What is Tax Deducted at Source (TDS)
The concept of TDS was introduced with the aim to collect tax from the very source of income. As per this concept, a person (deductor) who is liable to make a payment of specified nature to any other person (deductee) shall deduct tax at source and remit the same into the account of the Central Government.
The recipient of income receives the net amount (after reducing TDS). The recipient will add the gross amount to his income and the amount of TDS is adjusted against his final tax liability. The recipient takes credit for the amount already deducted and paid on his behalf.
Who is liable to Deduct TDS and when?
Any person making specified payments mentioned under the Income Tax Act is required to deduct TDS at the time of making such specified payment.
But no TDS has to be deducted if the person making the payment is an individual or HUF whose books are not required to be audited.
However, following Certain Cases where individuals or HUF Whose books are not required to be Audited are required to Deduct TDS.
- Rent payments made by individuals and HUF exceeding Rs 50,000 per month, are required to deduct TDS @ 5%.
- Payment made against purchase of property exceeding 50 lakhs are required to deduct TDS @ 1%
TDS Section and their Rate for F Y 2022-23
| Section | Sources of Income/Expenses | Threshold Limit | TDS Rate (%) |
|---|---|---|---|
| 192 | Payment of Salary Income | As per the Income tax slab rate | As per the slab |
| 192 A | Premature withdrawal of Employee Provident Fund (EPF) | ₹ 50,000 | 10% 20% (In case Pan is not provided) |
| 193 | Interest payment on Securities | ₹ 10,000 | 10% |
| 193 | Interest payment on Debentures | ₹ 5,000 | 10% |
| 194 | Dividend Income | ₹ 5,000 | 10% |
|
194 A |
Interest payment other than ‘interest on securities’ like interest on bank deposits, interest on loans and advances, interest on post office deposits etc. | ₹ 10,000 in case the TDS payer is a bank or any banking institution, banking co-operative society, and the post office. ₹ 5,000 in any other case | 10% |
|
194 B |
Prize money from crossword puzzle, lottery, etc. | ₹ 10,000 | 30% |
|
194 BB |
Winning from Jackpot /horse race | ₹ 10,000 | 30% |
| 194C | Payments made to contractors and sub-contractors | ₹ 30,000 for Single Payment and ₹ 1,00,000 for Annual Payment | 1% (For Individual & HUF) 2% (For Others) |
| 194 D | Insurance commission to domestic companies | ₹ 15,000 | 10% |
| 194 D | Insurance commission to other than companies | ₹ 15,000 | 5% |
| 194 DA | Maturity of LIC | ₹ 1,00,000 |
5% |
|
194 E |
Payment to non-resident sportsmen/sports association | No limit | 20% |
| 194 EE | Payment of National Savings Scheme Deposits (NSSD) | ₹ 2,500 | 10% |
| 194F | Repurchase of units by mutual fund or UTI | No limit |
20% |
| 194 G | Payment of Commission on the sale of lottery tickets | ₹ 15,000 | 5% |
| 194 H | Payment of Commission or Brokerage | ₹ 15,000 | 5% |
| 194 I | Payment of Rent for use of Land and building/ furniture/ fitting | ₹ 2,40,000 | 10% |
| 194 I | Payment of Rent for use of Plant and machinery | ₹ 2,40,000 | 2% |
| 194 IA | Proceeds from sale of immovable property other than agriculture land | ₹ 50,00,000 | 1% |
| 194-IC | Payment under Joint Development Agreements (JDA) to Individual/HUF | No limit | 10% |
| 194 J | Payment of Royalty, professional or technical services | ₹ 30,000 | 10% |
| 194 K | Dividend income from shares and mutual fund | No limit | 10% |
| 194 LA | Payment of Compensation on acquisition of certain immovable property | ₹ 2,50,000 | 10% |
| 194 LB | Payment of Interest on infrastructure debt fund | No limit | 5% |
| 194 N | Annual cash withdrawal from all account with a bank/ co-operative society/post office | ₹ 1 crore | 2% |
| 194-O | Payment made by an e-commerce operator to a seller for sale of goods and services via its e-commerce portal | ₹ 5 lakh | 1% |
| 194Q | Payments for the purchase of goods | ₹ 50 lakh | 0.10% |
Who is liable to Deduct TDS and when?
- Interest in case of non-deduction of TDS – Interest shall be levied @1% for every month or part of the month from the date on which TDS was deductible till the date on which TDS was deducted.
- Expenses Disallowed in case of Non-Deduction of TDS- 30% of Expenses disallowed while calculating Income Tax.
- Interest in case of non-payment / late payment of TDS – Interest shall be levied @1.5% for every month or part of the month from the date on which TDS was deducted till the date on which TDS was credited to the Government.
- Penalty for non-Deduction of TDS- As per provisions of Section 271C penalty for non-deduction/non-payment of TDS would be an amount equal to tax not so deducted/paid.
- Penalty For Delay in TDS Return Filing- A penalty of INR 200 per day is payable until the failure continues. However, a maximum penalty payable would be subjected to the TDS amount.
27
Aug
27
Aug
