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What is TDS ?

TDS (Tax Deducted at Source) is an indirect system of deduction of tax according to the Income Tax Act, 1961 at the point of generation of income. Tax is deducted by the payer and is remitted to the government by him on behalf of the payee. A TDS Return is a quarterly statement which has to be submitted to the Income Tax Department of India. Submitting TDS Return is mandatory if you are a deductor. It has details of TDS deducted and deposited by you.

Frequently Asked Questions

TAN stands for Tax Deduction Account Number. It is 10 digit alphanumeric number required to be obtained by all persons who are responsible for deducting or collecting tax. Under Section 203A of the Income Tax Act, 1961, it is mandatory to quote Tax Deduction Account Number (TAN) allotted by the Income Tax Department (ITD) on all TDS returns. The procedure for application of TAN is very simple and can be done online by filling up Form 49B.

Call financialtaxhelp @+91- 9826051141, in order to Apply For TAN.

TDS certificates are issued by the deductor (the person who is deducting tax) to the deductee (the person from whose payment the tax is deducted). There are mainly two types of TDS certificates issued by the deductor.

1.Form 16: which is issued by the employer to the employee incorporating details of tax deducted by the employer throughout the year, and
2.Form 16A: which is issued in all cases other than salary.

Persons responsible for paying salary are liable to deduct tax on estimated salary at the prescribed rate of 15% subject to following:
Exemption Limit: No tax is required to be deducted at source unless the estimated salary exceeds basic exemption limit.

Exempt allowances: Allowances such as LTC, HRA, conveyance, traveling exempt as per prescribed limits and other perquisites not forming part of salary should be deducted from total salary while calculating taxable salary.

Other deductions: Other deductions such as deductions under section 80C, 80CCC, 80CCD, 80CCG, 80D, 80DD, 80DDB, 80E, 80EE, etc. should be considered before the calculation of tax on salary.

If after comprehensive calculation of allowable allowances, taxable perquisites and deductions under chapter VI-A, income from salary head exceeds a sum of basic exemption limit, then tax has to be deducted by the employer @ 15% on the amount over and above the basic exemption limit.

For example, the salary of Mr. A arrives at Rs 2,80,000/- assuming that all the allowances, perquisites, and deductions have been taken into consideration, tax @ 15% on Rs 30000/- (2,80,000 – 2,50,000) shall be deducted by the employer.

Hence, provisions of TDS shall attract only if minimum salary is above the basic exemption limit.

SectionNature of incomeRate of TDS
192SalaryOn the average rates on the basis of per rates for individuals. (30% if no Valid PAN)
192APayment of accumulated balance due of Employees’ Provident Fund Scheme, 1952, to Employess which is taxable in their hand
(w.e.f 01-06-15)
10%

(30% if no Valid PAN)

193Interest on securities*

a) any debentures or securities for money issued by or on behalf of any local authority or a corporation established by a Central, State or Provincial Act;

b) any debentures issued by a company where such debentures are listed on a recognised stock exchange in accordance with the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and any rules made thereunder;

c) any security of the Central or State Government;

d) interest on any other security

10%

(20% if no Valid PAN)

194Dividend other than the dividend as referred to in Section 115O10%

(20% if no Valid PAN)

194AInterest other than
“Interest on securities”
10%

(20% if no Valid PAN)

194B /194BBIncome by way of winnings from lotteries, crossword puzzles, card games and other games of any sort and Income by way of winnings from horse races30%

(30% if no Valid PAN)

194CPayment to
contractors/ sub-
contractors
2% – For payments to
contractor/Sub-contractor
who is not an
Individual/HUF(20% if no Valid PAN)
1% – For payment to
contractor/Sub-contractor
who is an Individual/HUF(20% if no Valid PAN)
194DInsurance Commission10% from 01.04.2016 to 31.05.2016

5% wef 01.06.2016)

(20% if no Valid PAN)

(Please refer Note

194DAPayment under life
insurance policy
(including Bonus)
2%

(1% wef 01.06.2016)

(20% if no Valid PAN)

194EPayment to Non-Resident Sportsmen or Sports Association20%

(20% if no Valid PAN)

194EEPayment in respect of deposit under National Savings scheme (NSS)20% (1-April-2016 to 31-May-2016)

10% (on or after 1-Jun-2016)

(20% if no Valid PAN)

194FPayment on account of repurchase of unit by Mutual Fund or Unit Trust of India20%

(20% if no Valid PAN)

194G

 

Commission on sale of lottery tickets

 

10% from 01.04.2016 to 31.05.2016

5% wef 01.06.2016

(20% if no Valid PAN)

194HPayment of commission
brokerage
10% from 01.04.2016 to 31.05.2016

5% wef 01.06.2016

(20% if no Valid PAN)

194IRent10% – If rent is for land,
building or furniture(20% if no Valid PAN)
2% – If the rent is for
Machinery, Plant or
Equipment(20% if no Valid PAN)
194IA ((See note-8)Payment on transfer of certain immovable property other than agriculture land.1%

(20% if no Valid PAN)

194IBRent payable by an individual or HUF not covered u/s. 194I (W.E.F. from 01.06.2017)

 

Threshold limit Rs. 50,000/- per month. TDS to be deducted @ 5%
194ICPayment of Consideration (not being in kind) under Joint Development Agreement or other similar agreementThreshold limit Rs. Nil TDS to be deducted @ 10% (Applicable from 01.04.2017)
194JAny sum paid by way of

a) Fee for professional services,

b) Fee for technical services

c) Royalty,

d) Remuneration/fee/commission to a director or

e) For not carrying out any activity in relation to any business

f) For not sharing any know-how, patent, copyright etc.

10%

2% in case of payments received or credited to a payee, being a person engaged only in the business of operation of call center wef 01.06.2017.

(20% if no Valid PAN)

194KIncome in respect of UnitsOmitted w.e.f 01.06.2016 as Section was non-operational.
194LPayment of Compensation on acquisition of Capital AssetOmitted w.e.f 01.06.2016 as Section was non-operational
194LAPayment on transfer of certain immovable property other than agricultural land

(Read Note-8)

10%

(20% if no Valid PAN)

194LBPayment of interest on infrastructure debt fund to non-resident or foreign company5%#

(20% if no Valid PAN)

194LBACertain income from units of a business trust(applicable from 01.10.201410% #

(20% if no Valid PAN)

194LBA194LBA – Certain income from units of a business trust to non-resident (applicable from 01.10.2014)5%#

(20% if no Valid PAN)

194LBBInvestment fund paying an income to a unit holder [other than income which is exempt under Section 10(23FBB)] shall deduct tax therefrom (with effect from 01.06.2015).10% from 1-April-2016 to 31-May-2016

40% For Non Residents (1-Jun-2016 to 31-Mar-2017)

30 % For Non Residents (on or after 1-Jun-2016 )

(20% or Rate Applicable whichever is higher if no Valid PAN)

194LCPayment of interest by an Indian Company or a business trust in respect of money borrowed in foreign currency under a loan agreement or by way of issue of long-term bonds (including long-term infrastructure bond)5%#

Concessional rate of five per cent TDS on interest payment under this section will now be available in respect of borrowings made before the 1st July, 2020.

194LDPayment of interest on rupee denominated bond of an Indian Company or Government securities to a Foreign Institutional Investor or a Qualified Foreign Investor5%
196AForeign comp unit holder of MF10 % In case of a Company

20% In the case of a person other than a company

196BIncome from units (including long-term capital gain on transfer of such units) to an offshore fund10%

(20% if no Valid PAN)

196CIncome from foreign currency bonds or GDR (including long-term capital gains on transfer of such bonds) (not being dividend)10%

(20% if no Valid PAN)

196DIncome of FIIs from securities20%

(20% if no Valid PAN)

Numerous transactions are covered under the purview of TDS sections and calculation of TDS can be tricky in some sections.

Call FinancialTaxHelp @9826051141 to make the calculation clear.

Once tax is deducted the deductor should deposit the tax deducted with Central Government within time limit specified in the table below :

Type of DeductorPayments made between April – FebPayments made in March
Government

Without Challan: Same day

With Challan: On or before 7th of next month

Without Challan: Same day

With Challan: On or before 7th of next month

Other than GovernmentOn or before 7th of next monthOn or before 30th April
Other than Government (payment u/s 194IA)On or before 30th of next monthOn or before 30th of next month