Section (194D to 194I and 194IA to 194LA, 195) - Taxation | Income Tax for assessment (Inter Level) PDF Download

Section 194D. Insurance Commission (Paid to resident)

1. Tax Deducter: Insurance companies deducts tax of insurance agent’s commission.
2. When to deduct tax at source: It is deducted at the earliest point of time. [PCD]
3. Rate of TDS: Commission payable to resident
a. Non-corporate assessee (Ind / HUF / Firm): 5%  w.e.f. 1-6-2016
b. Corporate assessee : 10%.
4. When tax is not required to be deducted at source: upto Rs. 15,000 w.e.f. 1-6-2016

Section 194DA. TDS on life Insurance Maturity Proceeds (Paid to resident)
1. Tax Deducter: Any person responsible for paying any sum under a life insurance policy, including the sum allocated by way of bonus on such policy.
2. When to deduct tax at source: It is deducted at the time of payment.
3. Rate of TDS: 1%  w.e.f. 1-6-2016
4. When tax is not required to be deducted at source: upto Rs. 1,00,000.

Section 194G. Commission, etc., on the sale of Lottery Tickets (Paid to resident as well as non resident)
1. Tax Deducter: Any person deducts tax of lottery agent’s commission.
2. When to deduct tax at source: It is deducted at the earliest point of time. [PCD]
3. Rate of TDS: 5%  w.e.f. 1-6-2016
4. When tax is not required to be deducted at source: upto Rs. 15,000  w.e.f. 1-6-2016

Note: Income arises by way of commission, remuneration or prize (by whatever name called) to lottery agent. Rate of TDS 5%.

Section 194H. commission or brokerage (Paid to resident)

1. Tax Deducter: Every person except individual or a HUF
Any individual or a Hindu undivided family, in case of Professional - whose total sales exceeds Rs. 25 lakhs Others - exceeds Rs. 1 crore during the financial year immediately preceding the financial year in which such sum is credited or paid is required to deduct tax at source.
Meaning of commission and brokerage: Commission or brokerage includes any payment made for services rendered (not being professional services) in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing, not being securities.
2. When to deduct tax at source: It is deducted at the earliest point of time. [PCD]
3. Rate of TDS: It is 5% 10% w.e.f. 1-6-2016
4. No TDS: upto Rs. 15,000 Rs. 5,000. w.e.f. 1-6-2016
Example : FD Commission / Brokerage / Order procurement / Guarantee commission / Recruitment agency, property dealer commission.

Section 194I. Payment of Rent (Paid to resident)

1. Tax Deducter: Any person except individual or a HUF
Any individual or a Hindu undivided family, whose total sales Professional exceeds Rs. 25 lakhs Others exceeds Rs. 1 crore during the financial year immediately preceding the financial year in which such sum is credited or paid is required to deduct tax at source.
“Rent” means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land or any building (including factory building), together with plant, machinery or equipment, furniture, fittings and the land appurtenant thereto, whether or not such building is owned by the payee. (Advance payment of rent is subjected to TDS).
2. When to deduct tax at source: It is deducted at the earliest point of time. [PCD]
3. Rate of TDS: Rent payable to any resident whether Ind / HUF / Firm / Domestic Company
a. For use of any machinery or plant or equipment : 2%
b. For other asset (building, furniture and fixtures) : 10%
4. When tax is not required to be deducted at source:
a. upto Rs. 1,80,000 for each co-owner.
b. Where the rent is payable to the Govt./ RBI / Corporation established under Central Act / Mutual Fund specified u/s 10(23D).
c. Where the rent is payable to a local authority.

Section 194IA. TDS on transfer of Immovable Property (other than agricultural land) (Paid to resident)

1. Tax Deducter: Any person who is buyer of the property. (no need of having TDCAN).
2. When to deduct tax at source: At the time of credit of such sum to the account of the transferrer or at the time of payment of such sum in cash or by issue of cheque or draft or by any other mode, whichever is earlier.
3. Rate of TDS: It is 1% of the payment. The tax is to be deposited within 30 days from the end of the month in which deduction is made.
4. No TDS: Less than Rs. 50,00,000.

Section 194J. Fees for Professional or Technical Services (Paid to resident)

1. Tax Deducter: Any person except individual or a HUF
Any individual or a Hindu undivided family, whose total sales Professional exceeds Rs. 25 lakhs Others exceeds Rs. 1 crore during the financial year immediately preceding the financial year in which such sum is credited or paid is required to deduct tax at source.
Income arises by way of

Meaning of professional services: It means services rendered by a person in the course of carrying on a legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or such other profession as is notified by the Board for the purposes of section 44AA.
2. When to deduct tax at source: It is deducted at the earliest point of time. [PCD]
3. Rate of TDS: The tax is deducted @ 10%
4. No TDS: upto Rs. 30,000 for each type of income separately. To apply threshold limit the above payments cannot be clubbed. Threshold limit do not apply to payment made to director. Fees for personal purpose no TDS.

P1 : Compute amount of tax deduction at source on the following payments made by M/s S Ltd. as per the provisions of the Income Tax Act 1961.

Ans : (i) No TDS u/s 194C (ii) TDS u/s 194J @ 10% on Rs. 40,000. No TDS on Rs. 20,000. (iii) No TDS as per S 194C. (iv) No TDS since it is sale of goods. (v) No TDS u/s 194LA since payment do not exceeds Rs. 2,50,000. (vi) TDS @ 5% on Rs. 16,000 u/s 194H.

Section 194LA. Compulsory Acquisition of Certain Immovable Poperty (Paid to Resident)

1. Tax Deducter: Govt.
2. When to deduct tax at source: At the time of payment.
3. Rate of TDS: It is 10% of the payment.
4. No TDS: upto Rs. 2,50,000 Rs. 2,00,000. w.e.f. 1-6-2016
Note 1 : Compulsory acquisition of agricultural land by Govt. is fully exempt u/s 10(37) therefore no TDS

Section 195. Payment to Non-Resident and Foreign Companies
1. Tax deductor: Any person responsible for paying to a non-resident or to a foreign company any income except salaries.
2. When to deduct tax at source: At the time of credit of payees account or payment whichever is earlier. [PC]
3. Rate of TDS: Covered under chapter XII. Interest u/s 115A 20%. R/FTS 10% / 20% / 30%. Covered under chapter XIIA. Foreign Company 40%. Others 30%
4. Tax deductee can make an application to the Assessing Officer to determine lower rate of TDS chargeable. [197]
5. Surcharge and education cess wherever applicable shall be added.