Taxation Exam > Taxation Notes > Fast Track Quick Revision Income Tax > Tax Deducted at Source (Section 192 to 206C) Part -1
Tax Deducted at Source (Section 192 to 206C) Part -1 | Fast Track Quick Revision Income Tax - Taxation PDF Download
| Section | Nature of payment | Tax Deductor | When to deduct tax at source |
Basic Rate of TDS | No TDS upto base amount |
|
| 192 | Salary | Employer | Payment (P) | Slab rate + Ed cess | Basic exemption | |
| Other Points |
Employee can give all other income details to his employer on which tax shall be deducted. However employee cannot provide detail of losses of other heads. But he can provide losses under the head house property which the employer shall adjust while computing TDS. | |||||
| 193 | Interest on securities |
Company or Govt. |
Payment or credit whichever date is earlier (PCD) |
10% | 5,000 (listed / unlisted | ind/ huf | acc payee cheque) |
|
| No TDS also on followings |
1. DEMAT securities. Tax free securities |
2. Central / State Govt. securities. Tax free securities |
3. Interest on Gold Deposit Bonds since exempt u/s 10(15). | 4. Zero Coupon Bonds. Tax free securities |
||
| 194 | Dividend u/s 2(22)(e) Loan / advance | Closely held company |
Payment (P) | 10% | nil | |
| 10(34) | ||||||
| 194A | Other interest | All person except ind/ HUF* | Payment or credit whichever date is earlier (PCD) | 10% | 10,000 paid by Bank / Post Office |
|
| 5,000 other Interest | ||||||
| No TDS also on followings |
1. Interest to banks. |
2. Interest paid by firm to its partners | 3. Exempted interest u/s 10(15) |
4. Interest from micro banks. | ||
| 194B | Winning from Lottery/crossword puzzles |
Any person | Payment (P) | 30% | 10,000 | |
| 194BB | Winning from horse race |
Any person | Payment (P) | 30% | 10,000 | |
| 194C | Payment to contractor. Works / labour contract : Advt, Catering, TV, Transporters, Job Work. |
All person except ind/ HUF* |
Payment or credit which ever date is earlier (PCD) |
Firm / D. Co | 2% | Single : 30,000. Aggregate : 1,00,000. Personal contract : No TDS |
| Ind / HUF | 1% | |||||
| 44AE Truck + PAN | nil | |||||
| No PAN | 20% | |||||
| What is job work | Essential condition : Material is supplied by client. TDS only on labour contract. But if indivisible bill is generated for both material and labour then TDS on both labour and material. | |||||
| 194D | Insurance commission |
Any person | Payment or credit which ever date is earlier (PCD) |
Domestic Co. | 10% | Rs. 15,000 |
| Ind /HUF/ Firm | 5% | |||||
| Life insurance maturity proceeds |
Any person | Payment (P) | 1% | upto Rs. 1,00,000 | ||
| 194G | Commission on sale of lottery tickets | Any person | Payment or credit which ever date is earlier (PCD) |
5% | Rs. 15,000 | |
| 194H | Commission or brokerage other than share brokerage. |
All person except ind/ HUF* |
Payment or credit which ever date is earlier (PCD) |
5% | Rs. 15,000 | |
| Examples: | 1. Order procurement | 2. Guarantee commission |
3. Recruitmentc commission |
4. Property dealer commission |
||
| 194I | Rent | All person except ind/ HUF* |
Payment or credit which ever date is earlier (PCD) |
P & M | 2% | 1,80,000. Rent paid to Govt / Local authority / RBI |
| Building & Furniture |
10% | |||||
| 194IA | TDS on transfer of land & building other than agricultural land | Any person (buyer) | Payment or credit which ever date is earlier (PC) |
1% | less than Rs. 50,00,000 |
|
| * PY 15-16 | PY 16-17 |
| Turnover exceeds Rs. 1 Crore / 25 Lakhs | TDS is required to be deducted by Ind / HUF |
** Surcharge and education cess as applicable shall be added to basic rate for deduction of tax at source.
whether surcharge and education cess to be added to basic rate of TDS
| Any payment to | Payment to resident for | |||
| Foreign Company (R / NR) |
Other Non Resident |
Salaries | Other Payments |
|
| Surcharge | @ 2% if payment > 1 cr but do not exceed 10 Cr. |
@ 12% / (15% ind) if payment > 1 cr |
@ 15% if taxable salaries > 1 cr |
Not added |
| @ 5% if payment > 10 cr |
||||
| Education cess & SHEC |
3% | 3% | 3% | Not added |
PROCEDURE
| Section 197 | Section 197A | ||
| Title | Certificate of TDS at lower deduction or nil rate. | Declaration of nil deduction of tax. | |
| Issued by | Assessing Officer | Assessee | |
| Application by | Assessee | on its own. | |
| Income | All kinds of incomes which are subjected to TDS | Only interest income subjected to TDS u/s 193,194A and 194DA. | |
| Condition for application | If assessee is of the opinion that his final income tax amount shall be lower than tax to be deducted | For ind / HUF | For senior citizen |
| If interest < Basic exemption & Tax on TI is nil. |
If interest > Basic exemption but tax on TI is nil. |
||
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FAQs on Tax Deducted at Source (Section 192 to 206C) Part -1 - Fast Track Quick Revision Income Tax - Taxation
| 1. What is Tax Deducted at Source (TDS)? |  |
Ans. Tax Deducted at Source (TDS) is a system introduced by the Income Tax Department of India. It requires the payer to deduct a certain percentage of tax from the payment made to the payee and deposit it with the government. This system ensures that the government receives tax revenue in advance and also helps in preventing tax evasion.
| 2. Who is responsible for deducting TDS? | |
Ans. The person or entity making the payment is responsible for deducting TDS. This person or entity is known as the "payer" or "deductor" and can be an individual, a company, a partnership firm, or any other legal entity. The payer is required to deduct TDS and deposit it with the government within the specified time frame.
| 3. What are the different sections under which TDS is deducted? | |
Ans. TDS can be deducted under various sections of the Income Tax Act, 1961. Some commonly used sections for TDS deduction include Section 192 (salary payments), Section 194C (contract payments), Section 194A (interest payments), Section 194H (commission payments), and Section 206C (collection of tax at source). Each section specifies the rate of TDS to be deducted and other relevant provisions.
| 4. What is the process of filing TDS returns? | |
Ans. After deducting TDS, the payer is required to file TDS returns with the Income Tax Department. The process involves preparing and submitting Form 24Q (for salary payments) or Form 26Q (for non-salary payments). These forms contain details of TDS deducted, such as the PAN of the deductee, the amount deducted, and the tax deposited. TDS returns must be filed quarterly within the due dates specified by the government.
| 5. What happens if TDS is not deducted or not deposited on time? | |
Ans. If TDS is not deducted or not deposited on time, the payer may face penalties and interest charges. The Income Tax Department can also initiate legal proceedings against the payer for non-compliance. It is important for the payer to fulfill their TDS obligations diligently to avoid any legal consequences.
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