September 24, 2015

Introduction
What is Tax Deducted at source ?
Income Tax is Collected/recovered at two stages, namely preassessment stage and post assessment stage. The method by which
pre-assessment tax are collected is in the following manner at different
stages namely,

Advance Tax.
Tax Deducted at source.
Tax Collected at Source.

September 24, 2015

Objectives of introduction of Tax

Deducted at Source.

It helps in reporting the correct Incomes.

It helps in checking Tax evasion.
Early collection of revenue by the Government.
It is the cheapest mode of collection of tax.
It helps to widen the tax base as more and more people are
covered.

September 24, 2015

1.The Income Tax Act requires the person on whom the responsibility
has been cast to deduct tax (at the appropriate rate(s) ) from the
payment of specified type and category.
2.The deducted sum is required to be deposited to the credit of central
Government in the prescribed mode/manner & with in the specified
time limit.
3.The Recipient (Payee/Assessee) from whose income tax has been
deducted at sources, gets the credit for such tax deducted in his
personal assessment against the tax liability.

September 24, 2015

Need for Tax Deducted at

Source

To comply with the mandatory provisions of the Act

To avoid disallowance of certain expenditure under the Income

tax act 1961.

To avoid penalty and mandatory Interest for not deducting/short

deduction/non payment/delay in payment of Tax Deducted at
Source.

To avoid Prosecution under Sec.276B of the Income Tax Act

1961.

September 24, 2015

Important Provisions of TDS

Section
192

Type of Payment
Payment of Salaries.

194A
194C

Payment of Interest ( other than interest on securities).

Payment to any contractor or Sub-Contractor.

194H
194I

Payment of Commission or Brokerage.

Payment of Rent.

194J

Payment of any Professional fees.

September 24, 2015

TDS RATES CHART

Section Nature of payments
194A
Interest From Bank
194A
Other Interest

w.e.f
01.04.15
Rs.
10000
5000

Rate in %
Individual
s& HUF

Others

10
10

10
10

30000 (75000
in year)

194C

Payment to Contractor/
Sub Contractor/

194H

Commission/Brokerage

5000

10

10

194I
194I

Rent-property
Rent-Plant/ Machinery

180000
180000

10
2

10
2

194J

Professional Fees

30000

10

10

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NOTE 1. Payment made to transporter *, TDS is not required if PAN is

provided by the Transporter.
NOTE 2. Surcharge and Cess is not applicable on TDS from 1.04.09
on any payment made to resident.
NOTE 3. If PAN is not provided by the deductee then rate as per
above table or 20% whichever is higher is to be charged (effective
from 1.04.10 section 2006AA)
* Engaged in the business of plying ,hiring or leasing goods carriages

September 24, 2015

TIME OF TAX DEDUCTION

TAX DEDUCTED

SECTIONS

AT THE TIME OF PAYMENT

192,194,194B,194BB,194EE,
194F

AT THE TIME OF PAYMENT

OR CREDIT

193,194A,194C,194D,194E,194G,
194H, 194I,194J,195

September 24, 2015

Sec. 192 Payment of Salaries

Tax is to be deducted on income chargeable under Salaries and paid by

the employer

The liability to deduct the tax arises only at the time of payment of salary.
It means if provision for salary has been made and the same has not been
paid then deduction of tax does not arise *.

Any person responsible for payment of salary, is liable to deduct the tax.
The status of the employer is not relevant for deduction of tax. The liability
to deduct the tax arises even if the person carries on business or not.

Where an employee is in employment of more than one employer, tax will

be deducted at source by the employer, which the employee chooses or
the present employer.
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 The employee may furnish to the employer details of income chargeable

to tax under other heads of income (not being loss except loss under the
head Income from House Property and tax deducted on the same). In
such a case employer shall deduct tax due on total income. However,
total amount of tax deducted should not be less than the amount of tax
deductible from salary except where the loss under the head Income
from House Property has been taken into account.

* No deduction on mere accrual of salary(CIT v. Tej Quebecor Printing Ltd[2006]151 Taxman 210) (Del)
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Rates of Taxes for Individual

Rates

Super
Senior
Citizen

Nil

Rs.
5,00,000
Nil

Senior
Citizen

Others

Rs.3,00,00 Rs.2,50,00
0
0
10%
Rs.3,00,00 Rs.
0 to
2,50,000 to
5,00,000
5,00,000
20%
Rs.5,00,00 Rs.5,00,00 Rs.5,00,00
0 to
0 to
0 to
10,00,000 10,00,000 10,00,000
Rebate U/s 87A Rs.2,000 if salary does not increase Rs.5.00
30%
More than More than More than
lacs
Rs has to be increased
Rs
Rs
The above amount
by education
cess at
10,00,000 10,00,000 10,00,000 12
2%
September 24, 2015

Sec 194A Interest other than

Interest on Securities

Any person (except on individual or a HUF) responsible for paying

interest other than interest on securities to a resident is required to
deduct tax at Source at the rate of 10% for the Financial year 2010-11.

TDS is required to be deducted either at the time of credit of such

income to the payees account or at the time of payment, whichever is
earlier.

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 No tax is deducted in case where the aggregate amount of interest

does not exceed Rs.5,000/-. In case of term deposits with banks or
Cooperative Society and Housing Finance Companies, no tax is
required to be deducted upto an aggregate interest of Rs.10,000/-.

No tax is required to be deducted in case of interest paid/credited to

any banking company/financial corporation, LIC, UTI, etc

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Sec. 194C Payment to

Contractors

Any person (other than individual and HUF) paying any sum to any
resident contractors for carrying out any work (including supply of
labour for carrying out any work) in pursuance of a contract between
the resident contractor and specified person is required to deduct tax
at source.

TDS rate is 1% if recipient is individual/ HUF or 2% for any other

person.

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 Tax is required to be deducted either the time of credit of the sum paid
to the account of the payee or at the time of payment in cash or by
cheque or by any other mode, whichever is earlier.

The tax will be required to be deducted at source where the amount

credited or paid to the contractor or a sub-contractor exceeds Rs.30,000

in a single payment or Rs.75,000 in the aggregate during the financial
year.

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Work shall include

(a) Advertising
(b)

Broadcasting and telecasting including the production of

programmes for such broadcasting or telecasting including production
of programmes for such broadcasting or telecasting;

(c) Carriage of goods or passengers by any mode of transport other than

by railways;
(d) Catering
(e) Manufacturing or supplying a product according to the requirement or
specification of a customer by using material purchased from such
customers,
but does not include manufacturing or supplying a product according
to the requirement or specification of a customer by using material
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September 24, 2015
purchase
from a person, other than such customer.

Section 194H Commission or

Brokerage
Any person other than an individual or Hindu Undivided Family who is
responsible for paying on or after 1st June, 2001, to a resident, any
income by way of commission (other than insurance commission
referred to in section 194D), or brokerage, is required to deduct tax at
the rate of 10%.

No deduction is required to be made where the amount of such

income or the aggregate of the amounts of such income credited/paid
during the financial year does not exceed Rs.5,000 .

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Section 194 I Rent

Any person (other than an individual or Hindu Undivided Family)

responsible for paying rent to resident any income by way of rent is

required to deduct tax.

Rent means any payment by whatever nature called, under any lease,

sublease, tenancy or any other agreement or arrangement for the use of

(either separately or together) any:

(i) land, or
(ii) building (including factory building), or
(iii) land appurtenant to a building (including a factory building), or
(iv) machinery, or
(v) plant, or
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(vi) equipment, or
(vii) furniture, or
(viii) fittings

From 1st June, 2002 an individual or a Hindu Undivided Family whose

total sales or gross receipts or turnover from business exceeds Rs.40 lacs
(60 Lakhs w.e.f. 1.04.2011) or whose gross receipts from profession exceeds
Rs.10 lacs (15 Lakhs w.e.f. 1.04.2011) during the financial year immediately
preceding the financial year in which such sum is credited or paid shall be
liable to deduct tax at source.

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Rate of deduction of tax Sec 194I

Asset on which
payment is made

Payee being
Individual.

Payee being other

than Individual.

Land or building or
furniture or fixtures.

10% if Payment or Credit

exceeds or likely to
exceed Rs.1,80,000 in
aggregate in the previous
year.

10% if Payment or Credit

exceeds or likely to
exceed Rs.1,80,000 in
aggregate in the
previous year.

Machinery or plant or
equipment

2% if Payment or Credit
exceeds or likely to
exceed Rs.1,80,000 in
aggregate in the previous
year.

2% if Payment or Credit
exceeds or likely to
exceed Rs.1,80,000 in
aggregate in the
previous year.

September 24, 2015

21

21

Sec-194J Fees for Professional

or Technical Services.

Any person (other than individual or HUF) responsible for

paying to a resident fee for professional services or fee for
technical services is required to deduct tax on the income
comprised therein at the rate of 10% for financial year 2010-11.

Professional services means services rendered by a person in

the course of carrying on legal, medical, engineering or
architectural profession or the profession of accountancy or
technical consultancy or interior decoration or advertising or
such other profession as is notified by the Board for the
purpose of section 44AA or of this section.

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 Fees for technical services shall have the same meaning as in

Explanation 2 to clause (vii) of sub-section (1) of section 9
For the
purpose of this clause Fees for technical services means: any
consideration (including any lump sum consideration) for the
rendering of any
managerial, technical or consultancy services
(including the provisions of services of technical or other
personnel), but does not include consideration for any
construction, assembly, mining or like product undertaken by the
recipient or consideration which would be income of the recipient
chargeable under the head salaries.

The tax is required to be deducted at the time of credit of such income

to the account of the payee or at the time of payment in cash or by issue
of cheques or drafts or by any other mode whichever is earlier. No tax is
required to be deducted in case amount of such sum or aggregate of
amount of such sums credited or paid during the financial year does not
exceed Rs.20,000/-(Rs. 30,000 from July 1, 2010).
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 With effect from 1st June, 2003 no individual or HUF

shall be liable to deduct tax on fees for professional
services in case such sum is credited or paid
exclusively for personal purposes of such individual
or any member of HUF.

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Sec 195 Payment to Non

Residents
Any sum paid to Non Resident is subject to deduction of Tax at
source

Rate of tax is prescribed in the Finance Act. However if the rates

indicated in relevant DTAA is lower such lower rates are applicable.

Application can be made by payee to the Assessing Officer for Nil or

lower rate deduction of tax at source

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Exemption from deduction of tax

at source in respect of
payments made to certain
persons (Section 196)

Government
Reserve Bank of India
Corporation established by or under a Central Act whose
income is exempt from Income Tax
Mutual Fund u/s 10(23D)

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Consequences of Default

Liability u/s 201

Interest & Penalty

Assessee in default u/s 221 equal to the amount of tax in arrears.

Interest @ 1% per month (1.5% w.e.f. 01.07.2010, in case tax deducted but
deposited late).
Both the above are consequences of Not deducting or Deducted and not
paying to the Central Government.
After deducting not paying also leads to a charge being credited on the assets
of the payer.
Section 271C
Penalty for failure to deduct tax at source as required or under the provisions
of Chapter XVII-B. Penalty Equal to Tax.
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Section 276B

If a person fails to pay to the credit of Central Government, tax

deducted at source by him as required by or under the provisions of
Chapter XVII-B.

Imprisonment Period 3 months to 7 years and with fine.

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Section 278B Prosecution Offences by Companies

Every person who at the time of offence was in charge of and was
responsible to the company for the conduct of business of the
company as well as the company shall be liable to be proceeded
against.

If it is established that the offence was committed with the

connivance of director, manager, secretary or other officer such
persons shall also be liable to be punished

In the case of imprisonment and the offence being committed by

company, apart from fine on the company, officers responsible shall be
liable to be proceeded against.
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Due dates for Payment of Tax

deducted at Source Rule30.
Sl.N
o.
1

Nature of Payment

Due Date

All Payments or Credits

during the year (Other than
last quarter)

Within 7 days from the

end of the month in
which payment is
made

All Payments or Credits

Within 1 months from
during the last quarter of the the end of the month in
year .
which payment is
made.

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Certificate of Tax Deducted at source

to the payee Sec203 and rule 31.

In respect of cases where Salaries exceeds Minimum threshold limit in

Form No. 16 and in other cases Form No. 16AA
Other than Salaries - Form No. 16A
The certificates issued in Form No. 16 can be issued under Digital
Signature by virtue of Circular No. 2/2007 dated 21/05/2007
Due Dates by which certificate is to be submitted to the payee:
Salaries - Form No. 16 /16AA - within one month from the close of the
financial year
Other Payments Form No. 16A within one month from the end of the
month in which payment is made or where more than one payment is
made in a year at the request of the payee with in one month from the end
of the financial year.

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Exceptions to the time limit

specified for issuance of TDS
certificates.
In respect of cases where deduction is by virtue of credit within one
week from the expiry of two months after the month of credit

Duplicate certificates can be issued on receipt of a letter on a plain

paper from the payee

Non Issuance of TDS certificates with in the due dates will attract a
penalty of Rs.100/- per delay under Sec.272A.

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Tax Deduction Account Number

(TAN) Sec.203A Read with Rule
114A.

Every person who is liable to deduct tax at source shall obtain a

TAN number within one month from the end of the month in which
tax has been deducted. Penalty for failure to obtain TAN is Rs.
10,000 (Sec 272BB)

An application for the allotment of a TAN shall be made in

duplicate in Form No. 49B.

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E-TDS RETURNS

MeaningE-TDS return is a TDS return prepared in form No.24Q,26Q or 27Q in

electronic media as per prescribed data structure in either a floppy or a CD
ROM. The floppy or CD ROM prepared should be accompanied by a
signed verification in Form No.27A.

Need for filing e-TDS Return

As per Section 206 of Income Tax Act all corporate and government
deductors are compulsorily required to file their TDS return on electronic
media (i.e. e-TDS returns). However, for other Deductors, filing of e-TDS
return is optional.

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FORM NO.
Form 24Q

PARTICULARS
PERIODICITY
Quarterly statement for tax deducted at
Quarterly
source from "Salaries"

Form 26Q

Quarterly statement of tax deducted at

source in respect of all payments other than
"Salaries

Quarterly

Form 27Q

Quarterly statement of deduction of tax from

interest, dividend or any other sum payable
to non-residents

Quarterly

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Form 27A is a summary of TDS return (Form 24Q, 26Q or 27Q),

which contains control totals of 'Amount Paid' and 'Income tax
deducted at source'.

Sec. 206 and Rule 31A

QUARTER

DUE DATE

DUE DATE FOR

27Q

April to June

July 15

14 July

July to September

October 15

14 October

October to December

January 15

14 January

January to March

June 15

14 June

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Thank You

September 24, 2015

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