As per the Income Tax Act, 1961, TDS is defined as tax deducted by the company or any other person making payment if the payment exceeds certain threshold limits.
Tax Deducted at Source or TDS is type of tax deducted from the payments and salaries of the employees. As per the Income Tax Act, 1961, TDS is defined as tax deducted by the company or any other person making payment if the payment exceeds certain threshold limits. It is basically deducted at the tax rates prescribed by the tax department.
The company or person who makes the payment after deducting the TDS from the salaries is called a deductor and the company or person who is receiving the payment or salary is called a deductee. It is the responsibility of the deductor’s to deduct TDS from the payments/salaries before making the payment and depositing the same with the government. TDS is deducted with respect to the mode of payment i.e. either cash, cheque or credit whether it is linked to the PAN card of the deductor and deductee.
Following are types of payments on which TDS is deducted:
- Salaries of the workers
- Rent payments
- Professional fees
- Interest payable by Assessee
- Consultation fees
Finance Act, 2019 have brought some new changes in the TDS provisions. These are minor but important to note down. For your reference we have marked TDS rate charge for financial year 2019-20 in the below given table:
- The interest limit of 194A has been enhanced from Rs. 10,000/- to Rs. 40,000/- in case if the payer is a bank, co-operative society and post office. For the senior citizen limit is Rs. 50,000.
- The monetary limit of 194-I is enhanced to Rs. 2, 40,000/- from Rs. 1, 80,000/-. Accordingly, in case the rent payment does not exceed the limit of Rs. 2, 40,000/- in a financial year, the deductor is not required to deduct the TDS.
Common TDS provisions made to individual, firms or companies in India:
|
Section |
Nature of Payment for Domestic Transactions |
Threshold Limit |
Individual / HUF |
Others |
15G-15H |
|
Rs. |
TDS Rate (%)
|
Allowed |
|||
|
193 |
Interest on the Securities/ Debentures |
10,000 |
10 |
10 |
No |
|
194A |
Interest (Banks, co-operative society and post office)/ For Senior Citizen Rs. 50000 |
40,000/ 50000 |
10 |
10 |
YES |
|
Interest (Others) |
5,000 |
10 |
10 |
YES |
|
|
194C
|
Contractor – on a Single Transaction |
30,000 |
1 |
2 |
No |
|
Contractor – During the Financial Year |
1,00,000 |
1 |
2 |
No |
|
|
Transporter (44AE) declaration with PAN card |
– |
– |
– |
– |
|
|
194H |
Commission / Brokerage |
15,000 |
5 |
5 |
No |
|
194I |
Rent of a building and Land– F&F |
2,40,000 |
10 |
10 |
YES |
|
Rent of the Plant / Machinery / Equipment |
2,40,000 |
2 |
2 |
YES |
|
|
194IB |
Rent by an Individual / HUF (wef 01.06.2017) |
50000/PM |
5 |
– |
No |
|
192A |
Premature withdrawal from EPF |
50,000 |
10 |
– |
YES |
|
194IA |
Transfer of a certain immovable property other than an agriculture land |
50,00,000 |
1 |
1 |
No |
|
194J
194J |
Professional Fees / Technical Fees /Director fees/ royalty |
30,000 |
10 |
10 |
No |
|
Payment to the Call Centre Operator (w.e.f. 01.06.2017) |
30,000 |
2 |
2 |
No |
|
|
192 |
Salaries (Annexure-I) |
– |
Basis on Slab |
– |
No |
TDS provisions for resident or non –resident individual, firm or companies in India:
|
Section |
Nature of Payment for Domestic Transactions |
Threshold Limit |
Individual / HUF |
Others |
15G-15H |
Deduction At the time of |
|
Rs. |
TDS Rate (%)
|
Allowed |
|
|||
|
192A |
Premature withdrawal from EPF |
50,000 |
10 |
– |
YES |
Payment |
|
192 |
Salaries (Annexure-I) for the resident and non- resident |
– |
Basis on Slab |
– |
No |
Payment |
|
193 |
Interest on the Securities/ Debentures |
10,000 |
10 |
10 |
No |
Credit or payment (earlier) |
|
194A |
Interest (Banks)/ For Senior Citizen Rs. 50000 |
40,000 |
10 |
10 |
YES |
Credit or payment (earlier) |
|
Interest (Others) |
5,000 |
10 |
10 |
YES |
Credit or payment (earlier) |
|
|
194 |
Dividends (other than the listed Companies) |
– |
10 |
10 |
YES |
Payment |
|
194B |
Winning from Lotteries (resident & non- resident) |
10,000 |
30 |
30 |
No |
Payment |
|
194BB |
Winning from Horse Race (resident & non-resident) |
10,000 |
30 |
30 |
No |
Payment |
|
194C |
Contractor – Single Transaction |
30,000 |
1 |
2 |
No |
Credit or payment (earlier) |
|
Contractor – During the Financial Years |
1,00,000 |
1 |
2 |
No |
Credit or payment (earlier) |
|
|
Transporter (44AE) declaration with PAN card |
– |
– |
– |
– |
||
|
194DA |
Life insurance Policy |
1,00,000 |
1 |
1 |
YES |
Payment |
|
194D |
Insurance Commission |
15,000 |
5 |
5 |
YES |
Credit or payment (earlier) |
|
194EE |
NSS (resident and non- resident) |
2,500 |
10 |
10 |
YES |
Payment |
|
194E |
Non-Resident Sportsmen or Sports Association |
20 |
20 |
No |
Credit or payment (earlier) |
|
|
194F |
Repurchase Units by MFs (resident and non- resident) |
20 |
20 |
No |
Credit or payment (earlier) |
|
|
194G |
Commission – Lottery resident and non –resident |
15,000 |
5 |
5 |
No |
Credit or payment (earlier) |
|
194H |
Commission / Brokerage |
15,000 |
5 |
5 |
No |
Credit or payment (earlier) |
|
194IA |
TDS on the transfer of certain immovable property other than agriculture land |
50,00,000 |
1 |
1 |
No |
Credit or payment (earlier) |
|
194IB |
Rent by Individual / HUF (wef 01.06.2017) |
50000/PM |
5 |
– |
No |
Credit or payment (earlier) |
|
194I |
Rent of Building and Land– F&F |
2,40,000 |
10 |
10 |
YES |
Credit or payment (earlier) |
|
Rent of Plant / Equipment/ Machinery |
2,40,000 |
2 |
2 |
YES |
Credit or payment (earlier) |
|
|
194J
|
Professional / Technical /Director fees/ royalty |
30,000 |
10 |
10 |
No |
Credit or payment (earlier) |
|
194J |
Payment to Call Centre Operators |
30,000 |
2 |
2 |
No |
Credit or payment (earlier) |
|
194LA |
Immovable Property (TDS exempted under RFCTLARR Act (w.e.f. 01.04.2017) |
– |
– |
– |
– |
|
|
194LA
|
Compensation on the transfer of a certain immovable property other than any agricultural land |
2,50,000 |
10 |
10 |
No |
payment |
|
194LB |
Income by way of interest from an infrastructure debt fund(non- resident) |
5 |
5 |
No |
Credit or payment (earlier) |
|
|
194LC |
Income by way of interest by an Indian specified company to a non-resident / foreign company on the foreign currency approved loan / long-term infrastructure bonds from outside India i.e. applicable from 1st July, 2012 |
5 |
5 |
No |
Credit or payment (earlier) |
|
|
194LD |
Interest on certain bonds and Govt. Securities (from 01-06-2013) |
5 |
5 |
No |
Credit or payment (earlier) |
|
|
195 |
Other Sum payable to a non-resident Indian citizen |
Credit or payment (earlier) |
||||
|
|
Income by way of long-term capital gains referred in Section 115E if a Non-resident Indian Citizen |
10 |
10 |
No |
||
|
Income in respect of investment made by a Non-resident citizen |
20 |
20 |
No |
|||
|
|
Income made by way of long-term capital gains referred in sub-clause (iii) of clause of sub-section (1) of Section 193 |
10 |
10 |
No |
||
|
|
Income made by way of short-term capital gains referred in Section 111A |
15 |
15 |
No |
||
|
|
Any other income made by way of long-term capital gains |
20 |
20 |
No |
||
|
|
Income made by way of interest payable by Government or an Indian concern on borrowed money or incurred debt by the Government or the Indian concern in the foreign currency (not being income by way of interest referred in Section 194LB or Section 194LC |
20 |
20 |
No |
||
|
Any other type of income |
30 |
30 |
No |
|||
TDS is not applicable on the GST and the due dates for submitting TDS are given as follows:
Section 194IA/194IB: On or before the 30th day from the end of the month when tax is deducted.
Other Sections:
- April to February (Monthly) – on or before the 7th day from the end of the month when the tax is deducted
- For March – 30th April.
As per the Section 234E of Income tax Act, 1961 if a person fails to deliver statement within the prescribed time he shall be liable to pay, a sum of rupees two hundred for every day during which the failure continues, maximum to the amount of TDS.
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