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TAX DEDUCTED AT SOURCE

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INDEX

Introduction
Payments covered
under the scheme of TDS.
Provisions for filing
Returns to the Income Tax
Department.
Effects of Tax Evasion
Introduction

To avoid cases of tax evasion, the Income-Tax Act has made


provisions to collect tax at source on accrual of income. Cases
included in the scheme are, generally, those where income can
be computed at the time of accrual of income. Under this
scheme, persons responsible for making payment of income
covered by the scheme are responsible to deduct tax at source
and deposit the same to the Governments treasury within the
stipulated time. The recipient of incomethough he gets only
the net amount (after deduction of tax at source)is liable to
tax on the gross amount and the amount deducted at source is
adjusted against his final tax liability. The details of the scheme
of tax deduction and collection at source are briefly discussed in
this presentation. To conclude one can say that the scheme of
TDS is only payment of tax on adhoc basis by the payer of
income on behalf of recipient.
Steps for TDS
TAN

Every deductor is required to obtain a


unique identification number called TAN
(Tax Deduction Account Number) which is
a ten digit alpha numeric number. This
number has to be quoted by the deductor in
every correspondence related to TDS
Tax Deduction & Collection Account Number

Every person deducting tax or collecting tax should


obtain a tax deduction & collection number
Such person should quote such number in every
challan for payment u/s 200 or 206C(3), in every
certificate furnished u/s 203 or u/s 206C(5)
In all the TDS returns delivered
In all other documents pertaining to such transaction
as may be prescribed in the interest of revenue.
Payment covered under the scheme of TDS.

Salary (Sec.192)
Interest on Securities (Sec.193)
Dividends (Sec.194)

Interest other than Interest on Securities


(Sec.194A)
Winnings from Lotteries or crossword puzzles (Sec.194B)
Winnings from Horse Races (Sec.194BB)

Payments to Contractors and Sub-contractors


(Sec.194C)
Insurance Commission (Sec.194D)
Payment to Non-resident sportsmen or sports association
(Sec.194E)

Payment in respect of NSC (Sec. 194EE)

Contd
Payment covered under the scheme of TDS.

Payments in respect of Repurchase of units of Mutual


Funds or UTI (Sec.194F)
Commission on Sale of Lottery Tickets (Sec.194G)

Commission or Brokerage (Sec.194H)


Rent (Sec.194I)
Fees for Professional or Technical Services
(Sec.194J)
Payment of Compensation on acquisition of certain
immovable property (Sec.194LA)
Other Sums (Sec.195)
Long term capital gain (Sec.196B)
Income or Long term capital gain from Foreign Currency
bonds/Global Depository Receipts (Sec.196C)
Contd
Income of Foreign Institutional Investors from Securities
(Sec.196D)
INTEREST OTHER THAN INTEREST ON
SECURITIES (Sec 194A)

Who is the payer Any person paying interest other than interest
on securities
Who is the recipient A Resident person
Payment covered Interest other than interest on securities
At what time TDS to be deducted. At the time of payment or at the time of credit,
whichever is earlier
Maximum amount which can be paid without If payer is banking company, co-operative
tax deduction engaged in banking business or Rs 10000/- if
Payer is any other person Rs 5000/-
Rate at which TDS to be deducted 10% if the recipient is resident non-corporate
assessee and 20% if the recipient is resident
corporate assessee
When the provisions are not applicable If the payee are Insurance companies or
financial institutions including co-operative
societies etc.
Is it possible to get the payment without tax Declaration to the payer in Form 15G or 15H
deduction or with lower tax deduction as applicable
Payments to Contractors And Sub-contractors
(Sec.194C)

Who is the payer Specified person

Who is the recipient A resident person


Rate of TDS 2%

Payment Covered Consideration for any Work Contract


At what time TDS has to be At the time of payment or at the time of credit
deducted
Maximum amount which can The tax is required to be deducted if a single payment exceeds
be paid without tax deduction Rs. 30000/- or if the aggregate payments exceed Rs. 75000/-
per annum

Is it possible to get the The recipient can make application to the Assessing Officer in
payment without tax Form No. 13
deduction or with lower tax
deduction
Commission or Brokerage (Sec.194H)

Who is the payer Any person paying commission or


brokerage
Who is the recipient Any resident person

Payment covered Commission or brokerage (not being


insurance commission)
At what time TDS to be deducted. At the time of payment or at the time of
credit, whichever is earlier
Maximum amount which can be paid If the amount of payment is Rs. 5000 or
without tax deduction less than Rs. 5000
Rate at which TDS to be deducted 10% (up to may 31, 2007 : 5%)

When the provisions are not applicable --

Is it possible to get the payment without tax The recipient can make an application in
deduction or with lower tax deduction Form No.13 to the Assessing Officer to get
a certificate of lower tax deduction or no tax
deduction
Rent (Sec.194-I)

Who is the payer Any person paying rent (not being an individual
or HUF whose books of account are not
required to be audited under section 44AB in the
immediately preceding financial year)
Who is the recipient A Resident Person
Payment covered Rent
At what time TDS to be deducted. At the time of payment or at the time of credit,
whichever is earlier
Maximum amount which can be paid Rs. 180000/-
without tax deduction
Rate at which TDS to be deducted For Plant and Machinary Rent 2% and for
For Use of and Land or Building including
Furniture etc.
Individual Huf 10%
For any other 20%
Is it possible to get the payment without The recipient can make application in Form No.
tax deduction or with lower tax 13
deduction
Fees for Professional or Technical Services
(Sec.194J)

Who is the payer Any person paying professional charges (not


being an individual or HUF whose books of
account are not required to be audited under
section 44AB in the immediately preceding
financial year)
Who is the recipient Any Person
Payment covered Professional services, technical services,
Royalty,
At what time TDS to be deducted. At the time of payment or at the time of credit,
whichever is earlier
Maximum amount which can be paid If the amount of payment during the financial
without tax deduction year is Rs. 30000 or less than Rs. 30000

Rate at which TDS to be deducted 10%

Is it possible to get the payment without The recipient can make application in Form No.
tax deduction or with lower tax deduction 13
Provisions for Filing Returns

Different Payments In case the person deducting tax is a In case the person Time-limit for submission
company or a Government deducting tax is of return by the person
department or a person whose books any other person deducting tax
are required to be audited u/s. 44AB
in the immediately preceding year or
in whose case number of deductees
in any of the quarterly statements in
the immediately year is 20 or more

Salary Form No. 24Q in Electronic format Form No. 24Q Within 15 days from the
and Form No. 27A end of each quarter (31st
May in case of last
quarter)
Payment (other Form No. 26Q in Electronic format Form No. 26Q Within 15 days from the
than salary) to a and Form No. 27A end of each quarter (31st
resident May in case of last
quarter)
Payment (other Form No. 27Q in Electronic format Form No. 27Q Within 15 days from the
than salary) to a and Form No. 27A (quarterly) (quarterly) end of each quarter (31st
non-resident May in case of last
quarter)
Issue TDS Certificates Sec. 203

Sr. Form no Periodicity Cut off Date


No.
1 16 For Annual 31st May of following financial
Salary year

2 16A Other Quarterly Within 15 days from due date


than of furnishing the TDS
salary statement under rule 31A
Dates for Payment of TDS

Deductor For MARCH For April to February

Government On or before 7th On the same day for other than


of next month for salary & on or before 7th of
salary next month for salary
Other than On or before 30th On or before 7th of next month
Government April

Special 30th April Quarterly payment on or before


Cases 7th of the month succeeding
quarter
Questions?

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Thank You!

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