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What is Tax Deducted At Source TDS?
In order to collect taxes quickly and efficiently, the Income-tax Law has incorporated a system of deduction of tax at the point of generation of income. This system is called “Tax Deducted at Source”, commonly known as TDS. Under this system, tax is deducted at the origin of the income if payment exceeds a certain threshold limit.
Tax is deducted by the payer and is remitted to the Government by the payer on behalf of the payee.
The provisions of deduction of tax at source are applicable to several payments:
- Salary,
- Interest,
- Commission,
- Brokerage,
- Professional fees,
- Royalty,
- Contract payments, etc.
In respect of payments to which the TDS provisions apply, the payer has to deduct tax at source on the payments made by him and he has to deposit the tax deducted by him to the credit of the Government.
TDS Rates Applicable for Resident
| Nature of Payments | TDS Rates (%) |
|---|---|
| Section 192- Payment of Salary | Normal Tax Rate plus surcharge and education cess. (i.e Normal Slab Rates) |
| Section 192A- Payment of the taxable accumulated balance of the provident fund | 10 |
| Section 193- Interest on Securities | 10 |
| Section 194- Dividend | |
| *Section 194A- Interest other than interest on securities | 10 |
| Section 194B- Winnings from lottery or crossword puzzle or card game or other game of any sort. | 30 |
| Section 194BB- Winning from horse races | 30 |
| Section 194C- Payment to resident contractor/Sub-contractor:
a)Individual/HUF b) Any Others | 1
2 |
| Section 194D- Insurance Commission | 10 |
| 5
10 |
| Section 194DA-Payment in respect of Life Insurance Policy | 1 |
| Section 194EE- Payment in respect of deposits under National Savings Scheme, 1987 | 10 |
| Section 194F- Payment on account of repurchase of units of MF or UTI | 20 |
| Section 194G- Commission on sale of lottery Tickets. | 5 |
| Section 194H- Commission or Brokerage | 5 |
| Section 194-I- Rent: | |
| 2
10 |
| Section 194-IA- Payment/credit of consideration to resident transferor for transfer of any immovable property (Other than rural agricultural land) | 1 |
| Section 194-IB- Payment of rent by an individual or HUF not subject to tax audit under section 44AB | 5 |
| Section 194-IC- Payment under Joint Development agreement to resident individual or HUF who transfers land or building as per such agreement | 10 |
| Section 194J- Professional Fees, technical fees, royalty or remuneration to a director.
(Note: 2% if payee is engaged in the business of operation of call center) | 10 |
| Section 194LA- Payment of compensation on acquisition of certain immovable property | 10 |
| Section 194LB(1)- Payment of the nature referred to in section 10(23FC) or section 10(23FC)(a) or section 10(23FCA) by business trust to resident unit holder | 10 |
| Section 194LBB- Payment in respect of units of investment fund specified in section 115UB. | 10 |
| Section 194LBC(1)- Payment in respect of an investment in a securitisation trust specified in clause in (d) of the explanation occuring after section 115TC ( W.e.f june 1,2016) | – |
| Section 194M- Payment of contractual work, Commission ( not being insurance commission referred to section 194D), brokerage or professional fees, by an individual or HUF not covered under section 194C, Section 194H, and 194J | 5 |
| Section 194N- Payment in cash by banking company or Co-op. bank or post office | 2 |
| 25
30 |
TDS Rates Applicable for Non-Resident or Foreign Company
Due Dates for Filing TDS Returns
- FY 2019-2020
| Quarter | Quarter Ending | Due Date |
|---|---|---|
| Q1 (April – June) | 30th June | 31st July |
| Q2 (July – Sep) | 30th September | 31st October |
| Q3 (Oct – Dec) | 31th December | 31st January |
| Q4 (Jan – March) | 31st March | 31st May |
Due Date for TDS Payment
| Month | Quarter | Due Dates for TDS Payment (Non -Govt. Deductor) |
|---|---|---|
| April | Q1 (April-June) | 7th May |
| May | Q1 (April-June) | 7th June |
| June | Q1 (April-June) | 7th July |
| July | Q2 (July-Sep) | 7th Aug. |
| August | Q2 (July-Sep) | 7th Sept. |
| September | Q2 (July-Sep) | 7th Oct. |
| October | Q3 (Oct – Dec) | 7th Nov. |
| November | Q3 (Oct – Dec) | 7th Dec. |
| December | Q3 (Oct – Dec) | 7th Jan. |
| January | Q4 (Jan – March) | 7th Feb. |
| February | Q4 (Jan – March) | 7th March |
| March | Q4 (Jan – March) | 30th April |
*For Government Deductor:
- Same day -i.e. should be deposited on the same day of deduction (Without Challan).
- On or before the 7th working day of next month (With challan # Even in March also i.e. for the month of March – 7th April)
Nature of Challan used for payment of TDS/TCS
Challan 281
281 is to be used for making payment of TDS/TCS by corporate and non-corporate
deductors/collectors. Following are few important points to be kept in mind while
providing details in Challan 281:
- The correct selection of the nature of the deductee is to be made along with the correct Code.
The Codes provided in the Challan 281 are :- 0020
- 0021
Code 0020 is for company deductees and 0021 is for non-company deductees.
- Correct selection of the type of payment is to be made along with the correct Code. The Codes provided in the Challan 281 are :
- 200
- 400
Code 200 is for TDS/TCS payable by taxpayer and Code 400 is for TDS/TCS to
be paid on regular assessment
- Correct selection of nature of payment should be made (i.e., TDS on salary,
interest, commission, etc.) along with correct section.
Following are the Challans to be used for making payment of different direct taxes:
| Nature of Tax Payment | Challan No |
|---|---|
| For making payment of income-tax and Corporate tax (i.e. income-tax by companies) | ITNS 280 |
| For making payment of TDS/TCS by corporate and non-corporate deductors/collectors | ITNS 281 |
| For making payment of Securities Transaction Tax, Wealth Tax and other direct taxes. | ITNS 282 |
| For making payment of income-tax and corporate tax (i.e. income-tax by companies) in case of undisclosed foreign Income and Assets. | ITNS 284 |
| For making payment of Equalization levy | ITNS 285 |
Know About TDS Return Forms
| Particulars | Type of Forms |
|---|---|
| For Salary Payment | 24Q |
| On All Payments other than Salaries | 26Q |
| Payment To NRI | 27Q |
| For TCS Return | 27EQ |
Source: Income Tax India & Finance Act, 2019.
