TDS OVERVIEW FOR FY 2019-20

OBJECTIVES OF TAX DEDUCTED
AT SOURCE.
 It helps in reporting the correct Incomes,
checking Tax evasion, early collection of tax and
widening the tax net.
 TDS is only on the payments which are specified
under Chapter XVII B, hence it is exhaustive in
nature. Therefore only those payments which are
covered in the above chapter are liable for
deduction of tax at source.
2

Need for Tax Deducted at Source
 To comply with the mandatory provisions of the Act
 To avoid disallowance of certain expenditure under
Section 40a.
 To avoid penalty and mandatory Interest for not
deducting/short deduction/non payment/delay in
payment of Tax Deducted at Source.
 To avoid Offence & Prosecution under Chapter XXII of
Income Tax Act 1961.
3

CHAPTER XVII
COLLECTION & RECOVERY OF TAXES
A. Chapter XVII contains the provisions for deduction of
tax.
B. Section 4(1) Income Tax is the charging section in
respect of the total income of the previous year.
As per Section 4(2) In respect of Income chargeable
u/s 4(1), income tax shall be deducted at source as
per the applicable provisions of the Act.
C. Credit for tax deducted u/s 199
TDS shall be treated as payment of tax on behalf of
the person from whose income the deduction was
made.
4

D. Credit shall be given to him for the Assessment Year
for which such income is assessable or assessed.
E. Section 191 – If the provision for TDS not applicable
or where TDS has not been deducted. Obligation to pay
directly by the assessee.
F. Section 205 – If TDS applicable and deducted, then
there is no liability for the assessee to pay tax by himself.
CHAPTER XVII
COLLECTION & RECOVERY OF TAXES
5

Section Type of Payment
192 Payment of Salaries.
192A Premature withdrawal from EPF
193 Interest on Securities
194 Dividends
194A
Payment of Interest (other than interest
on securities).
194B
Winning from Lottery or Crossword
puzzles
194BB Winning from Horse races
194C
Payment to any contractor or Sub-
Contractor.
7

194D Insurance commission
194DA Payment in respect of life insurance policy.
194E Payment to Resident Sportsman or Sports Association
194F
Payment on Account of repurchase of Units by
National Funds or U.T.I
194G Commission etc. on Sale of Lottery
194H Payment of Commission or Brokerage.
194I Payment of Rent.
194 IA
Payment on transfer of certain immovable property
other than agricultural land (w.e.f 01/06/13)
194IB Rent By Individual / Huf
8

194J Payment of any Professional fees.
194 LA
Payment of compensation on acquisition
of certain immovable property other than
agricultural land
194 LB
Income by way of interest from
Infrastructural debt bond (Non Resident)
194LC Income by Interest from Indian Company
194LD
Income by way of interest on certain
bonds and Government securities
195 Payment to Non Residents.
9

206AA
Requirement to furnish PAN for
TDS eligible payments.
Rule 30 Due date for payment of TDS.
201 & 276B Consequences of Default
278B Offences by Companies
203 & Rule 31
Certificate of Tax Deducted at
source to the payee
203A Read with Rule
114A
Tax Deduction Account Number –
(TAN)
Sec. 206 & Rule 31A
Filing of Returns of tax deducted at
Source
10

TIME OF TAX DEDUCTION
TAX DEDUCTED SECTIONS
AT THE TIME OF PAYMENT
192,194,194B,194BB,
194DA,194EE, 194F, 194LA
AT THE TIME OF PAYMENT
OR CREDIT
193,194A,194C,194D,194E,194G,
194H,194I,194IA,194LB,194LC,194
LD,194J,195
11

SEC.192 : PAYMENT OF SALARIES
Who is the payer ?? Employer
Who is the recipient ?? Employee
What Payment Covered ?? Taxable Salary of the
employee
At what time TDS to be deducted
??
At the time of payment.
(If salary is not paid then TDS
does not arise.)
Maximum amount which can be
paid without tax deduction ??
The amount of exemption limit
(i.e.,Rs.2,50,000 / 3,00,000 /
5,00,000 )
Rate at which tax to be deducted. As per Calculation
Who shall deduct tax if a person is
employed at multiple employers ?
Tax shall be deducted by the
employer which employee
chooses.
12

Is it possible to get the
payment without tax
deduction or with lower tax
deduction ??
The employee can make application in
Form No.13 to the Assessing Officer to get
the certificate of lower tax deduction or no
tax deduction.
Is 15G / 15H Allowed ? No.
Can the tax be recovered from
the employee if the employer
after deduction of tax on
salary did not deposit the
same ??
No. It is decided in the case of Capt.
J.G.Joseph vs JCIT (2008)303 ITR (AT) 395
(Mum).
Can an employer be penalized
for short deduction of tax due
to honest and bona fide error
??
If the employer acted honestly and fairly
he could not be treated as assesee in
default U/S 201(1) .Commissioner of
Income Tax Vs Delhi Public School (2011)
13

 The employee may furnish to the employer details
of income chargeable to tax under other heads of
income
not being loss, except loss under the head Income
from House Property and tax deducted on the same.
In such a case employer shall deduct tax due on total
income.
However, total amount of tax deducted should not be
less than the amount of tax deductible from salary
except where the loss under the head Income from
House Property has been taken into account.
14

SEC. 192A
Payment of accumulated balance due to an employee
Who is the payer ?? Trustee of EPF
(Recognized and unrecognized)
Who is the recipient ?? Employee
What Payment Covered ?? Early withdrawal of EPF
What is “Early withdrawal ?” Withdraw money before 5 years
of continues service.
including service with the
former employer
At what time TDS to be deducted ?? If accumulated PF balance is
Rs.50,000/- or more
Rate of TDS
If PAN is Provided
If PAN is not furnished
10%
34.068%(Maximum marginal rate)
15

SEC. 192A
Payment of accumulated balance due to an employee
For Recognized EPF Account, TDS under section
192A shall not be deducted-
(rule 8 of Part A of 4th Schedule)
1. If you transfer your old EPF account to another EPF account.
2. If you have been terminated from service due to his ill health or
discontinuation/contraction of business by an employer or
completion of a project or other cause beyond the control of the
member.
3. If you withdraw money from the EPF account after 5 years of
continuous service, including service with the former employer.
4. If your withdrawal from EPF account is less than Rs.50,000/-
5. If you submit Form I5G/15H along with your PAN.
16

SEC. 193 : INTEREST ON SECURITIES
Who is the payer. Payer of interest on securities.
Who is the recipient. A resident person holding securities.
Payment covered. Interest on securities.
At what time TDS to be deducted. At the time of payment or at the time
of credit, whichever is earlier.
Maximum amount which can be paid
without tax deduction
Rs. 10,000/-
Rate at which TDS to be deducted 10%
When the provisions are not
applicable.
Interest on Central/ State Government
securities.
Is it possible to get the payment
without tax deduction or with lower
tax deduction.
The recipient can make application to
the Assessing Officer in Form No. 13
or declaration to the payer in Form
15G or 15H as applicable.
17

1. For a National Defense bond held by a resident, interest is payable
at 4.25%. Sec.193(i)
2. On interest paid at 4.25% on national defense loans from 1968 or
4.75% on NDL 1972. Sec.193(ia)
3. Interest payable on National Development Bond. Sec.193(ib)
4. Interest payable on 7-year National Savings Certificate. Sec.193(iia)
5. No tax shall be deducted if the payee (not being a company or a
firm) provides Form No. 15G/15H.
6. When the payee has obtained a certificate from the Assessing
Officer for no deduction or less deduction of tax.
7. From 1st June 2008, any interest payable on any security issued by a
company, where such security is in dematerialized form and is
listed on a recognized stock exchange in India in harmony with the
Securities Contracts (Regulation) Act, 1956 (42 of 1956) and the
rules made there under. Sec.193(ix)
Tax Exemptions u/s 193
Tax does not get deducted in the below situations:
18

8. Interest payable on 6.5% Gold Bonds, 1977 or 7% Gold
Bonds, 1980 held by a resident individual on condition that
total nominal value of such bonds does not exceed Rs.
10,000 at any time during the period to which the interest
relates. Sec.193(iii)
9. Effective from 1/07/2012, for resident individual, or
resident HUF where interest is payable on debentures
issued by a company in which the public are greatly
interested, provided these conditions are met: Sec.193(v)
(a) amount of interest does exceed Rs. 5000; and
(b) Payment of such interest is paid by the company by
an account payee cheque.
19

10.Any interest due on any security of the Central Government or
State Government, other than 8% Savings (taxable) Bonds,
2003, provided the interest does not exceed Rs. 10,000 for the
financial year. Sec.193(iv)
11.Interest payable on certain notified debentures issued by any
institution or authority, or any public-sector company, or any
co-operative society (including co-operative land mortgage
bank or co-operative land development bank). Sec.193(iib)
12.Any interest payable to LIC/GIC/4 companies formed under
General Insurance Business Act/any other insurer in respect
of any securities owned by it or in which it has valuable
interest. Sec.193(vi, vii, viii)
Where any incomes by way of interest on securities is credited to any account, whether
called “Interest Payable Account” or “Suspense Account” or by any other name, such
crediting shall be deemed to be credit of income to the account of the payee and the
provisions of this section shall be applicable.
20

Who is the payer Domestic company.
Who is the recipient Resident.
Payment Covered
Dividend under section 2(22) (a), (b),
(c), (d), (e)
At what time TDS to be deducted At the time of payment
Rs.2,500/-
When the provisions are not applicable
1. Shareholder being An individual , if-
a) Dividend covered by section 115-O
b) Dividend paid by A/c Payee cheque
2. Dividend given to LIC, GIC, 4
companies under GIB(N) Act, 1972.
Is it possible to get the payment without
tax deduction or with lower tax
deduction
The recipient can make application to
the Assessing Officer in Form No. 13 or
declaration to the payer in Form 15G or
15H as applicable
SEC.194 : DIVIDENDS
21

SEC 194A : INTEREST
OTHER THAN INTEREST ON SECURITIES
Who is the payer.
Any person paying interest other than interest
on securities.
(except an individual or a HUF not required to
get his books audited u/44AB)
Who is the recipient. A Resident person
Payment covered. Interest other than interest on securities
At what time TDS to be deducted.
At the time of payment or at the time of credit,
whichever is earlier
Maximum amount which can be paid without
tax deduction.
If payer is banking company, co-operative
society engaged in banking business or post
office - Rs 40,000/-
if Payer is any other person - Rs 5,000/-
If the Payee is Senior citizen – Rs.50,000/-
Rate at which TDS to be deducted.
10% if the recipient is resident non-corporate
assessee and
10% if the recipient is resident corporate
assessee
When the provisions are not applicable.
If the payee are Insurance companies or
financial institutions including co-operative
societies etc.
22

Q:Is there is any liability to deduct tax under this
section if the interest paid by a society registered
under the Travancore –Kochi Literary Scientific and
Charitable Societies Registration Act,1955, since the
societies are exempted from the deduction of tax?
A:Yes. Since only those societies registered under the
Societies Registration Act,1980 is exempted from
deduction of tax as per the Section 194A(iii)(f): Kerala
State Nirmiti Kendra Vs CIT (2013) 30 taxmann.com15
(Kerala HC)
23

Q: Is it possible to impose penalty under section 271C if in
the case of interest payments by the partners to the firm for
their debit balance in the current account with out
deduction of tax?
A:No. There is no liability for the firm to deduct the tax on
interest payments to partners. The partners and the
partnership firm are not two different legal entities and the
partners believe that there is no liability to deduct tax.
So there is a “Reasonable cause” for the non deduction of
tax, hence as per section 273B and so no penalty will be
livable U/s 271C.
Thomas Muthoot Vs Joint Comm.of Income Tax (TDS),TVM
[2013] 30 taxmann.com 354 (Cohin Tribunal)
24

Winnings from Lotteries or Crossword Puzzles (Sec.194B)
and Winning from horse races (Sec.194BB)
Who is the payer Any person paying winnings
Who is the recipient Any Assessee
Payment covered
Winnings from lotteries/crossword
puzzles/card games/other games /
Winning from Horse racing / or any
other wagering or betting in any race
course
At what time TDS to be deducted. At the time of Payment
Rs.10,000/-
tax deduction
Not Possible
25

194C : PAYMENT TO CONTRACTORS
Who is the payer Specified person
Who is the recipient A resident contractor
Payment Covered Consideration for any Work Contract
Rate of TDS
1% - Individual or HUF
2% - Others
Nil - Transporter (44AE) declaration with PAN
At what time TDS has to be
deducted
At the time of payment or at the time of credit
paid without tax deduction
The tax is required to be deducted if a single
payment exceeds Rs. 30,000/- or if the aggregate
payments exceed Rs. 1,00,000/- p.a
without tax deduction or with
lower tax deduction
The recipient can make application to the Assessing
Officer in Form No. 13
26

“Work” shall include –
(a) Advertising;
(b) Broadcasting and telecasting including the production of
programs for such broadcasting or telecasting;
(c) Carriage of goods or passengers by any mode of transport
other than by railways;
(d) Catering;
(e) Manufacturing or supplying a product according to the
requirement or specification of a customer by using material
purchased from such customers,
But does not include: manufacturing or supplying a product
according to the requirement or specification of a customer by
using material purchase from a person, other than such
customer.
27

Sec.194D : Insurance Commission
Who is the payer
Any person paying insurance
commission.
Who is the recipient A resident person
Payment covered Insurance Commission
At the time of payment or at the time of
credit whichever is earlier
Rs. 15,000/-
Rate at which TDS to be deducted
5% - non-corporate assessee and
10% - corporate assesse
tax deduction
The recipient can make an application
in Form No. 13 to the Assessing Officer
to get the certificate of lower tax
deduction or no tax deduction, or
Recipient submitted for m 15G/15H.
28

Sec.194DA : PAYMENT IN RESPECT OF LIFE
INSURANCE POLICY
Who is the payer Insurer
Who is the recipient A resident
Payment covered
Insurance policy, bonus on such policy
or any other amount received on such
policy, other than the amount covered
u/s 10(10D).
At what time TDS to be deducted. At the time of payment
Rs. 1,00,000/-
1% - non-corporate assessee and
corporate assesse
29

Sec.194E : PAYMENT TO NON-RESIDENT
SPORTSMAN/SPORTS ASSOCIATION
Who is the payer Any person making payment to non-
resident sportsman/sports association.
Who is the recipient Non-resident sportsman/sports
association/ Athlete/ Entertainer.
Payment covered Payment to non-resident
sportsman/sports association.
( Income referred to in Sec.115BBA)
At what time TDS to be deducted. At the time of payment or at the time of
credit whichever is earlier
Nil
Rate at which TDS to be deducted 20%+ Education cess etc and Surcharge
as applicable
When the provisions are not applicable --
Is it possible to get the payment without
tax deduction or with lower tax deduction No Provision
30

SEC.194EE : PAYMENT IN RESPECT OF DEPOSITS
UNDER NATIONAL SAVINGS SCHEME
Who is the payer Post Office
Who is the recipient Any Person
Payment covered
Payment (Principal+Interest) out of
National Saving Scheme, 1987.
2,500/-
applicable
The payment is made to legal heirs
of the deceased depositor .
31

Sec. 194F : Payments on account of repurchase of units of
Mutual Funds or UTI
Who is the payer Mutual Fund or UTI
Who is the recipient Unit holder under section 80CCB
Payment covered
Payment on account of repurchase
of units referred to in section
80CCB
--
applicable
--
tax deduction
No Provision
32

Sec. 194G : COMMISSION, etc., ON SALE OF
LOTTERY TICKETS
Who is the payer
Any person paying commission of
sale of lottery tickets
Who is the recipient Any person
Payment covered
Commission on sale of lottery
tickets
At the time of payment or at the
time of credit, whichever is earlier
15,000/-
tax deduction
The recipient can make an
application in Form No. 13 to the
Assessing Officer to get a
certificate of lower tax deduction
or no tax deduction
33

Sec. 194H : COMMISSION OR BROKERAGE
Who is the payer
Any person paying commission or
brokerage other than Individual or
HUF having turnover does not exceed
the monetary limits specified u/s
44AB.
Who is the recipient Resident
Payment covered
Commission or brokerage (not being
insurance commission)
At the time of payment or at the time
of credit, whichever is earlier
Rs.15,000/-
ITO V. MITTAL INVESTMENT & CO. [2013] 33 taxmann.com 52 (Delhi - Trib.) - Decided not to
deduct tax from sub brokers on the commission for trading Securities and Mutual fund paid by the
agent.
34

SEC.194 I : RENT
Who is the payer
Any person paying rent.
(not being an individual or HUF whose books
of account are not required to be audited
under section 44AB in the immediately
preceding financial year)
Who is the recipient A Resident
Payment covered Rent ( does not include GST charged on rent)
Rs. 2,40,000/- p.a
1. For use of Plant and Machinery - 2%.
Sec.194I(a)
2. For use of Land or Building including
Furniture – 10% 194I(b)
tax deduction
The recipient can make application in Form
No. 13
35

“Rent” means any payment by whatever nature called, under any
lease, sublease, tenancy or any other agreement or arrangement for
the use of (either separately or together) any:
i. land, or
ii. building (including factory building), or
iii. land appurtenant to a building (including a factory building),
or
iv. machinery, or
v. plant, or
vi. equipment, or
vii. furniture, or
viii. fittings
SEC.194 I – RENT
36

SEC.194-IB : RENT BY INDIVIDUAL / HUF
Who is the payer
Individual / HUF whose books of account are
not required to get audited under section
44AB in the immediately preceding financial
year
Who is the recipient A Resident.
Payment covered Rent ( does not include GST charged on rent)
Rs. 50,000/- per month or part of a month.
tax deduction
No. 13
37

SEC.194-IA : PAYMENT ON TRASFER OF CERTAIN IMMOVABLE
PROPERTY OTHER THAN AGRICULTURAL LAND
Who is the payer
Any person.
(other than person defined u/s 194LA)
Who is the recipient Any Resident Transferor.
Payment covered
any sum by way of consideration for transfer
of immovable property ( Other than
agricultural land - as defined in Section 2(14)
(iii)(a) and (b).
whichever is earlier.
Rs.50,00,000/-
(Total value specified in single sale deed)
tax deduction
No. 13
Is TAN required
Not required, only PAN is sufficient to file form
26QB
38

SEC.194-IC : PAYMENT UNDER SPECIFIC AGREEMENT
Who is the payer Any person.
Who is the recipient Any Resident.
Payment covered
Any payment (not in kind) under agreement in
Sec.45(5A) (Joint Development Agreements)
What is Joint Development
Agreement?
This is an agreement between the owner of an
asset (being land or building or both) who agrees
to allows another person to build a real estate
project on such asset, in return for share and/or
payment in cash.
whichever is earlier.
Nil
39

SEC.194-J : FEES FOR PROFESSIONAL OR TECHNICAL
SERVICES
Who is the payer
Any person paying professional charges (not being
an individual or HUF whose books of account are
not required to be audited under section 44AB in
the immediately preceding financial year)
Who is the recipient Any Person
Payment covered
Professional Services, Technical Services, Royalty,
Any Payment Other Than Salary And Allowance To
A Director Of A Company, Payment To Call Centre
Operator etc.
If the amount of payment during the financial year
is Rs. 30,000/-.
Payment to Call Centre Operator - 2%
Others – 10%
tax deduction
The recipient can make application in Form No. 13
40

Definitions:
 Professional services:
services rendered by a person in the course of carrying on
legal, medical, engineering or architectural profession or the
profession of accountancy or technical consultancy or
interior decoration or advertising or such other profession as
is notified by the Board for the purpose of section 44AA or of
this section.
41

 Fees for technical services:
 shall have the same meaning as in Explanation 2 to clause (vii)
of sub-section (1) of section 9
 any consideration (including any lump sum consideration) for
the rendering of any managerial, technical or consultancy
services (including the provisions of services of technical or
other personnel), but does not include consideration for any
construction, assembly, mining or like product undertaken by
the recipient or consideration which would be income of the
recipient chargeable under the head “salaries”.
42

Royalty
"royalty" means consideration (including any lump sum consideration but excluding any
consideration which would be the income of the recipient chargeable under the head
"Capital gains") for—
i. the transfer of all or any rights (including the granting of a licence) in respect of a
patent, invention, model, design, secret formula or process or trade mark or similar
property ;
ii. the imparting of any information concerning the working of, or the use of, a patent,
invention, model, design, secret formula or process or trade mark or similar property ;
iii. the use of any patent, invention, model, design, secret formula or process or trade mark
or similar property ;
iv. (the imparting of any information concerning technical, industrial, commercial or
scientific knowledge, experience or skill ;
iva. the use or right to use any industrial, commercial or scientific equipment but not
including the amounts referred to in section 44BB;
v. the transfer of all or any rights (including the granting of a licence) in respect of any
copyright, literary, artistic or scientific work including films or video tapes for use in
connection with television or tapes for use in connection with radio broadcasting, but
not including consideration for the sale, distribution or exhibition of cinematographic
films ; or
vi. the rendering of any services in connection with the activities referred to in sub-clauses
(i) to (iv), (iva) and (v).
43

SEC.194-LA : PAYMENT OF COMPENSATION ON
ACQUISITION OF CERTAIN IMMOVABLE PROPERTY.
Who is the payer Any person
Who is the recipient Any Resident
Payment covered
Compensation or the enhanced compensation on
compulsory acquisition of any immovable
property other than agricultural land under any
law for the time being in force.
At what time TDS to be deducted. At the time of Payment
Rs.2,50,000/-
tax deduction
no deduction shall be made under this section
where such payment is made in respect of any
award or agreement which has been exempted
from levy of income-tax u/s 96 of the Right to Fair
Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement Act,
2013 (30 of 2013)44

SEC.194-LB : INCOME BY WAY OF INTEREST FROM
INFRASTRUCTURE DEBT FUND.
Who is the payer Any person
Who is the recipient Non-resident other than a foreign company
Payment covered
an infrastructure debt fund referred to in clause
(47) of section 10.
At the time of Payment or At the time of payment
or at the time of credit, whichever is earlier
NA
45

SEC.194-LBA : CERTAIN INCOME FROM UNITS OF A
BUSINESS TRUST.
Who is the payer A business trust
Who is the recipient
Resident or
Non-resident (other than a foreign company)
Foreign Company
Payment covered
Any distributed income referred to in section
115UA
NA
1. Resident – 10%
2. Non-resident – 5% (payment in nature
referred to sub-clause(a) of clause (23FC)
of section 10)
3. Non-resident – at the rates in force (payment
in nature referred to clause 23FCA of section
10)46

SEC.194-LBB : INCOME IN RESPECT OF UNITS OF
INVESTMENT FUND..
Who is the payer Any resident
Resident or
Non-resident (other than a foreign company)
Foreign Company
Payment covered
Any income, other than that proportion of income
which is of the same nature as income referred to
in clause (23FBB) of section 10.
NA
1. Resident – 10%
2. Non-resident – at the rates in force
3. Non-resident – at the rates in force
47

SEC.194-LBC : INCOME IN RESPECT OF INVESTMENT IN
SECURITIZATION TRUST..
Who is the payer A Resident
Who is the recipient An investor
Payment covered
any income in respect of an investment in a
securitization trust specified in clause (d) of
the Explanation occurring after section 115TCA
NA
1. Resident Individual / HUF– 25%
2. Others – 30%
3. Non-resident – at the rates in force.
48

SEC.194-LC : INCOME BY WAY OF INTEREST FROM INDIAN
COMPANY.
Who is the payer Indian Company or a business trust.
Who is the recipient Non-resident , foreign company.
Payment covered
In respect of monies borrowed in foreign currency from a
foreign source –
a) under a loan agreement at any time b/w 01/07/2012 and
01/07/2020; or
b) by way of issue of long-term infrastructure bonds b/w
01/07/2012 and 01/10/2014; or
c) by way of issue of any long-term bond including long-term
infrastructure bond b/w 1/10/2014 and 1/ July/2020 as
approved by the Central Government in this behalf ;or
d) by way of issue of rupee denominated bond (masala bond)
before the 1st day of July, 2020 and
e) to the extent to which such interest does not exceed the
amount of interest calculated at the rate approved by the
Central Government in this behalf, having regard to the
terms of the loan or the bond and its repayment.
49

NA
1. Non-resident – 5%
2. Foreign Company – 5%
SEC.194-LC : INCOME BY WAY OF INTEREST FROM INDIAN
COMPANY.
50

SEC.194-LD : INCOME BY WAY OF INTEREST ON CERTAIN
BONDS AND GOVERNMENT SECURITIES.
Foreign Institutional Investor or a Qualified
Foreign Investor
Payment covered
Interest payable b/w 01/06/2013 and
01/07/2020 in investment made in
i. a rupee denominated bond of an Indian
company ; or
ii. a Government security:
NA
51

SEC 195 – OTHER SUMS (Payment To Non Residents)
Who is the recipient Non-resident
Payment covered
1. any interest (not being interest referred to
in section 194LB or section 194LC or section
194LD); or
2. any other sum chargeable under the
provisions of this Act ;
3. not being income chargeable under the head
"Salaries“
4. any dividends referred to in section 115-O
For Govt or PS Bank or PFI : At the time of Payment
Others : At the time of Payment or At the time of
payment or at the time of credit, whichever is
earlier
Rate of tax is prescribed in the Finance Act.
However if the rates indicated in relevant DTAA is
lower such lower rates are applicable.
tax deduction
The recipient can make application in Assessing
Officer
52

SEC.196 : INTEREST OR DIVIDEND OR
OTHER SUMS PAYABLE TO GOVERNMENT,
RESERVE BANK OR CERTAIN
CORPORATIONS.
No Deduction of tax shall be made by any person from
any sum payable to :
 Government
 Reserve Bank of India
 Corporation established by or under a Central Act
whose income is exempt from Income Tax
 Mutual Fund u/s 10(23D)
53

SEC 196A – INCOME IN RESPECT OF UNITS OF
NON-RESIDENTS.
Payment covered
1. any income in respect of units of a Mutual
Fund specified under clause (23D) of section
10 ; or
2. Unit Trust of India
NR Individual / HUF who purchased from UTI
using NRE A/c or by remittance in foreign
currency - Nil
Others - 10%
no deduction shall be made under this section from any such income
credited or paid on or after the 1st day of April, 2003
54

SEC 196B – INCOME FROM UNITS.
Who is the recipient Offshore Fund
Payment covered
income from units purchased in foreign currency
or
long-term capital gains arising from the transfer of
such units
55

SEC 196C – Income from foreign currency bonds or
shares of Indian company.
Payment covered
1. interest or dividends in respect of bonds or
Global Depository Receipts referred to
in section 115AC (income from bonds or
Global Depository Receipts purchased in
foreign currency); or
2. long-term capital gains arising from the
transfer of such bonds or Global Depository
Receipts
56

SEC 196D – Income of Foreign Institutional Investors
from securities.
Who is the recipient Foreign Institutional Investor
Payment covered
1. any income in respect of securities referred to
in clause (a) of sub-section (1) of section
115AD (not being dividend or capital gain
arising from such securities..
57

Sec.197 : Obtaining a Certificate of Nil rate or
Lower Rate from the Assessing Officer
 For tax-deductible u/s 192, 193, 194, 194A, 194C, 194D,
194G, 194H, 194-I, 194J, 194K, 194LA or 195.
 The recipient can apply in Form No.13 to the Assessing
Officer to get a certificate authorizing the payer to deduct
tax at lower or deduct no tax as may be appropriate.
 The certificate of lower rate shall be issued through the
ITD application i.e. computer system of the department.
Issue of manual certificates is not permitted.
58

Certificate has to be issued individually to each deductor.
Only a copy of the certificate is to be given to the applicant
/ assessee for information.
 Only the original certificate addressed to the deductor and
signed by AO can be acted upon by deductor and
photocopy is not valid.
However in the case of entities covered by Rule 28AB, the
Assessing Officer may issue a certificate to the recipient
authoring payment of income without deduction of tax at
source. The recipient may furnish copies of such certificate
to the person responsible for paying the income for the
purpose of no deduction of tax at source.
 The certificate to be issued with in 30days from the date of
application
59

No deduction of tax at source in
certain cases – Section 197A
Payment u/s 193,194A,194EE
◇ Form No: 15G by everybody (not being a company or a firm)
and Form No: 15H by Senior Citizens.
◇ This benefit is not applicable if the total amount
paid/payable is in excess of the maximum amount not
chargeable to tax.
60

SECTION 206(AA)
Furnishing PAN is compulsory for all TDS eligible payments covered
under Chapter XVII-B , failing to which, Deductor will be deducting
TDS at a higher rate.
For such case, the rate of TDS should be determined at higher of
below conditions:
1. TDS rate prescribed in the Act ;
2. Rate of Tax in force ;
3. At 20%
The section is applicable for all payments made on or after April 1,
2010.
Declaration under Section sub-section (1) or sub-section (1A) or
sub-section (1C) of section 197A shall be valid only if PAN is
furnished.
61

No certificate under section 197 shall be granted unless
the application made under that section contains the
PAN of the applicant. TAN of the deductor is mandatory
without which certificate cannot be generated from the
system.
The deductee shall furnish his PAN to the deductor and
both shall indicate the same in all the correspondence,
bills, vouchers and other documents which are sent to
each other.
In the case of A.Kowsalya Bai Vs.U.O.I (Karnataka HC)
decided that if any person is having income below the
basic exemption limit there is no need of PAN and
asking of PAN is arbitrary and unconstitutional.
62

CONSEQUENCES OF DEFAULT
Liability u/s 201 & 221
Interest & Penalty –
 Assessee in default u/s 221 Penalty equal to the amount of tax
in arrears.
 Interest @ 1% per month or part of the month from the date on
which tax such tax was deductible to the date on which such
tax is deducted.
 1.5% per month or part of the month from the date on which
such tax was deducted to the date on which such tax is actually
paid.
 Both the above are consequences of Not deducting or Deducted
and not paying to the Central Government.
63

Amendments (w.e.f. 01.07.2012):
 Any person including principal officer of a company
who fails to deduct the whole or any part of the tax on
the sum paid to a resident or on the sum credited to the
account of a resident as salary shall not be deemed to
be an assessee in default in respect of such tax if such
resident-
 Has furnished his return of income U/s 139;
 Has taken into account such sum for computing
income in such return of income; and
 Has paid the tax due on the income declared by him
in such return of income,
and the person furnishes a certificate to this effect from
an accountant in Form No.26A
64

 No penalty shall be charged U/s 221 from such person,
unless the assessing officer is satisfied that such person,
without good and sufficient reasons, has failed to deduct
and pay such tax.
Section 271C
 Penalty for failure to deduct tax at source as required or
under the provisions of Chapter XVII-B. Penalty Equal to
Tax.
Section 276B
 If a person fails to pay to the credit of Central
Government, tax deducted at source by him as required
by or under the provisions of Chapter XVII-B.
 Imprisonment for a Period 3 months to 7 years and with
fine.
65

Sec.234 : E-FEE FOR DEFAULT IN
FURNISHING STATEMENTS
◇ If any person fails to deliver or cause to be delivered a
statement within the time prescribed in Section 200 (3)
he shall be liable to pay by way of fee a sum of Two
hundred rupees for every day during the failure
continues. The amount should not be more than the
tax deducted or collected as the case may be.
◇ Kerala, Karnataka, Delhi & Allahabad HC are stayed
the demand
◇ Hope for the new Budget
66

 Every person who at the time of offence was in charge of and
was responsible to the company for the conduct of business of
the company as well as the company shall be liable to be
proceeded against.
 If it is established that the offence was committed with the
connivance of director, manager, secretary or other officer –
such persons shall also be liable to be punished
 In the case of imprisonment and the offence being committed
by company, apart from fine on the company, officers
responsible shall be liable to be proceeded against.
Section 278B – Prosecution -
Offences by Companies
67

Due dates for Payment of Tax deducted
at Source – Rule30
Sl.No Nature of Payment Due Date
1 All Payments or Credits during
the year
Within one week from
the end of the month in
which payment is made
2 Provision by way of credit to
the account of person on 31st
March of the Previous year.
Before 30th April of the
next financial year.
68

Certificate of Tax Deducted at
source to the payee – Sec 203 and
rule 31
 In respect of cases where Salaries under section
192 in Form No. 16
 Other than Salaries - Form No. 16A
 In the case of payment on transfer of certain
immovable property- Form No.16B
 The certificates issued in Form No. 16 can be
issued after downloading from the TRACES (TDS
Reconciliation Analysis and Correction Enabling
System) portal of the income tax department. This
form having two parts one is Part A and other is
Part B. Only Part A will be required to download
from the site.(Circular No 4/2013)
69

 Due Dates by which certificate is to be submitted to the
payee:
 Salaries - Form No. 16 - within one month from the end of
the month during which the credit has been given (ie on
or before 31st May) or the sum have been paid.
 Other Payments – Form No. 16A – within 15 days from the
due date for furnishing the statement of TDS in each
quarter.
 As per circular No 3/2011 dated 13 /05/11 it can be down
loaded form the site.
70

Exceptions to the time limit specified for
issuance of TDS certificates
 Duplicate certificates can be issued on receipt of a letter
on a plain paper from the payee
 Non Issuance of TDS certificates with in the due dates will
attract a penalty of Rs.100/- per day during this default
continues under Sec.272A
71

PROVISIONS FOR FILING RETURNS
Meaning:
• E-TDS return is a TDS return prepared in form No.24Q,26Q or 27Q
in electronic media as per prescribed data structure in either a
floppy or a CD ROM. The floppy or CD ROM prepared should be
accompanied by a signed verification in Form No.27A.
• In the return we have to show “T” if there is any payment to
transporters with out deduction of tax.
Need for filing e-TDS Return:
 As per Section 206 of Income Tax Act all corporate and
government deductors are compulsorily required to file their TDS
return on electronic media (i.e. e-TDS returns). However, for
other Deductors, filing of e-TDS return is optional.
72

Different
Payments
In case the person deducting tax
is a company or a Government
department or a person whose
books are required to be audited
u/s. 44AB or whosenumber of
deductees in any of the quarterly
statements in the immediately
year is 20 or more
In case the
person deducting
tax is any other
person
Time-limit for
submission of return by
the person deducting
tax
Salary
Form No. 24Q in Electronic format
and Form No. 27A
Form No. 24Q
Within 15 days from the
end of each quarter (31st
May in case of last
quarter)
Payment (other than
salary) to a resident
and Form No. 27A
Form No. 26Q
May in case of last
quarter)
Payment (other than
salary) to a non-
resident
and Form No. 27A (quarterly)
Form No. 27Q
(quarterly)
May in case of last
quarter)
Payment against
transfer of
immovable property
(w.e.f 01/06/2013
Form 26QB Form 26QB
With in 7days in the next
month
73

• Form 27A is a summary of TDS return (Form 24Q, 26Q,
26QB or 27Q), which contain control total of “Amount
Paid “ and TDS.
• Note :Penalty U/S 271H for non-filing will be minimum
Rs.10,000 and maximum Rs.1,00,000 if it is not filed
within 1year from the due date ( w.e.f 01/07/2012)
74

◇ Case:1 Commissioner of Income Tax Vs Hardarshan
Sing, [2013 ]30 taxmann.com 245 (Delhi HC)
◇ Issue: 1.The assessee is carried on business of
commission agent by arranging for transportation of goods
through other transporters .He claimed that contract was
between the client and lorry owners/transporters, he acted
only as a facilitator or intermediary and not liable to deduct
TDS at the time of payment to transporters. The assessing
authority rejected the explanation and order that it is liable
to deduct tax as per section 194C.
◇ Decision:-Since he is receiving only the commission from
the transporters there is no need to deduct tax under
section 194C
CASE STUDIES & QUESTIONS
75

◇ Case:2 Income tax officer,Rajkot Vs Bhoomi
Construction 2013(30) taxmann.com 335 (Rajkot-Trib)
◇ Issue: Tax deducted under Section 194C form the
contractors /subcontractors was deducted on the last day
of the relevant accounting year by debiting the running
account of the contractor and paid before the due date for
filing the return under Section 139(1) even though there
are payments during the year in different date to the
contractor. So there is no need for disallowance under
section 40(a)(ia).
Decision:-Debiting the running account of the payee on last
day of accounting period could not be said to be deduction
of tax at source as contemplated by Section 194C read
with Section 40(a)(ia).So it should be disallowed
76

◇ Case:3 Income tax officer (TDS), Jammu Vs Accounts
officer, Govt. medical College, Jammu 2012(6) TMI
546(Tri) ITAT AMRITSAR
◇ Issue: 1.The assessee is a Govt. medical college at
Jammu. The assessee has entered into contracts with a
number of parties to maintain the operation theatre and
surgical equipments, CT Scan Machine, MRI Scan, Lift
etc., whether it is applicability of sec 194C or 194J?
◇ 2. Supply of bread and Butter and supply of security
personnel –Section 194 C or 194J
77

 But the assessing officer had observed that the assessee
had made payments for technical services and had made
a short deduction of tax. He made a total demand for
Rs.264390 for FY 2007-08 and Rs.773570 for FY 2008-09.
 Decision:
 Theatre and surgical are highly technical equipments for
the operations of the person and there for cannot be
maintained in a routine and normal manner, but a technical
person is required for maintenance of such equipments.
These contracts can not be the contracts in a routine or
normal manner but for which technical services has been
rendered and provision of sec 194J are attached except for
the supply of Bread & Butter and supply of security
personnel which is come under 194C,since there is no part
of technical service.
78

◇ Case 4: The Commissioner of Income Tax-XVII Vs.
Cadbury India Ltd.,Delhi High Court (2011)
◇ Issue: Based on survey U/S 133A -Wrong Deduction of
TDS –Penalty U/S 271C
◇ Assessee deducted tax under section 194 C for the
payment of rent of the space provided as warehouse by 10
Clearing and Forwarding agents(CFA) and deducting
under the same section form the payment made to
manpower recruiting agencies for supply of pilots for their
remuneration and expenses. But he relied on the advice of
a CA for the same
79

◇ Decision: The section 271C says that,before imposing
penalty the officer has to taken into consideration that the
failure is due to “with out a reasonable cause”
◇ In this case the assessee relied on the advice of the
learned CA and he had collected the tax and paid under
section 194C.Also the payment were to be deducted from
CFA no benefit was to be derived by the assessee for
making the lesser deduction or inaccurate deductions. So it
is not possible to say judiciously that the assessee failed
to comply the provisions.
80

◇ Case 5:Escorts Heart Institute & Reserch Centre Ltd Vs DCIT (TDS) (2014)
42 taxman.com 200 ITAT Jaipiur ( Third Member)
◇ Issue: a) Assesee running a hospital-not having blood bank-collected a
package fee from patients-patients to purchase blood from blood bank-the
company reduce the value from the package and account as payments to
blood bank- is it liable to deduct tax from payment to blood bank U/s 194J-
Difference of opinion by two members
81

◇ b) Paid a monthly payment to a retainer doctor who is a HOD - on an
agreement that not to give his service except to the assessee and to obey the
rules and regulations of the company-giving a monthly bill by the doctor-Tax
U/s 194J
◇ c) Purchasing medicine from Fortis Health World Ltd ( FHWL) –as per
agreement they will provide the staff for the smooth conduction of pharmacy-
they will charge cost plus a markup for the medicines sold –Charges under
section 194H as commission for supply of staff
CASE STUDIES &
QUESTIONS
82

◇ Decision: a) No chargeable
◇ Decision: b) Chargeable u/s 192
◇ Decision : c) Not chargeable u/s 194H
○
83

◇ Case 6: Kingfisher Airlines Ltd Vs Income Tax Department (2014) 43
taxman.com 201 Karnataka High Court
◇ Issue: Is it possible to take prosecution under section 276B if the proceedings
are pending under 201 (1) and 201 (1A) and is it possible to treat more than
one person as Principal Officer U/s 2(35)
◇ Decision: Yes it can be proceed
84

◇ Case 7: Rakeshkumar Guptha Vs UOI (2014) Taxcorp (LJ) 3378 Allahabad
High Court
◇ Issue: Is it possible to deny the officer to grant refund of tax stating that it is
not matched with the Form 26AS
◇ Decision: Since the assesse have made any fault for he same and it is only
the fault of the dedutee, the refund could not ne denied
85

◇ Case 8 :-Suo-moto action of Delhi High Court on 14th March 2013.
◇ Directed to the tax authorities the following:
◇ 1.Dispose off rectification applications filed for non credit of TDS by the taxpayers.
◇ 2.Not to adjust the past dues with the current refunds with out intimating the
taxpayers
◇ 3.If refunds have been suo-moto adjusted, transfer the matter to the concerned tax
officer for a timely remedial action.
86

◇ 4.pay interest on delayed refunds where the taxpayer is
not at fault.
◇ 5.if demand orders for the past arrears ( For the period
Prior to 31st March 2010) were not properly communicated
to the taxpayers, will treat as invalid, unless the tax
authorities can prove other wise.
◇ 6.Inform the tax dedutors in case of mistake made by them
in uploading TDS details and get it rectified.
◇ 7.Give credit of TDS when taxpayers furnish evidence,
even if the tax deductor has made mistake in uploading
details.
87

◇ Case 9: Bharti Auto Products Vs CIT –II (2013) 37 taxman.com 37 Rajkot
Tribunal (Special Bench)
◇ Issue: The assesse is a dealer of imported scarp and sold it without collection
of tax under section 206C and the scrap is not generated from the
manufacturing or mechanical working of material as per the explanation of
section 206C
◇ Decision: As per the section 206c(6) and from the definition of scarp it is
liable to collect the tax
88

◇ Questions:
◇ a)Is sponsorship given for conducting seminar chargeable
to tax ?
Yes-U/s194C
◇ b) Doses Honorarium paid to lecture attract TDS?
Yes-U/s 194C
◇ c) Does the reimbursement of expenses attract TDS?
Yes/No (Circular No 715 dt.08/08/1995-ITO Vs Dr.Willmar
Schwabe India (Pvt) Ltd (2005) 3 SOT 71 (ITAT)
◇ d) Is there is any need to file the nil TDS return, if in any
quarter there is no tax deducted
◇ No. All fine/penalty provisions 234E,271H and 272A(2)
limited to tax liability.
89

Thank You
SHIVAPRASAD RAO
shvprsd57@gmail.com
+91 999 599 1059
90

TDS OVERVIEW FOR FY 2019-20

More Related Content

What's hot (20)

Similar to TDS OVERVIEW FOR FY 2019-20 (20)

Recently uploaded (20)

TDS OVERVIEW FOR FY 2019-20