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Tax Deduction at Source

Tax Deduction at Source (TDS)

Tax Deducted At Source | Taxation Services in India

TDS (Tax Deducted at source) which is required to be deducted while making payment to the parties for defined service at a specified rate as and when party crosses the threshold limit. The payment of tax is in the hand of recipient, Purchaser to make payment to the party after deducting TDS. For deducting TDS Tax Deduction and Collection number (TAN) is required.

Tax Deducted at source

In TDS the responsibility to pay tax gets diversified as the person deducting TDS is required to deposit the tax deducted to the central government. TDS Returns are filed quarterly and payment for challan is made monthly.

TDS provision applies to all the business whether small or large same is the provision for the proprietor, firm, companies. The payment of expense of a person is income in the hand of recipient Thus the payer is under a liability to deduct tax at the given rates while making payment to the parties. For small payments which don’t cross the prescribed limit the TDS provision doesn’t apply.

Online TDS return is a statement given by the income tax department every quarter. It is necessary for every deductor to deduct tax and pay to the income tax.

Partnership Firm Registration

TDS Rate

Section 192

  • This section applies on payment of Salaries by Employers.
  • It is calculated on the basis of Slab rate prescribed by Income tax.

Section 192A

  • Section 192 A is for withdrawal of EPF before 5 years then TDS is deducted under section 192A.
  • If the amount of Withdrawal is 50,000 or more than TDS is deducted @ 10% for individuals.

Section 193

  • Section 193 is for deduction of TDS on payment of interest on securities by the company.
  • The prescribed limit for deduction of tax under section 193 is 10,000.
  • The Rate of TDS Deduction is 10% for individuals as well as other. The TDS rate was reduced to 7.5% from 14th may 2020 to 31st march 2021.
Benefits of partnership Registration

Documents required to file TDS(Tax Deducted at Source)

Documents Required For Partnership Registration

The following documents have to be submitted for filing the TDS

  • TAN details
  • PAN details
  • The period for which TDS has to be filed
  • Date of incorporation of the business
  • No. of transactions for filing TDS
  • Name of the entity - Proprietorship/ Partnership/ Company/ LLP

TDS (Tax Deducted at source)

Section 193

  • Section 193 is also for interest on securities for money issued on behalf of local authority.
  • The threshold limit is Rs 5000
  • The Rate of TDS Deduction is 10%.
  • The Rate of TDS reduced from 10% to 7.5% from 14th may 20 to 31st march 2021.

Section 194

  • Section 194 is for payment of Dividend
  • The Prescribed limit for deduction of tax is 5000.
  • The Rate of TDS is 10% for individual as well as other firms. The TDS rate was reduced to 7.5% from 14th may 2020 to 31st may 2021.

Section 194A

  • Section 194A is for deduction of tax on payment of interest by bank.
  • The Prescribed limit for deduction of tax is 40,000 for Non-citizen and 50,000 for Senior Citizen.
  • The Rate of Deduction is 10% for individual as well as other firms. The TDS rate was reduced to 7.5% from 14th may 2020 to 31st may 2021.

Section 194B

  • Section 194B is for payment of tax on prize won from lottery, reality shows.
  • The Prescribed limit for deduction of tax is 10,000 and above.
  • The Rate of Deduction is 30% for individual as well as other.

Section 194C

  • Section 194C is TDS deducted on payment to contractors.
  • The Prescribed limit for deduction of tax is 30,000 on single bill or aggregate of, 100000 within the financial year.
  • The Rate of Deduction is 1% for Individual/HUF and 2% for others. TDS rate was reduced to 0.75% from 1% and 1.5% from 2% from 14th may 2020 to 31st march 2021.

Section 194D

  • Section 194D is for deduction of TDS on payment of insurance commission by insurance company.
  • The Prescribed limit for deduction of tax is 15,000.
  • The Rate of Deduction is 5% for individual and 10% for others. The TDS rate was reduced to 3.75% from 5% from 14th may 2020 to 31st may 2021.

Section 194DA

  • Payment in respect of maturity of life insurance policy.
  • The Prescribed limit for deduction of tax is 100000
  • The Rate of Deduction is 5%.TDS rate was changed from 5% to 3.75% from 14th may 2020 to 31st march 2021.

Section 194DE

  • This Section is with respect to deduction of TDS on payment to NRI sportsman.
  • There is no limit for Deduction
  • The Rate of Deduction is 20% for individual and others.

Section 194F

  • This section is for deduction with respect to repurchase of units by Mutual Fund companies.
  • There is no limit for deduction under this section
  • The Rate of Deduction is 20% for individual and others. TDS rate was reduced from 20% to 15% from 14th may 2020 to 31st march 2021.

Section 194G

  • Section 194G is for deduction of tax under payment of commission from lottery.
  • The limit for deduction is 15000 and above.
  • The Rate of Deduction is 5% for resident as well as Non -resident. TDS rate was reduced from 5% to 3.75% for resident from 14th may 2020 to 31st march 2021.

Section 194H

  • Section 194H is for deduction of TDS on payment of commission and Brokerage.
  • The Prescribed limit for Deduction of TDS is up to 15000 and above.
  • The Rate of Deduction is 5 % for individual and other. TDS rate was reduced from 5% to 3.75% from 14th may 2020 to 31st march 2021.

Section 194I

  • Section 194I is for deduction of TDS on rent, building, and furniture payment.
  • The Prescribed limit for TDS deduction is 240000 and above.
  • The Rate of Deduction is 10% for individual and other. TDS rate was reduced from 10% to 7.5% from 14th may 2020 to 31st march 2021.

Section 194I

  • Section 194I is also for deduction of TDS on rent of plant, machinery and equipment's.
  • The Prescribed limit for deduction is 240000.
  • The Rate of Deduction is 2% for individuals and other. TDS rate was reduced from 2% to 1.5% from 14th may 2020 to 31st march 2021.

Section194IB

  • This section is for deduction of tax under payment made on account of transfer of immovable property other than agriculture land.
  • The limit for deduction is 50 lakh and above.
  • The Rate of Deduction is 1% for individual as well as other. TDS rate was reduced from 1% to 0.75% from 14th may 2020 to 31st march 2021.

Section194IC

  • This section is applicable for non-resident and deduction of Payment under Joint Development Agreements to Individual/HUF.
  • There no limit for deduction.
  • The Rate of Deduction is 10% for individual as well as other. TDS rate was reduced from 10% to 7.5% from 14th may 2020 to 31st march 2021.

Section 194J

  • Section 194 J is for deduction of TDS on payment to professional fees, Technical Fees and Payment to call center operator.
  • The Prescribed limit for deduction is 30000.
  • The Rate of Deduction is 10% for individual and other of professional fees
  • The Rate of Deduction is 2% for individual and other of Technical Fees and Payment to call center operator.
  • TDS rate was reduced from 10% to 7.5% for professional fees and 2% to 1.5% for Technical Fees and Payment to call center operator from 14th may 2020 to 31st march 2021.

Section 194K

  • Section 194 K is for deduction of TDS on payment for Payment of any income in respect of (a) units of a mutual fund as per section 10(23D); or (b) the units from the administrator; or (c) units from specified company
  • The Prescribed limit for deduction is 5000.
  • The Rate of Deduction is 10%.
  • TDS rate was reduced from 10% to 7.5% from 14th may 2020 to 31st march 2021.

Section 194 LA

  • This section is for deduction of tax under compensation payment on transfer of immovable property other than agriculture land.
  • The Prescribed limit is 250000 and above.
  • The Rate of Deduction is 10% for individual as well as other. TDS rate was reduced from 10% to 7.5% from 14th may 2020 to 31st march 2021.

Section 194LB

  • This section is for interest from infrastructure Debt bonds
  • The Rate of Deduction is 5%.

Section 194K

  • This section is for deduction of tax on income from mutual funds units.
  • There is no Prescribed limit for deduction
  • The Rate of Deduction is 10%.TDS rate was reduced from 10% to 7.5% from 14th may 2020 to 31st march 2021.

Section 194M

  • This section applies to payment paid to a residential individual for carrying any contractual work or professional service exceeding 50 lakhs, they are not required to get their accounts audited after exceeding the prescribed limit.
  • The Rate of Deduction is 5%. TDS rate was reduced from 5% to 3.75% from 14th may 2020 to 31st march 2021.

Section 194 N

  • This section applies deduction of tax on cash withdrawal when
  • - Amount is more than Rs.20 lakh but up to Rs. 1 crore and the Rate of Deduction is 2 %.
  • - Amount exceeds Rs. 1 crore (Applicable from 01.07.2020) and the Rate of Deduction is 5 %.

Section 194 O

  • This section applies to Applicable for e-commerce operator for the sale of goods or provision of services facilitated by it through its digital or electronic facility or platform (Applicable from 01.10.2020).
  • The Rate of Deduction is 1%. The rate of TDS was reduced from 1% to 0.75% from 14th may 2020 to 31st march 2021.

Section 195

  • This Section applies to income from investment by a non-resident Indian.
  • The Rate of Deduction is 20%.

Section 195

  • This section applies to deduction of TDS on Royalty, Fees for Technical Services.
  • The Rate of Deduction is 10%.

Section 195

  • This section applies to payment of TDS on Interest income payable by the Government.
  • The Rate of Deduction is 20%.

Section 195(A)

  • This section applies to income from long term capital gains
  • The Rate of Deduction is 10%

Section 195(B)

  • This section applies to deduction for income from short term capital gains
  • The Rate of Deduction is 15%

Section 196 A

  • Income in respect of units of mutual funds under clause 23D.
  • The Rate of Deduction is 20%.

Section 196 B

  • Section 196 B is for Income from units to an offshore funds.
  • The Rate of Deduction is 10%.

Section 196C

  • This Section is for Income from foreign currency bonds or GDR of an Indian company.
  • The Rate of Deduction is 10%.

Section 196 D

  • This Section is for income from foreign institutional investor from securities.
  • The Rate of Deduction is 20%.

Due Date of Filing of TDS:

The payment for TDS is done on monthly basis and is required to be submit till the 7th of the next month otherwise interest and late fees is imposed @ 1.5% per month and full month is counted from the date of delayed Payment.

  • TDS Return is filed on quarterly basis otherwise late fees of Rs 200 will be imposed per day; the liability is limited to the amount of TDS.
  • 1st Quarter (1st April to 30thJune) due date is 31st July.
  • 2nd Quarter (1st July to 30th September) due date is 31st October.
  • 3rd Quarter (1st October to 31st December) due date is 31st January.
  • 4th Quarter (1st January to 31st March) due date is 31st May are the due dates for filing TDS Returns.

TDS RETURN FORMS

Form 24Q: According to section 192 of the income tax Act 1961, an employer has to deduct TDS while making payment to the employees if salary of employee exceeds the limit of 2.5 lakh. An employer has to submit form 24Q for filing salary TDS of the employee. Form 24Q is a quarterly statement of payment that has been made to employee and the TDS that has been deducted by the employer.

Form 26Q Form 26Q is used to file TDS Return for the tax deduction other than salary. The form reflects the total amount that is paid in a quarter and TDS amount that is deducted by the deductee.

Form 27EQ: Form 27EQ contains all the details related to Tax collected at source (TCS) According to section 206c of income tax act form 27EQ Return is to be filled quarterly.

Q1. Is Pan mandatory for deductors and employees?

Yes Pan is mandatory as Tax deduction will reflect on the Pan number otherwise it won’t be visible when you fill your Return.

TAN is a 10 digit collection number which is required by a person who is liable to deduct TDS and file TDS return, Tan number is noted in all TDS certificate, failure to apply for TAN results in penalty of 10000.

For Deducting TDS he shall have Tan number and it should be quoted in all the certificates of TDS. He shall deduct TDS and deposit it to the Government.

TDS is deposited to the government online through E- payment option.

Yes, we can Revise TDS Return after filing the Return without any penalty.

The Documents for TDS Return are TAN details, PAN details, Date of incorporation of the business, transaction details of TDS etc.