LTCG from units referred to in Section 115AB

  • Deductor: Any person
  • Deductee: Offshore Fund
  • Time of deduction: At the time of credit or payment, whichever is earlier
  • Rate of TDS: 10% on LTCG referred to in section 115AB.

Note:

  • Income on units referred to in section 115AB is exempt under section 10(35) and hence, no TDS.
  • No TDS shall be deducted on Long Term capital gains exempt under section 10(38)

196C: TDS on Income from foreign currency bonds or GDRs

  • Deductor: Any person
  • Deductee: Non resident
  • Time of deduction: At the time of credit or payment, whichever is earlier
  • Rate of TDS: 10% on interest income or LTCG in respect of Bonds and GDR referred to in section 115AC

Note:

  • Dividend income on GDR is exempt under section 10(34) and therefore no TDS on such dividend.

196D-TDS on income of foreign institutional investors from Securities

  • Deductor: Any person
  • Deductee: Foreign Institutional Investors
  • Time of deduction: At the time of credit or payment, whichever is earlier
  • Rate of TDS: 20% on interest income in respect of securities referred to in section 115AD

Note:

  • Dividend income is exempt under section 10(34) and therefore, no TDS on such dividend income.
  • No TDS is to be deducted on LTCG or STCG on transfer of securities referred to in section 115AD.

196: Interest or dividend or other sums payable to Government, Reserve Bank or certain corporations

No TDS shall be deducted from any sum payable to:

  • Government
  • RBI
  • Mutual Funds
  • Corporation established under any Central Act whose income is exempt from tax.
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