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OVERVIEW OF TDS

By
C.A. Manish Jathliy

OVERVIEW OF TDS

What is TDS

Who shall deduct tax at source

What a Deductor must do

TAN

Nature of payments attracting TDS and rates

Surcharge/cess Applicable on TDS

Non deduction or deduction at lower rate in certain cases

Due date to deposit TDS

Persons required to file e-TDS

Due dates for e-TDS, Form 16 & Form 16A

TDS defaults

Consequences of Defaults

Penalty Provisions

General Information

What is TDS

Tax Deduction at Source or best known as TDS is one of the modes of

collecting Income-tax.

In simple terms, TDS is the tax getting deducted from the person receiving
the amount (Employee/Deductee) by the person paying such amount
(Employer/Deductor).

The tax so deducted at source by the payer, has to be deposited in the

Government treasury to the credit of Central Govt, within the specified time.

The tax so deducted from the income of the recipient is deemed to be

payment of Income-tax by the recipient at the time of his assessment.

Presently this concept of TDS is also used as an instrument in enlarging the

tax base.

Some of such income subjected to TDS are salary, interest, dividend,

interest on securities, winnings from lottery, horse races, commission and
brokerage, rent, fees for professional and technical services, payments to
non-residents etc.

It is always considered as an Advance tax which is paid to the government.

Who shall deduct tax at source

Every

person responsible for making payment of nature covered by TDS

provisions of Income Tax Act shall be responsible to deduct tax.
However in case of payments made under sec. 194A, 194C, 194H, 194I
and 194J in respect of individual and HUF, only if the turnover or
professional receipt exceeds Rs.1 Crore or Rs. 50 Lakhs respectively in
previous year, he is required to deduct tax at source.
These persons are mainly:

Principal Officer of a company for TDS purpose including the employer in case of
private employment or an employee making payment on behalf of the employer.
DDO (Drawing & Disbursing Officer), In case of Govt. Office any officer
designated as such.
In the case of "interest on securities" other than payments made by or on behalf
of the Central govt. or the State Government, it is the local authority, corporation
or company, including the Principal Officer thereof.

Such

person is called Deductor while the person from whom the tax is
deducted is called Deductee.
Tax must be deducted at the time of payment in cash or cheque or credit
to the payee's account whichever is earlier. Credit to payable account or
suspense account is also considered to be credit to payee's account and
TDS must be made at the time of such credit.

What a Deductor must do

To apply for Tax Deduction Account Number (TAN) in form 49B, in

duplicate at the designated TIN facilitation centers of, within one
month from the end of the month in which tax was deducted.
To quote TAN (10 digit reformatted TAN) in all TDS/TCS Challans,
certificates, statements and other correspondence.
To deduct/collect tax at the prescribed rates at the time of every
credit or payment, whichever is earlier, in respect of all liable
transactions.
To remit the tax deducted/collected within the prescribed due
dates by using Challan no. ITNS 281 by quoting the TAN and
relevant section of the Income-tax Act.
To issue TDS/TCS certificate, complete in all respects, within the
prescribed time in Form No.16(TDS on salaries), 16A(other TDS)
and
27D( TCS).
To file TDS/TCS quarterly statements within the due date.
To mention PAN of all Deductees in the TDS/TCS quarterly
statements.

TAN

Tax Deduction Account Number TAN is a

identification number for person deducting the tax.

unique

TAN is a 10 characters alpha numeric string comprising of

4 Alpha - 5 Numeric - 1 Alpha. [Eg: MUMB02933A]. The first
3 characters consists of Income Tax Region Code (MUM =>
Mumbai) and the Fourth digit comprises of 'First Character'
of deductor name (B => Bright Power project (India) Pvt.
Ltd). Remaining characters form an unique combination to
get identified at Income Tax Department.

Nature of payments attracting TDS and rates

Sl.
No
.

Section

Nature of Payment

Cut OffAmount
AY 2017-18
Yearly

Rate %
HUF/IN
D

Limit

Others

192

Salaries

Salary incomemust be Average Rate

more
than
exemptionlimit after
deductions.
50000
10
NA

192A

Premature Withdrawal from EPF

193

194

Interest on Securities
Interest on Debenture
Deemed dividend

10000
5000
2500

10
10
10

10
10
10

194A

10000

10

10

5A

194A

5000

10

10

194B

Interest other than Int. on securities (by

Bank)
Interest other than Int. on securities (By
others)
Winning from Lotteries

10000

30

30

194BB

Winnings fromHorse Race

10000

30

30

8
9
10

194C(1)
194C(2)
194D

Contracts
Sub-contracts/ Advertisements
Insurance Commission

30000
30000
15000

100000
100000

1
1
5

2
2
5

11
12

194DA
194EE

Life Insurance Policy

Payments out of deposits under NSS

100000
2500

1
10

1
-

13
14

194G
194H

Commission on sale of lotterytickets

Commission or Brokerage

5
5

5
5

15000
15000

15

194I

Rent (Land & building)furniture &

180000

10

10

180000

50,00,000

81

30000

10

10

250000

10

10

fittings)

Rent (P & M , Equipment

16

194IA

17

194J

18

194LA

Payment on transfer of Immovable

PROPERTY (Other Then Agriculture
Land
Professional/Technical
charges/Royalty/Remuneration-feecommission to director & Noncompete fees
Compensation on acquisition of
immovable property

*Amount Highlight in Red are recent Amendmends after 01.06.2016

Exceptions/Notes:
No TDS on Service Tax
TDS on Transport wef from 01.06.2016 (Transporter who own ten or less goods
carriages are exempt)
Education Cess is not deductible/collectible at source in case of resident
Individual/HUF/Firm/ AOP/
BOI/ Domestic Company in respect of payment of income
other than salary.
AnIndividualor aHindu Undivided Familywhose total sales, gross receipts or
turnover from business or profession carried on by him does not exceeds the
monetary limits (Rs.100,00,000 in case of business & Rs.50,00,000 in case of
profession) under Clause (a) or (b) of Sec.44ABduring the immediately preceding
financial yearshall not be liable to deduct tax u/s.194A,194C, 194H, 194I & 194J.So no
tax is deductible by HUF/Individual in first year of operations of business even Sales
Receipt is More then 100/50akh.

Exceptions/Notes:

TDS at higher rate (i.e., 20%)has to be made if the deductee does not provide
PAN to the deductor

Surcharge on Income-tax is not deductible/collectible at source in case of

individual/ HUF /Firm/ AOP / BOI/Domestic Company in respect of payment of
income other than salary.

Surcharge on TDS on Salary is applicable if taxable salary is > 1 Crore @5%

No Cess on payment made to resident: Education Cess is not

deductible/collectible at source in case of resident Individual/HUF/Firm/ AOP/ BOI/
Domestic Company in respect of payment of income other than salary.Education
Cess @ 2% plus secondary & Higher Education Cess @ 1% is deductible at source
in case of non-residents and foreign company.

Where the aggregate of the amounts paid/credited or likely to be paid/credited to

Contactor or Sub-contractor exceeds Rs.1,00,000 during the financial year, TDS
has to be made u/s 194C

Surcharge/Cess applicable on TDS

Amount in Rs.

Ces
s

Salary Upto 1 Crore

No

3%

Salary > 1 Crore

15%

3%

Non- Corporate

Any

No

No

Non- Corporate

Any

No

No

Salary Upto 1 Crore

No

3%

Any Payments =< 1 Crore

No

3%

Any Payments => 1 Crore

15%

3%

Co Oeprative
Society Firm

Any Payments > 10 Crore

12%

3%

NON Domestic
Company

Any Payment >1 Crore to 10

Crore
Any Payments >10 Crore

2%
5%

3%
3%

Resi Individual
dent
Individual

Non- Individual
Resi
dent Individual or HUF
or AOP or BOI or
every Artificial
Juridicial Person

Payment

1
Surcharg
0

Non deduction or deduction at lower

rate in certain cases

No Tax has to be deducted for the payment made

to Government, RBI, Corporation whose income is
exempt from tax or mutual fund specified u/sec.
10(23D). Also in case where deductee produces a
non deduction certificate or lower deduction
certificate u/sec. 197 of the Income Tax Act 1961.

Self declaration in Forms 15G and 15H can be filed

by the Deductee if his income doesn't exceed the
amount chargeable to tax. This self declaration
can be filed for dividends, interest and mutual
fund income only. In these cases no tax has to be
deducted. However the tax Deductor is required to
furnish copies of this self declaration to the
concerned CCIT or CIT as per the rules.

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Due date to deposit TDS

Tax to be deducted by Govt Office

Tax deposited without challan
Same day
Tax deposited with challan

7th of next month

Tax to be deducted by Non Govt Office

Tax deductible in March
30th April of Next FY
Tax deposited with challan

7th of next month

Tax on transfer of Immovable property 194IA

Tax deductiable in a particular
30th of next month
month

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Note

For all section under TDS one challan is to be

deposited ie ITNS -281

Deductor can adjust excess TDS deposit in One

section/assessment year with another
section/assessment year (So no need to deposit
section wise challan)

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Notwithstanding anything contained in subrule (2), in

special cases, the Assessing Officer may, with the prior
approval of the Joint Commissioner, permit quarterly
payment of the tax deducted under section 192 or section
194A or section 194D or section 194H for the quarters of the
financial year specified to in column (2) of the Table below by
the date referred to in column (3) of the said Table:

Sl. No.

Quarter ended On

Date of payment

30th June

7th July

30the September

7th October

31st December

7th January

31st March

30th April

Persons required to file e-TDS returns

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Vide NotificationNo. 238/2007, dated 30-82007, following persons are liable to file etds/e-tcs return:

1) All

Government department/office;
2) All companies
3) All persons who are required to get their
accounts audited under section 44AB in the
immediately preceding financial year;
4) All persons where the number of Deductees
records in a quarterly statement for any
quarter of the immediately preceding
financial year is equal to or more than 20.

Due dates for e-TDS returns, form 16 & Form 16A

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Due date e-tds return 24Q, 26Q, 27Q and Form16 ,Form 16A
Sl. No.

Quarter ending

Return
For other deductors
Etds return

Form 16A
Form 16
(TDS certificate Income (TDS Certificate on TDS on
on other then Salary)
Salary)

30th June

31st July

15th August

30th September

31st October

15th November

31st December

31st January

15th February

31st March

31st May

15th June

31ST May

TDS defaults

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Failure to deduct or remit TDS /TCS(full or part)

As per Income tax act/rules , Interest on late deposit of TDS is

payable under the following two Circumstances

1 Tax is not deducted , when it was deductaible

2 tax once deducted , is not paid on or before the due date

Secti
on

Nature of Default

Interset Period

Intere
st
under
sectio
n
201(1
A)

Non Deduction of tax at

source , either in whole or
part

1.00%
per
month

From the date on which

tax was deductiable to
the date on which tax is
actually deducted

After deduction, non

payment of tax , either in
whole or part

1.50%
Per
month

From the date on which

tax was deducted to the
date on which tax is
actually paid

Simple Interest shall be calculated and part of month will be

treated full month

Consequences of Defaults

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New Section for Penalty for non submission of e-TDS /eTCS return
8
(section 271H)(applicable from 01.07.2012)

Failure to deliver statementwithin time prescribed u/s200 (3) or to the

proviso tosub-section (3) of section206C may liable to penaltywhich shall
not be less thanRs. 10,000/- but which mayextend to Rs. 1,00,000/-.
Nopenalty if payment of taxdeducted or collectedalong with fee or
interest anddelivering the statement aforesaidbefore the expiryof 1 year
from the timeprescribed for delivering the such statement. HoweverNo
penalty shall be imposedu/s 271H if the personproves that there
wasreasonable cause for thefailure.(section 273B)

Assessee In default (amendment in section 201)

The Deductor will not to betreated as assessee inDefault provided

theresident payee has furnished his return u/s 139 and hastaken into
account such amount for computing income in such Return ofIncome and
has paid theTax Due on the incomedeclared by him in suchreturn of
income andfurnishes a certificate to thiseffect, duly certified by aCA, in
the prescribed form.This form is yet to benotified.

However, the interest fornot deducting tax would be payable from the
date onwhich such tax wascollectible till the date of furnishing of return of
income by the residentpayee.

The limit of passing ordersunder section 201(1)increased from 2 years to

6years (retrospectiveamendment wef 1-04-2010)

Penalty Provisions

Section Type of Default

Penalty Amount

272BB

Failure to Apply TAN in Time or

failure to quote allotted TAN or
wrong quoting TAN

10,000

234E

Late filling of TDS Statement

200 per day till the failure to

fill TDS statements continue (
HoweverTotal Amount not
exceeds TDS Liablity)

271H

Failure to fill TDS Return on time &

Filling of incorrect Statements

Not less then 10,000 but

which may extend to Rs.
1,00,000 (No Penalty if
Payment of TDS along with
fees or interest and delivering
the statement ofersaid before
expiry of 1 year from the time
prescribed for delevring the
statement.

Penalty on late issue of TDS

Certificate

200 per day (May not exceed

actual amount of TDS
certificate)

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General Information

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0
u/s.197,

Deduction at lower or nil rate requires certificate

which will take effect from the day it is issued. It cannot be
used retrospectively.

If TDS/TCS certificate is lost, duplicate may be issued on a

plain paper giving necessary details marking it as duplicate.

Refund can be claimed by the deductee on filing of return of

income.

Even if the recipient of payment has shown it in his incometax

return
and
paid
the
taxes
thereon,
the
deductor/collector who has failed to deduct/collect tax will
be liable to pay interest and penalty.

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