Applicability of TDS?

TDS is applicable to all business except an individual or HUF whose books of accounts are not required to be audited under section 44AB of the Income-tax Act, 1961. However, Individuals and HUF whose accounts are not audited required to deduct TDS under section 194IB and 194M.

What is TAN and How to apply for TAN?

TAN stands for Tax Deduction Account Number. It is a 10 digits alphanumeric number require 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 on all TDS returns

The procedure for the application of TAN is very simple and One can do online by filling up Form 49B.

What is the specified payment in TDS?

TDS is applicable on almost all the transactions, except for a few. The nature of such specified payments along with TDS rates are as follows:-

Category A - When the Recipient/Deductee is Resident

Section	Nature of Payment	Threshold Limit(Amount in Rs.)	Individual / HUF TDS Rate (%)	Others TDS Rate (%)
192	Salaries	Basic Exemption Limit of Employee	Normal or Special Tax Rate
193	Interest on Securities	Debentures-Rs.5,000/-	10	10
		8% Savings (Taxable) Bonds 2003 or 7.75% Savings (Taxable) Bonds 2018- Rs.10,000/-	10	10
		Other Securities- No Limit	10	10
194	Dividends	Rs.5,000/-(w.e.f. 01.04.2020)	10	10
194A	Interest other than interest on securities / debentures	For Senior Citizen- Rs.50,000/-	10	10
		For Others- Rs.40,000/-	10	10
	Interest (Others)	Rs.50,000/-	10	10
194B	Winning from Lotteries	Rs.10,000/-	30	30
94BB	Winning from Horse Race	Rs.10,000/-	30	30
194C	Payment to Contractor/Sub-Contractor	Single Transaction- Rs.30,000/-	1	2
		Aggregate Transaction-Rs.1,00,000/-	1	2
194D	Insurance Commission	Rs.15,000/-	5	10
194DA	Income for the Insurance pay-out, while payment of any sum in respect of a life insurance policy.	Rs.1,00,000/-	5	5
194EE	Payment of amount standing to the credit of a person under National Savings Scheme (NSS)	Rs.2,500/-	10	10
194F	Payment for Repurchase Units by UTI or MF	No Limit	20	20
194G	Commission on Sale of Lottery Tickets	Rs.15,000/-	5	5
194H	Commission / Brokerage	Rs.15,000/-	5	5
194I	Rent	P & M -Rs.2,40,000/-	2	2
		L/B/F&F-Rs.2,40,000/-	10	10
194IA	Transfer of certain immovable property other than agriculture land	Rs.50,00,000/-	1	1
194IB	Payment of rent not covered u/s 194I	Rs. 50,000/- per month	5
194IC	Payment under Joint Development Agreement	No Limit	10
194J	Any sum Paid by way of: Professional Services, Not Carry out any activity concern Business, Not Sharing Know-How/Patent/Copyright, etc.	Rs.30,000/-	10	10
	Remuneration/Fee/Commission to Director	No Limit	10	10
	Technical Services, Royalty, Technical Services but payee engage in business of call center.	Rs.30,000/-	2	2
194K	Payment of any Income for Units of a MF	No Limit	10	10
194LA	Payment of compensation on acquisition of certain immovable property	Rs.2,50,000/-	10	10
194LBA(1)	Certain Income Distributed by a business trust to its unitholders.	No Limit	10	10
194LBB	Certain Income paid to unitholder in respects of units of an investment fund	No Limit	10	10
194LBC(1)	Income from Investment in Securitization Fund	No Limit	25	10
194M	Certain Payments not liable to deduct TDS u/s 194C, 194H and 194J.	Rs.50,00,000/-	5
194N	Cash Withdrawal: Exceed Certain Amount	Rs.1 Crore	2	2
	Person Not File ITR for Last 3 Years and Original ITR Due Date Expired	Rs.20 Lakh to Rs.1 Crore	2	2
		Rs.1 Crore	5	5
194O	Payment for Sale of Goods/Services by E-Commerce Operator through Digital or Electronic Facility	Rs.5,00,000/-	1	1
194P	Payment of Pension or Interest to Specified Senior Citizen (75Y or more)	Basic Exemption Limit of Senior Citizen or Super Senior Citizen	Normal Tax Slab Rates
194Q	Payment for Purchase of Goods	Rs.50,00,000/-	0.10	0.10
194R	Perquisite or Benefit to Business/Profession	Rs.20,000/-	10	10
194S	TDS on transfer of Virtual Digital Assets	Specified Person- Rs.50,000/-	1	1
		Other- Rs.10,000/-	1	1

Note : Tax is to be deducted exclusive of surcharge and Health & Education cess except in case of salary.

Category B - When the Recipient / Deductee is Non-Resident or Foreign Company

Section	Nature of Payment	Threshold Limit(Amount in Rs.)	NR	FC
192	Salaries	Basic Exemption Limit of Employee	Normal Slab Rate
192A	Premature withdrawal from EPF	Rs.50,000/-	10
194B	Winning from Lotteries	Rs.10,000/-	30	30
194BB	Winning from Horse Race	Rs.10,000/-	30	30
194E	Non Resident Sportsmen or Sports Association	No Limit	20	20
194EE	Payment of amount standing to the credit of a person under National Savings Scheme (NSS)	Rs.2,500/-	10
194F	Payment for Re-purchase of units of MFs or UTI	No Limit	20
194G	Commission on sale of lottery tickets	Rs.15,000/-	5	5
194LB	Income by way of interest by infrastructure debt fund	No Limit	5
194LBA(2)	Income of a business trust from SPV: Interest Income	No Limit	5	5
	Dividend Income which hold entire share capital (exempt govt.)distribution to its unit holders		10	10
194LBA(3)	Rental income payment of assets owned by the business trust to the unit holders of such business trust	No Limit	30	40
194LBB	Certain income paid to a unit holder in respect of units of an investment fundd	No Limit	10	40
194LBC	Income from investment in securitization fund received to a domestic company	No Limit	10	40
194LC	Payment of interest for the loan borrowed in foreign currency by an Indian company or business trust against the issue of long-term bonds listed in IFSC	No Limit	4	4
194LD	Payment of interest on bond (rupee-denominated) to FII or a QFI	No Limit	5	5
194LD	Cash Withdrawal: Exceed Certain Amount	Rs.1 Crore	2
	Person Not File ITR for Last 3 Years and Original	Rs.20 Lakh to Rs.1 Crore	2
		Rs.20 Lakh to Rs.1 Crore	2
	ITR Due Date Expired
195	Income on investments made by NRI citizen	No Limit	20
195	Income by way of LTCG referred to in Section 115E in case of a NRI Citizen	No Limit	20	5
195	Income by way of LTCG u/s 112(1)(c)(iii)	No Limit	10	10
195	Income by way of LTCG u/s 112A	No Limit	10
195	Income by way of STCG u/s 111A	No Limit	15	15
195	Any other income by way of LTCG	No Limit	20	20
195	Interest payable on money borrowed by the government or Indian concern in foreign currency	No Limit	20	20
195	Income from royalty payable by the Indian concern or the government, for the copyright in a subject referred in the first proviso of section 115A or computer software referred to in the second proviso of section 115A	No Limit	10	10
195	Income from royalty payable by government or Indian concern in pursuance of an agreement on matters included in the industrial policy	No Limit	10
	If the agreement for such royalty payment is entered in between 31st March 1961 and 1st April 1976			50
	If the agreement for such royalty payment is entered after 31st March 1976			10
195	Income from technical fees payable by government or Indian concern in pursuance of an agreement on matters related to industrial policy	No Limit	10
	where the agreement is made after February 29, 1964 but before April 1, 1976			50
	If the agreement for such payment is entered after 31st March 1976			10
195	any other income	No Limit	30	40
196B	Income (including LTCG) from units of an offshore fund	No Limit	10	10
196C	Income (including LTCG) from foreign currency bonds or GDR of an Indian company	No Limit	10	10
196D	Income (excluding dividend and capital gain) from Foreign Institutional Investors.	No Limit	20	20

Note : Tax is to be deducted inclusive of surcharge and Health & Education cess wherever applicable. The detail is as under:-

For all Assessee: Higher Education Cess: 4%

If the recipient is a resident/non-resident Individual/ HUF/ AOP/ BOI/ Artificial juridical person:

Payment amount/Income Amount	Surcharge (%)
Less Than Rs. 50 Lakh	-
Exceeds Rs. 50 lakh but doesn't exceed Rs. 1 crore	10
Exceeds Rs. 1 crore but doesn't exceed Rs. 2 crore	15
Exceeds Rs. 2 crore but doesn't exceed Rs. 5 crore	25
Exceeds Rs. 5 crore	37

When the recipient is a non-resident co-operative society/firm

Payment amount	Surcharge (%)
Less Than or Equal to Rs. 1 Crore	-
More than Rs.1 Crore	12

If the recipient is a non-domestic company

Payment amount	Surcharge (%)
Less Than or Equal to Rs. 1 Crore	-
More Than Rs.1 Crore but less than Rs.10 Crore	2
More Than Rs.10 Crore	5

What is the due date for depositing the TDS to the government?

• The TDS deducted is to be deposit to the government by the 7th of the subsequent month. For March month TDS can be deposit till 30th April.
• For TDS deduct on rent and purchase of property, the due date is 30 days from the end of the month in which TDS deduct.

How to deposit TDS?

• Tax Deducted at Source has to be deposit using Challan ITNS-281 on the government portal.

How to file TDS Returns?

• Filing of TDS return is mandatory for all the persons who have deducted TDS.
• TDS return is to submit quarterly, in which various details are required to furnish like:
  • TAN of the deductor
  • Nature of payment
  • Detail of amount paid to the deductee
  • Amount of TDS deducted
  • Date of payment credited to the deductee
  • Date of tax deducted at source
  • PAN of deductee
  • Details of TDS Challan

Different forms are prescribe by the government for filing returns depending upon the purpose of the deduction of tax at source.
Various types of return forms and detail of due date of filing of TDS return is as under:-

Form No.	Nature of transaction	Due date of filing of return
24Q	TDS on salary	1st Quarter - 31st July 2nd Quarter - 31st October 3rd Quarter - 31st January 4th Quarter - 31st May
26Q	Tax deducted from income generated from other sources other than salary
27Q	TDS on all payments made to non-residents except salaries
26QB	TDS on Sale of Property	30 days from the end of the month in which TDS deduct
26QC	TDS on Rent	30 days from the end of the month in which TDS deduct.

TDS Certificate

• This is a certificate issued by Deductor to the Deductee from whose income TDS was deducted while making payment.
• These certificates helps Deductee to claim the deducted amount of tax from the IT Department. There are 4 types of certificates as under: -

Form No.	Nature of Payment on which tax is deducted at source	Due Date	Issued (frequency)
16	Salary	31st May relevant assessment year	Yearly
16A	Non - Salary Payments	15 days from the due date of filing return	Quarterly
16B	Sale of property	15 days from the due date of filing return	After every respective transaction
16C	Rent	15 days from the due date of filing return	After every respective transaction

What are the Consequences of non-deduction or delay in deducting / depositing of TDS and late filing of TDS returns?

Non-Compliance of TDS provisions led to the levy of interest, fees, and penalties, which are as under:-
Consequences of non-deduction of TDS -
If a person who is responsible for deducting tax at source fails to do so, then the assessing has powers to disallow whole or part of (As per section 40a(ia) and 40a(ib) of the Income-tax Act, 1961) such expenditure for ascertaining taxable profits.

Late deduction of TDS -

In cases of late deduction of tax, interest @ 1% per month or part of the month, of the TDS amount is a charge.

Late payment of Tax Deduction at Source -

If the tax deducted but does not deposit within due time, interest @ 1.5% per month or part of the month, of TDS amount is a charge.

Fees for late filing of return of Tax Deduction at Source -

As a result of the late filing of the TDS return, fees under section 234E of the Income-tax Act, 1961 are levy @ Rs 200/- per day subject to a maximum amount of TDS until the return is a file.

Penalty for late filing of Tax Deduction at Source return -

In addition to the late fees, the Assessing Officer may direct a person who fails to file the return of TDS within the due date, to pay a penalty under section 271H of the Income-tax Act, 1961 which is minimum of Rs. 10,000/- and can be extended to Rs.1,00,000.

Note : No penalty shall be levied for the failure in filing statement of TDS / TCS, if the assessee proves that after paying tax deducted or collected along with the fee and interest, if any, he had filed the statements of TDS / TCS before the expiry of a period of one year from the time prescribed for delivering such statement.

Penalty under section 271C of the IT Act - For failure to deduct tax at source

• If any person fails to -
  • Deduct the whole or any part of the tax as required by the provisions of TDS or
  • Pay the whole or any part of the tax as required by -
    • Tax on distributed profits of domestic companies (Section 115-O(2) of the IT Act)
    • TDS on winnings from lottery or crossword puzzle (Second proviso to Section 194B of the IT Act)

In such cases, person shall be liable to pay, by way of penalty, a sum equal to the amount of tax, which such person failed to deduct or pay as aforesaid.

Note : Any penalty imposable under section 271C(1) of the IT Act shall be imposed by 'The Joint Commissioner'.

TCS Return Filing

Tax Collected at Source (TCS) is a system introduced by the government which works on the concept that where a person selling specific goods is liable to collect tax from a buyer at a prescribed rate and deposits the same with the Government. TCS is an extra amount collected as tax by a seller of specified goods from the buyer at the time of sale, which is over and above the sale amount and it is remitted to the government account.

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 TCS returns. TCS is applicable on specified goods listed under Section 206C of the Income Tax Act, 1961. Non-Compliance of TCS Provisions led to levy of interest, fees, and penalties.

What is the specified payment in TCS?

TCS is applicable on following transactions. The nature of such specified payments along with TCS rates are as follows:-

Section	Collector (Seller)	Collectee (Buyer)	Nature of Transaction	Rate
206C(1)	Any Person other than Individual/HUF ( For Ind./HUF require to collect TCS, if last year T/O > 1Cr. In case of Business G/R > 50 Lakhs in case of Profession	Any Person other Than: Buy for Person Use Public Sector Company CG, SG, Embassy, High Comm., Legation, Consulate, Trade Representation and Clubs.	Tendu Leaves	5
			Timber & Other Forest Products	2.5
			Alcoholic Liquor for Human Consumption	1
			Scrap	1
			Minerals Being Cool, Lignite, Iron Ore	1
206C(1C)	Same as Section 206C(1)	Any Person other than public sector company	Leasing or Licensing or Transferring any right or interest in any- Parking Lot Toll Plaza Mine or Quarry For the purpose of Business	2
206C(1F)	Same as Section 206C(1)	Any Person other than: Public Sector Co. Engaged in passenger carry business CG, SG, Embassy, High Comm, Legation, Consulate, Trade Representation, Local Authority	Sale of a Motor Vehicle of the Value Exceeding Rs. 10,00,000/-	1
206C(1G)	Authorized Dealer	No TCS if Buyer is: Deduct TDS under any section CG, SG, Embassy, High Comm, Legation, Consulate, Trade Representation, Local Authority	Foreign Remittance of money more than Rs. 7 Lakh under LRS of RBI	5% of amount in excess of Rs. 7 Lakhs
	Seller of OTPP		Sale of Overseas Tour Program Package (OTPP)	5% of Sale Value
206C(1H)	Any Person whose last year T/O is more than Rs. 10 Crore	Any Person other than: CG, SG, Embassy, High Comm, Legation, Consulate, Trade Representation of a Foreign State, Local Authority Person Import goods into India or any other notified person	Sale of Goods (other than export and covered u/s 206C[(1)/(1F)/(1G)]	0.1% of Consideration in excess of Rs.50 Lakh

Due Dates for E-Filing of TCS Return

Quarter	Period	Due Date
1st Quarter	1st April to 30th June	15th July
2nd Quarter	1st July to 30th September	15th October
3rd Quarter	1st October to 31st December	15th January
4th Quarter	1st January to 31st March	15th May

Due Date for Deposit TCS Payment: 7th of next month

Form for Filing TCS Return: Form 27EQ

TCS Certificate

It is a certificate issued by the seller collecting tax at source from the buyer. The certificate of collection of tax at source has to be submitted in Form No. 27D by the seller within a week from the last day of the month in which the tax was collected.