Tax deducted and collected at source

DEDUCTION OF TAX AT SOURCE (TDS)

LIABILITY FOR TDS

Any person responsible for making payment of certain category of incomes is liable to deduct tax at source at an appropriate occasion.
The law prescribes time when the TDS is to be made, rate at which it should be made, when TDS should be paid to the Government and associated administrative responsibilities of payer (tax deductor) and payee (tax deductee) have been prescribed.

A. TDS Rate Chart for A.Y. 2014-15 on Payments other than Salary and Wages

Section   No.Nature of PaymentThresholdPayment to
Total Payment
During the YearIndividualOthers
 or HUF
193Interest on DebenturesRs. 5000/-10%10%
194Deemed Dividend10%10%
194 AInterest by banks (Other than interest on securities)Rs. 10000/-10%10%
194 AInterest by Others (Other than interest on securities)Rs. 5000/-10%10%
194 BWinnings from Lotteries / Puzzle / GameRs. 10000/-30%30%
194 BBWinnings from Horse RaceRs. 5000/-30%30%
194 C (1)Payment to ContractorsRs. 30000/-1%2%
194 C (2)Payment to Sub-Contractors / for AdvertisementsRs. 30000/-1%2%
194 DPayment of Insurance CommissionRs. 20000/-10%10%
194 EEOut of deposits under NSSRs. 2500/-20%NA
194 GCommission on Sale of Lottery ticketsRs. 1000/-10%10%
194 HCommission or BrokerageRs. 5000/-10%10%
194 IRent of Land, Building or FurnitureRs. 180000/-10%10%
194 IRent of Plant & MachineryRs. 180000/-2%2%
194 JProfessional / technical services, royaltyRs. 30000/-10%10%
194 J(1)Remuneration / commission to director of the company10%10%
                        194J(ba)w.e.f. 01 .07.2012, Any remuneration / fees / commission to a director of a company, other than those on which tax is deductible under section 192.10%10%
194 LACompensation on acquisition of certain immovable propertyRs. 2,00,000/-10%10%
194 IACompensation on transfer of certain immovable property other than agricultural land (w.e.f. 01 .06.2013)Consideration is1%1%
Rs. 50 lakh or
more.
194LDInterest on certain bonds & Govt. securities (w.e.f. 01 .06.2013)5%5%

1. Copies of Form Nos. 15G and 15H received by the payer have to be filed with the Chief Commissioner Commissioner within 7 days of the succeeding month.
2. If the person responsible for deducting and paying tax fails to do so, he shall be considered as an assessee in default, liable to pay interest @ 12% p.a. on the amount of such tax from the date on which such tax was deductible to the date of actual payment, and penalty, not exceeding the amount of tax and rigorous imprisonment ranging from 3 months to 7 years and fine. The interest payment needs to be paid before filing of Quarterly Return.
3. Sec. 199 – Credit for tax deducted :
a. Credit will be given for the assessment year in which such income is assessble.
b. Where such income is assessable in the hands of any other person, credit shall be given to such other person.
c. When any security, property etc. is jointly owned by two or more persons not constituting partnership, credit for TDS on income there from shall be given to such persons in the proportion in which the income is distributed.

4. A payee from whose income TDS is made must intimate his PAN to tax deductor. Tax deductor must to quote PAN of payees in TDS Certificate and TDS return [Sec. 139A].
5. TAN/TDCAN to be quoted on all quarterly statements of TDS/ TCS section 203A(ba).
6. A declaration for non-deduction of tax u/s. 197A can be furnished by the assessee only if his aggregate income is less than threshold limit. Senior Citizens can file declaration if tax on their estimated total income is likely to be NIL.
7. Disallowance due to non-deduction: If tax deductible u/ss. 193, 194A, 194C, 194H, 194J and 195 is not deducted/paid before applicable due dates, the relevant expenditure otherwise allowable in computing Total Income of the payer would be liable for disallowance u/s 40(a)(i)/(ia). The deduction will be allowed in the year in which TDS is paid. For details see section 40(a).

TIME SCHEDULE

Nature of ActivityTime Frame
Time of DeductionSalary : At the time of payment
Others : When income paid or credited to the account including “payable” or
“suspense” account whichever is earlier
Time of deposit of tax (Other than on behalf of Government)(a)If credited on the date on which accounts are made, within two months from the end of the month in which income is credited.
 (b)Any other case, within one week from the end of the month in which deduction is made.
Statement For each Quarter
TDS TypeFormsFor all category of Statements 
Salary No 24QNo. 24 QQ1 : April – June – 15th July
Non ResidentNo. 26 QQ2 : July – September – 15th October
All OthersNo. 27 QQ3 : October – December – 15th January
  Q4 : January – March – 15th June
Electronic For every office of Government and the principal officer in the case of every company, firm, whose total sales, gross receipts or turnover from the business or profession carried on by it exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such income is credited or paid

Consequence of non compliance of TDS provisions :

Sr.No.SectionDefaultDefaultConsequence
SectionEffect
1197ADelay, no submission of no TDS declarations272A(2)(j)Rs. 100 per day / Max. Tax Amount on Decleration
2Chapter XVII – BFails to deduct the whole or any part of TDS271C(1)(a)(i) Penalty of a sum equal to the amount of TDS not so deducted.
(ii) Fails to deduct the whole or any part of TDS:
Penalty :- a sum equal to the amount of TDS not so deducted. [sec. 271C(1)(a)]
3200Delay in payment of TDS201(1A)Interest @ 1% p.m
4200Delay, no submission of Quarterly TDS Statement272A(2)(k)Rs.100 per day / Max. Tax Amount of TDS in of Quarterly
TDS Statement
5203ADefault in the matter of TAN272BBPenalty Rs.10,000

TAX COLLECTION AT SOURCE [Sec. 206C]

Every seller at the time of debiting the buyer with the amount payable or receiving payments from buyers engaged in business of alcoholic liquor, forest produce, scrap, timber, tendu leaves, etc. shall collect tax at the following rates:

B. The Tax Collection at Source Rates for the Financial Year 2013-14 is tabulated below:

Sl. No.

Nature of Goods

Rates in %

1

Alcoholic liquor for human Consumption

1

2

Tendu leaves

5

3

Timber obtained under forest lease

2.5

4

Timber obtained by any mode other than a forest lease

2.5

5

Any other forest produce not being timber or tendu leaves

2.5

6

Scrap

1

7

Parking lot

2

8

Toll plaza

2

9

Mining & Quarrying

2

10

Minerals, being coal or lignite or iron ore

1

11

Bullion or jewellery (if the sale consideration is paid in cash  exceeding INR 2 lakhs)

1

The amount of tax so collected shall be paid, within one week seven from end of the month of tax collection. Delay or failure attracts interest @ 1% p.m. [sec. 206C(7) & (8)]

Responsibility & Liability of the Tax Collector
1. To obtain Tax Collection Account No. [sec. 206CA(1)]
2. To quote TCS No. in all returns, certificates and challans. [sec. 206CA(2)]
3. To furnish quarterly return in form No. 27EQ within stipulated time i.e. within fifteen days from the end of a quarter for the first three quarters and by 30th April for the last quarter.
4. Failure to furnish TCS return: Penalty @ 100/- per day, during which the default continues, but not exceeding the amount of TCS. [sec. 272A(2)(g)]
5. Failure to deposit TCS in Government treasury, rigorous imprisonment for a term of not less than 3 months, but which may extend to 7 years, in addition to fine [secs. 276B & 276BB]
Thus, administrative provisions are similar to TDS administration.

Filing of TDS and TCS statements (W.e.f. 1-10-2009)
Section 200(3) of Income-tax Act provides that any person deducting tax in accordance with the provisions of Chapter XVII B has to furnish, within the prescribed time, quarterly statements for the period ending on the 30th June, 30th September, 31st December and 31st March in each financial year. Similarly, filing of quarterly returns for tax collection at source (TCS) have been provided in sub-section (3) of section 206C of the Act. Further section 206A provides furnishing of quarterly return in respect of payment of interest to residents without deduction of tax.
In order to provide administrative flexibility in deciding the periodicity of such TDS related statements, the Act has modified the existing provisions so as to allow the Government to prescribe periodicity of such TDS statements besides prescribing their form and manner.
Further, section 272A(2)(0 relating to non-filing of quarterly statement of TDS/TCS has been amended in order to delete the word ‘quarterly’ given for such statements.

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