Business Mantra : Faridabad
Tax deducted at source is one of the modes of collecting Income-tax from the assessees in India. When a person earns specified income then while making payment of income, he should deduct tax at source at the prescribed rates and pay only the balance amount to the recipient of such income.
The tax so deducted at source by the payer has to be deposited to the Central Govt. account 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.
Income from several sources is subjected to tax deduction at source. Some of the incomes which are liable 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. TDS paid to the government is always treated as an Advance tax when we are being paid for provision made by us in the form of products or services.
Amount on which tax to be deducted
Tax is deductible on the entire income or the bill amount or gross receipts less taxes. If service tax is levied on the bill amount then TDS is not to be deducted on service tax amount as it is not income of the recipient.
Time of Deduction
For Salary payments TDS has to be deducted at the time of such payment to the employee.
For all payments other than salary TDS has to be deducted at the time of :
- Credit of such income to the account of the recipient or
- Payment of such amount by any mode to the recipient,
Whichever is earlier.
If an assessee earns Gross receipts from a source of income and if no income tax is to be deducted then assessee will get full payment of Gross receipts from its source.
If tax is to be deducted from Gross receipts then assessee will get payment of gross receipts less TDS and amount of TDS to be deposited to Central Govt account.
|TDS Rate Chart Financial Year 2014-15|
|If Deductor / Recipient is|
|Nature of Payment Made To Residents||Income limit upto which TDS is not deductible (Rs.)||Company / Firm / Co-operative Society / Local Authority||Individual / HUF||If No PAN / Invalid PAN|
|Section – Description||Rate (%)||Rate (%)||Rate (%)|
|192 – Salaries||–||NA||Average rates||30|
|193 – Interest on securities||–||10||10||20|
|194 – Dividends||–||10||10||20|
|194A – Interest other than interest on securities – Others||5000||10||10||20|
|194A – Banks||10000||10||10||20|
|194B – Winning from Lotteries||10000||30||30||30|
|194BB – Winnings from Horse Race||5000||30||30||30|
|194 C – Payment to Contractors|
|– Payment to Contractor – Single Transaction||30000||2||1||20|
|– Payment to Contractor – Aggregate During the F.Y.||75000||2||1||20|
|– Contract – Transporter who has provided valid PAN||–||–||–||20|
|194D – Insurance Commission||20000||10||10||20|
|194DA-Pament of Taxable Life Insurance Policy wef 01.10.2014||100000||2||2||20|
|194G – Commission – Lottery||1000||10||10||20|
|194H – Commission / Brokerage||5000||10||10||20|
|194I – Rent – Land and Building||180000||10||10||20|
|194I – Rent – Plant / Machinery||180000||2||2||20|
|194IA-Transfer of immovable property other than agricultural land||5000000||1||1||20|
|194J – Professional Fees||30000||10||10||20|
|194LA – Compensation of acquisition of Immovable Property||100000||10||10||20|
Deposit of TDS.
The tax deducted/collected by a person shall be deposited to government as follows :
- On or before 7 days from the end of the month in which tax is deducted.
- For the month of March, tax should be deposited by 30th
|Due date ETDS return 24Q, 26Q 27Q and Form16 ,Form 16A|
|Sl. No.||Quarter ending||For Govt offices||For other deductors|
|E tds return||Form 16A||E tds return||Form 16A|
|1||30th June||31st July||15th August||15th July||30th July|
|2||30th September||31st October||15th November||15th October||30th October|
|3||31st December||31st January||15th Feburary||15th January||30th January|
|4||31st March||15th May||30th May (31st May for form 16)||15th May||30th May (31st May for form 16)|
CONSEQUENCES OF DEFAULT
The following chart indicates the nature of default and its consequences which range from penal interest, penalty to prosecution:
|Default/ Failure||Section||Nature of Demand||Quantum of demand or penalty|
|Failure to deduct tax at source||201(1)||Tax demand||Equal to tax amount deductible but not deducted|
|201(1A)||Interest||@1 % p.m. of tax deductible|
|271C||Penalty||Equal amount of tax deductible but not deducted|
|Failure to deposit tax at source||201(1)||Tax demand||Equal to tax amount not deposited|
|201(1A)||Interestfirstname.lastname@example.org% p.m. of tax not deposited|
|276B||Prosecution||Rigorous imprisonment for a term for a minimum of 3 months which may extend to 7 years and with fine|
|Failure to file TDS return in time||234E||Fine||Rs 200 per day will be levied on the deductor, as long as TDS statement is not filed upto the maximum of TDS amount.|
|If deductor exceeds one year time limit to file TDS statement.If deductor furnishes incorrect details like PAN, TDS amount, payment of challan etc.||271H||Penalty||Deductor has to pay penalty ranging from Rs. 10000/- to One Lac rupees.|
|Failure to issue TDS certificate u/s 203||272(A)(g)||Penalty||Rs. 100 every day during which the failure continues subject to maximum of TDS amount.|
|Failure to furnish prescribed statements u/s 200(3)||272A(2)(k)||Penalty||Rs. 100 every day during which the failure continues subject to maximum of TDS amount|
|Failure to mention PAN of the deductee in the TDS statements and certificates||272B||Penalty||Rs. 10000|
|Failure to apply for TAN No. u/s 203A||272BB||Penalty||Rs. 10000|