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TDS

All about TDS- Meaning, Applicability, Rates, Due dates & Amendments (AY 2023-24)

In this article, we will discuss about the Tax Deducted at Source (TDS) all sections & amendments in detail. Tax Deducted at Source (TDS)   TDS is income tax reduced from the money paid at the time of making specified payments such as rent, commission, professional fees, salary, interest etc. by the persons  making such payments.  Any person making specified payments mentioned under the Income Tax Act are required to deduct TDS at the time of making such specified payments.   Due date for depositing the TDS   TDS must be deposited to the government by 7th of the subsequent month.  For example, TDS deducted in the month of June must be paid to the government by 7th July.   Due date of filing TDS returns   Filing TDS returns is mandatory for all the persons who have deducted TDS. TDS return is to be submitted quarterly. Different forms are prescribed for filing returns depending upon the purpose of the deduction of TDS. Various types of return forms are as follows: Form 26Q – TDS on all payments except salary Form 24Q – TDS on Salary Form 27Q – TDS on all payments made to non‐residents except salaries Due dates – Q1 (April to June) – 31st July, Q2 (July to September) – 31st October, Q3 (October to December) – 31st January & Q4 (January to March)  – 31st May Rates of TDS applicable for Financial Year 2022‐23 or Assessment Year 2023‐24:   Section – 192 – Salaries   Deductor – Any Resident Person Deductee – Any person Threshold Limit – If Total Income of the Employee is upto Basic Exemption Limit, then no TDS Tax Rate – Individual Slab Rate Other Conditions – a) Tax will include Surcharge (if any) & Cess (always) b) Employer shall consider other income & deduction of employee & not consider any loss other than House Property loss if provided by employee. c) Employee can take credit of Tax on Non-monetary perquisite paid by the employer. d) In case of Arrears of salary, TDS is deducted after considering relief under section 89. e) If employee opts for Section 115BAC (New Tax Regime) – He will intimate to the employer & Form 10BA need to be filed before due date of filing of ITR return. Section -192A‐ Premature withdrawal from Employee Provident Fund Deductor – Any Resident Person Deductee – Any person Threshold Limit – Rs 50,000 Tax Rate – 10% Other Conditions – a) TDS only if amount is taxable in the hands of employee – if employee renders < 5 years of service & amount received is more than Rs 50,000 b) If PAN is not furnished, TDS is deducted as Maximum Marginal Rate (MMR) i.e. 30% tax rate + 37% maximum surcharge rate + 4% cess = 42.744%. Section -193‐ Interest on securities   Deductor – Any Resident Payer Deductee – Any Payee Threshold Limit – Rs 2,500 Tax Rate – 10% Other Conditions – No TDS if: a) Interest is payable on CG or SG Securities b) Interest is paid to LIC, GIC or any other insurer c) Interest is payable on DMAT Securities d) Interest is payable on debenture of public company to Individual/HUF (If amount not exceed Rs 5,000 p.a.) Section -194‐ Dividend   other than the dividend as referred to in Section 115‐O (Deemed dividend) – Deductor – Any Resident Payer Deductee – Any Payee Threshold Limit – Rs 5,000 Tax Rate – 10% Other Conditions – No TDS if: a) Dividend is paid to LIC, GIC or any other insurer b) Paid to Individual other than Cash (If amount not exceed Rs 5,000 p.a.)   Section -194A – Interest other than interest on securities   Banks Time deposits, Recurring deposit and Deposit in Co‐op Banks Deductor – Any Resident Payer Deductee – Any Payee Threshold Limit – Rs 40,000 (for individual), Rs 50,000 (for Senior Citizens) & Rs 5000 (for others) Tax Rate – 10% Other Conditions – If bank opting for Core Banking Solution (CBS), then limit will be checked per bank wise not per branch wise. No TDS if: a) Interest on Saving Bank account b) Interest paid by Firms to Partners c) Interest on Income Tax Refund. However, Interest on IT refund of NRI will be liable for TDS deduction at applicable rate. d) Interest is paid to any other bank, LIC, UTI or any other insurer e) Interest is paid by co-operative society to its member or any other co-operative society f) Interest on compensation awarded by Motor Accident Claim Tribunal, if amount not exceeds Rs 50,000 p.a g) If interest is credited by bank to provisioning account on daily/monthly basis for macro monitoring only by use of CBS Software    Section -194B – Winning from Lotteries, Crossword Puzzle, Card games etc   Deductor – Any Person Deductee – Any Person Threshold Limit – Rs 10,000 Tax Rate – 30% Other Conditions – If winning in kind, then the organizer will release winning only after ensuring that TDS on winning is paid to the Govt.  Section -194BB – Winning from Horse Race   Deductor – Any Person Deductee – Any Person Threshold Limit – Rs 10,000 Tax Rate – 30% Other Conditions – TDS will be deducted without set off of loss   Section -194C – Payment to Contractor   Deductor – Any Resident Payer Deductee – Any Resident Person Threshold Limit – Rs 30,000 (Single Bill/Invoice)/ Rs 1,00,000 (Aggregate Payment for whole financial year) Tax Rate – Individual/HUF – 1% / Others – 2%. Other Conditions – a) Work Contracts includes Advertisement, Broadcasting, Telecasting, Catering, Transportation of goods/passenger (other than railway) & Manufacturing/Supplying product as per customer specification out of the material supplied by such customer or its associate (Job Work). b) Payment made for personal purpose by Individual/HUF – No TDS c) Contract also includes Sub-Contracting d) TDS is not applicable on payment to Contractor engaged in plying, hiring or leasing of goods carriages u/s 44AE, where such contractor owns 10 or less goods carriages during the financial year & furnishes PAN. e) No TDS if Single Transaction is < Rs 30,000 & aggregate payment during the financial year is < Rs 1,00,000.    Section -194D – Insurance Commission   Deductor – Any Insurance Company Deductee – Any Resident Person Threshold Limit – Rs 15,000 Tax

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TDS – Quick and Complete Summary [Part-II]

In the last part of this summary, we have learned about the basic meaning of TDS, some concepts which were very useful and commonly applied on all sections, and the various sections under which the TDS is being deducted. Now, In the Part-II, we will get the details about the procedural parts regarding compliance of TDS. So, let’s proceed with that: 1. What is the Time Limit for Payment of deducted Tax? TDS needs to be deposited on or before the 7th day of Next Month in which such tax is deducted. For the month of March, the last date for depositing TDS is 30th April. [However, In case of Govt. Employer when TDS is deposited without Challan (i.e. through Book entry) then TDS deposit date shall be the Same Day.] 2. What is the Due Date for Quarterly Return of TDS? (i) For First Quarter (i.e. Qtr ending on 30June)       —              —               —  31st July (ii) For Second Quarter (i.e. Qtr ending on 30 Sep)   —              —               —  31st Oct (iii) For Third Quarter (i.e. Qtr ending on 31 Dec)     —              —                —  31st Jan (iv) For Fourth Quarter (i.e. Qtr ending on 31 Mar)   —              —                —  31st May 3. What is the TDS Certificate? TDS certificate is the statement issued by Deductor to the Effect that tax has been deducted and specifying the amount, Section, Rates etc under which it has been deducted. In common parlance, it is widely known as Form-16 (in case of Salary) and Form-16A (in other cases). 4. What is the Time Limit for the issue of TDS Certificate? In Case of Form-16: It is issued Annually and the due date for issue of Form 16 is 31st May of the following year from the year in which Tax has been deducted. In Case of Form-16A: It is to be issued Quarterly and the due date for issue of Form-16A; 15 days from the due date of Furnishing Return (i.e. which comes as 15Aug, 15Nov, 15Feb, 15June) [Imp. Note- If TDS Certificate is not issued within the said time limit then there is a penalty of Rs. 100/- per day per certificate up to which the failure continues subject to max. of TDS amount.] 5. What is the Lower Deduction Certificate? It is a certificate issued by the Assessing Officer (AO) u/s 197 on request of Assessee; if AO is satisfied that on the income of Assessee which is liable for tax deduction under TDS is such that deduction should be made on lower rates, then AO may issue a Certificate in this regard i.e. called Certificate of Lower Deduction. [Note- Certificate of Lower Deduction cannot be issued for TDS to be deducted u/s 194-IA] 6. What is Form 15G & 15H? It is a Self Declaration given by Assessee to the Payer (Deductor) that his/her tax on total income including the income on which TDS is to be deducted shall be Nil. On receipt of such form the Deductor submit this form to the Income-tax department and did not deduct any amount as TDS. Form 15G is for any assessee (excluding Firm & Company) while Form 15H is for Resident Individual who is Senior Citizen. Form 15G & Form 15H can be given only when there is a liability for TDS under 5 Section only i.e. 192A (RPF), 193 (Int. on Securities), 194A (Other Interest), 194DA (Insurance Amount), 194-I (Rent). It cannot be submitted against any other Section Liability. [Note- If any of Such Income received by any person (who is eligible for 15G) is exceeding the exemption limit then 15G can’t be submitted.] 6. What if there is no PAN detail of Payee? (i) In case the Payee (Deductee) has not provided the PAN then the TDS shall be deducted at the Rates HIGHEST from the following: – Rate given in relevant TDS Sections – At the Rates in Force (i.e. given in Finance Act) – 20% [Note:- But if the amount received itself is within the threshold limit of TDS then NO question of Deduction at higher rates.] (ii) If PAN is not given then there would not be provided any Lower tax deduction certificate. Also, any request submitted in Form 15G or 15H shall be taken as Invalid. 7. What are the consequences of Failure to Deduct or Pay TDS? If any such person who is liable to deduct TDS; – Does not deduct whole or any part of TDS; OR – Has deducted but not deposited whole or any part of TDS; Then Such person would be considered as Assessee-in-Default for tax not so deducted or deposited and therefore shall be liable for the Interest u/s 220 and Penalty u/s 221 for being Assessee in Default. V. Important Note: – If Deductor has not deducted the TDS and paid the whole amount to the Deductee (Payee); & – Deductee (resident only) has himself/herself declare this amount in his return and paid the tax thereon; then the Deductor shall not be considered as Assessee-in-Default. But still, he will be liable for the Interest on Late Deduction of TDS. 8. What are the consequences of Late Deduction/Payment of TDS? If any person is liable for deduction of TDS does not Deduct TDS within time OR after deduction does not Pay within Time then s/he shall be liable to simple interest as follows: Late Deduction: 1% Per Month or part thereof [From When Deductible –to– When Deducted] Late Payment: 1.5% Per Month or Part thereof [From Deducted –to– Actual Payment] And such interest shall be paid before filing of Return of TDS. 9. Default in Furnishing Quarterly Return of TDS? When a Person fails to Deliver the Quarterly

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