Project of: Law of Taxation

A PROJECT ON:

“TAX DEDUCTION AT SOURCE”

SUBMITTED TO:

MS. SURBHI GOYAL

(ASSISTANT PROFESSOR)

(LAW OF TAXATION)

SUBMITTED BY:

Aviral

ENROLLMENT NO: 19FLICDDN01035

SUBMISSION DATE: 24/11/2022

SIGNATURE OF STUDENT – Aviral

SIGNATURE OF FACULTY-

ICFAI LAW SCHOOL,

THE ICFAI UNIVERSITY, DEHRADUN

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Project of: Law of Taxation

Acknowledgement

I would like to express my sincere gratitude to several individuals and to my supervisor,

Assistant Professor Ms. Surbhi Goyal for his enthusiasm, patience, insightful comments,
helpful information, practical advice and unceasing ideas that have helped me tremendously
at all times in my research and writing of this thesis. Her immense knowledge, profound
experience and professional expertise in this subject have enabled me to complete this
research successfully. Without his support and guidance, this project would not have been
possible. I could not have imagined having a better supervisor in my study.

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Project of: Law of Taxation

CHAPTER 1

TAX DEDUCTED AT SOURCE (TDS)

MEANING

TDS (Tax Deducted at Source) is a measure in which the individual paying the income
is responsible for deducting tax from it (at prescribed rates) and paying only the net
amount. TDS (tax deducted at source) must be deposited with the government's treasury
within the timeframe specified. The payee will receive credit for TDS and his tax
liability will be reduced to that level if the payer issues a certificate in Form 16 or
16A1. In a word, the requirements are essentially a method of income tax collection and
a deterrent to tax evasion through proper management and information.

OBJECTS

1) Quicker realization of tax.

2) Effective realization of tax.

Following points shall be kept in mind by the person responsible to deduct tax at
source u/s 192

Maximum exempted limit: Tax shall not be deducted if taxable salary is less than basic
exemption limit.
Employer payment of tax: An employer who receives non-monetary perquisite income
may, at his discretion, pay tax on that income without deducting it at the period when
the tax would otherwise be deductible. For this purpose, tax is calculated as the average
of income tax computed on the basis of the current rates on the income chargeable
under the heading "Salaries" for the financial year. It should be emphasised that the
employer's tax on non-monetary perquisites is not counted as the employee's income.

Particulars of perquisites: The employer shall furnish a statement to the employee

(whose salary exceeds ` 1,50,000) giving correct and complete particulars of perquisites
or profits in lieu of salary provided to employee and the value thereof in Form 12BA
provided salary of such employee exceeds 2,00,000.
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Project of: Law of Taxation

Salary from multiple sources: Under Sec. 192(2), if an assessee works for more than
one employer at the same time, he may provide details (in Form No. 12B) of income
taxable under the head "Salaries" due to or received by him from other employer(s) to
any one employer of his choice, and that employer shall deduct tax on the aggregate
salary.

Treatment of other income: As per Sec. 192(2B), where an assessee who receives any
income chargeable under the head “Salaries” has, in addition, any income chargeable
under any other head of income for the same financial year, he may (or may not)
furnish to employer the particulars (in plain paper) of -

 such other income (only income and not loss)

 tax deducted on such other income as per provision of this chapter;

 the loss, if any, under the head “Income from house property” (Losses
under any other head are not to be considered) Tax deducted u/s 192
shall be higher of the following:
 Tax deductible from income, that would be so deductible, if loss under
the head ‘Income from House Property’, other income (only income)
and the tax deducted thereon had been taken into account.
 Tax deductible from income under the head “Salaries”, that would be so
deductible (after adjusting loss under the head Income from house
property), if the other income (or loss) and the tax deducted thereon had
not been taken into account.

Evidence of claim: The responsible person shall collect evidence or proof or particulars
of prescribed claims (including claim for set-off of loss) from the assessee in such form
and manner as may be prescribed for the purposes of estimating the assessee's income
or computing tax deductible.
TDS on ESOP: ESOPs have been a significant component of the compensation for the
employees of start-ups, as it allows the founders and start-ups to employ highly talented
employees at a relatively low salary amount with balance being made up via ESOPs.

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Project of: Law of Taxation

ESOPs are taxed as perquisites u/s 17(2). The taxation of ESOPs is split into two
components:

 Tax on perquisite as income from salary at the time of exercise.

 Tax on income from capital gain at the time of sale.

Who is responsible to deduct tax: Any person responsible for paying to any person
any income by way of winning from any lottery or crossword puzzle or card game and
other game of any sort, exceeding ` 10,000.

Taxpoint: If income is more than ₹ 10,000 (say ₹ 12,000), then tax shall be deducted
on the whole amount (i.e. ₹ 12,000).

TDS

TDS ON WINNING FROM TDS ON WINNING TDS ON COMMISSION

LOTTERIES OR CROSS FROM HORSE RACES ON SALE OF LOTTERY
WORD PUZZLES, [Sec. 194BB] TICKETS [Sec. 194G]
etc. [Sec. 194B]

TDS ON WINNING FROM LOTTERIES OR CROSS WORD PUZZLES,.

[Sec. 194B]

Who is responsible to deduct tax: Any person1 responsible for paying to any person
any income by way of winning from horse races, exceeding ` 10,000?

Rate of TDS: 30% (in case of non-resident payee, applicable surcharge, health and
education cess shall also be considered)

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Project of: Law of Taxation

When tax shall be deducted: At the time of payment.

Other Points

 Any person, here means a book-maker or a person to whom a licence

has been granted by the Government for horse racing or arranging for
wagering, betting in any race course.
 Race-income other than horse races like camel races etc is not covered
by this section.

TDS ON WINNING FROM HORSE RACES [Sec. 194BB]

Who is responsible to deduct tax: Any person1 responsible for paying to any person
any income by way of winning from horse races, exceeding ` 10,000.

Rate of TDS: See sec. 194B (TDS on Winning from lotteries or cross word puzzles or
card games, etc.)

When tax shall be deducted: At the time of payment.

Other Points

 Any person, here means a book-maker or a person to whom a licence

has been granted by the Government for horse racing or arranging for
wagering, betting in any race course.
 Race-income other than horse races like camel races etc is not covered
by this section.

TDS ON COMMISSION ON SALE OF LOTTERY TICKETS [Sec. 194G]

Who is responsible to deduct tax: Any person responsible for paying any income by
way of commission, remuneration or prize (by whatever name called) on lottery tickets
to any person, who is stocking, distributing, purchasing or selling such tickets.

When tax shall be deducted: At the time of payment or crediting the payee, whichever
is earlier?

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Project of: Law of Taxation

Rate of TDS: Resident 5% Non-Resident 5% (+ Surcharge + Health & Education cess)

When TDS cannot be made

 Where amount of commission, etc. on such tickets does not exceed ` 15,000.

Exemption or relaxation from the provision

 When the recipient applies to the assessing officer in Form 13 and gets a
certificate authorizing the payer to deduct tax at lower rate or deduct no tax.
[Refer sec.197]

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Project of: Law of Taxation

BIBLIOGRAPHY

BOOKS REFERRED:-

1. Taxation Law by Atal Kumar

2. Law of Taxation by Dr. Ashok k Jain

WEBSITES :-

• Lawwire.in

• Legalservicesindia.com

• Lawyersnjurist.com

References

1) https://www.mondaq.com/india/tax-authorities/601974/a-study-of-the-indian-tax-
system

2) https://blog.ipleaders.in/law-taxation-constitution-india/#Introduction

3) https://www.drishtiias.com/daily-updates/daily-news-analysis/increase-in-direct-
taxcqollections#:~:text=In%20September%202019%2C%20India%20slashed,%25%2C
%20down%20from%2035%25.