Direct Taxation - Notes on Tax Deducted at Source

 

Notes on Tax Deducted at Source

 

TDS Payment Due Date

TDS shall be deposited by 7^th of next month for any TDS of current month. But there is an exception for March of Assessment Year. For any TDS of March, payment will be made-

1.         By 7^th April next in case of the tax deducted by Government Offices.

2.         By 30^th April next in case of other deductors.

 

Due Date of Submission of TDS Return

1.         For quarter ending 30^th June - 31^st July

2.         for quarter ending 30^th September - 31^st October

3.         for quarter ending 31^st December - 31^st January

4.         for quarter ending 31^st March - 31^st May

 

Late Filing Fees u/s 234E

Under Section 234E the person who is required to deduct TDS will have to pay a fine of Rs 200 per day until the TDS return is filed. The deductor of TDS shall be liable to pay this fine for every day of delay until the fine amount is equal to the TDS amount supposed to be paid. That means total amount of fine for delayed submission of return will not exceed the TDS amount supposed to be paid.

 

Example:

TDS deducted Rs 5,000 on 13^th May, 2023. TDS return for the same was submitted on 17^th November, 2023. Calculate fine payable by the assessee for delayed submission of TDS return.

 

Solution:

No of days for which TDS return was delayed

= (31 days+ 30 days+ 31 days+ 17 days)

= 109 days

Therefore,

Fine Payable= Rs 200 × 109 days

                      = Rs 21,800

But the fine should not exceed the amount of TDS payable/paid Rs 5,000.

Therefore, in this case fine payable is Rs 5,000.

 

 

 

Penalty u/s 271H

Penalty chargeable is minimum Rs 10,000 and maximum Rs 1, 00,000. This is in addition to fine payable for delayed filing. No penalty u/s 271H will be levied in case of delayed filing of TDS return if the following condition is satisfied:

If the TDS return is filed before the expiry of one year from the due date specified in this regard.

 

Interest Payable on TDS Default

Sections	Nature of default	Interest Rate	Period of Interest
201(1A)(i)	TDS not deducted (partly/fully)	1% per month	From the date on which tax is deductible to the date on which tax is actually deducted.
201(1A)(ii)	TDS not deposited to the Government after deduction. (partly/fully)	1.5% per month	From the date of tax deducted to the date of deposit.

 

Important note:

Interest shall to be calculated on monthly basis i.e. part of a month shall be considered as full month.

 

Example:

TDS of Rs 5,000 deducted on 13^th January, 2023 and deposited on 17^th May, 2023. Calculate interest payable for delayed payment of TDS.

 

Solution:

No of months      = 5 months

Interest Payable = Rs 5,000 × 1.5% × 5

                              = Rs 375

 

Prosecution u/s 276B

If fails to pay TDS of the credit of central Government as required by the provisions of the Income Tax Act, he shall be punishable with rigorous imprisonment for a term not less than 3 months but which may extend to 7 years and with a fine.

 

Section 196

No deduction of tax shall be made from any sums payable to the following persons:

1)        The Government,

2)        The Reserve Bank of India,

3)        A Corporation established by or under a Central Act which is, under any law for the time being in force, exempt from income-tax on its income, and

4)        A Mutual Fund specified u/s 10(23D).

 

TDS Rate Chart for the FY 2023-24

 

Section	Deductee	Nature of txn	Threshold limit (Rs)	TDS Rate
192	R, NR	Payment of salary [See Note: 1 below for computation of TDS from payment of salary]	BEL of employee	Normal slab rates
192A	R, NR	Premature withdrawal from EPF	50,000	10% (20% without PAN)
193	R	Interest on securities	A. Debentures: 5,000 B. 8% Savings Bond, 2003: 10,000 C. 7.75% Savings Bond, 2018: 10,000 D. Other securities: No limit	10%
194	R	Payment of dividend	5,000	10%
194A	R	Payment of interest other than interest on securities payable by: a) A bank b) A co-operative society c) A post office	A. Senior citizen: 50,000 B. Others: 40,000	10%
194A	R	Any payment of interest	5,000	10%
194B	R, NR, FC	Income from lottery winnings, card games, crossword puzzles, and other games of any type	Aggregate income from lottery winnings, card games, crossword puzzles etc- 10,000	30%
194BA	R, NR, FC	Income from online games	Nil	30%
194BB	R, NR, FC	Income from horse race winnings	10,000 (Aggregate winnings during a financial year - not single transaction)	30%
194C	R	Payment to contractor/ subcontractor	Single transaction- 30,000 Aggregate transactions- 1,00,000	a) Individuals /HUF 1% b) Other than Individuals /HUF 2%
194D	R	Payment of insurance commission to companies	15,000	a) Domestic companies 10% b) Other than companies 5%
194DA	R	Payment in respect of Life Insurance Policy, the payment being any sum in respect of the policy	1,00,000	5%
194E	NR, FC	Payment to non-resident sportsmen / sports association	No limit	20% (+ applicable surcharge and 4% cess)
194EE	R, NR	Payment of amount standing to the credit of a person under National Savings Scheme (NSS)	2,500	10%
194F	R, NR	Payment for the repurchase of the unit by Unit Trust of India (UTI) or a Mutual Fund	No limit	20%
194G	R, NR, FC	Payments, commission, etc., on the sale of lottery tickets	15,000	5%
194H	R	Commission or brokerage	15,000	5%
194I (a)	R	Rent on plant and machinery	2,40,000	2%
194I (b)	R	Rent on land / building/ furniture/ fitting	2,40,000	10%
194IA	R	Payment any sum by way of consideration for transfer of certain immovable property other rural than agricultural land.	50,00,000	1%
194IB	R	Payment of rent by certain individual or HUF not covered u/s. 194-I	50,000 per month	5%
194IC	R	Payment under Joint Development Agreements (JDA) to Individual/HUF	No limit	10%
194J	R	a) Payment of professional fees b) Payment of technical service fees c) Payment of royalty d) Payment of any sum for not sharing any know-how, patent, copyright, etc.	30,000	2% 1. If payee is engaged only in the business of operation of call centre 2. If payment is fees for technical services 3. If payment is royalty in the nature of consideration for sale, distribution or exhibition off films   10% In other cases
194K	R	Payment of any income in respect of units of a mutual fund, for example, dividend	5,000	10%
194LA	R	Payment in respect of compensation on acquisition of certain immovable property	2,50,000	10%
194LB	NR, FC	Payment of interest on infrastructure debt fund to Non-Resident	No limit	5% (+ surcharge + 4% cess)
194LC	NR, FC	Payment of interest for the loan borrowed in foreign currency by an Indian company or business trust against loan agreement or the issue of long-term bonds	No limit	5%
194LC	NR, FC	Payment of interest for the loan borrowed in foreign currency by an Indian company or business trust against the issue of long-term bonds listed in IFSC	No limit	4%
194LD	NR, FC	Payment of interest on bond (rupee-denominated) to FII or QFI	No limit	5%
194M	R	Payment by an individual or HUF 1. any sum for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract, 2. any sum by way of commission (not being insurance commission) or brokerage, or 3. Any sum by way of fees for professional services.	50,00,000	5%
194N	R, NR	In case of a defaulter [See Note: 2 below for “defaulter”] Cash withdrawal from a banking company or a co-operative society (engaged in carrying on the business of banking) or a post office	20,00,000	2%
194N	R, NR	In case of a defaulter Cash withdrawal from a banking company or a co-operative society (engaged in carrying on the business of banking) or a post office	100,00,000	5%
194N	R, NR	In any other case Cash withdrawal from a banking company or a co-operative society (engaged in carrying on the business of banking) or a post office	100,00,000	2%
194O	R	Payment for the sale of goods or provision of services by an e-commerce operator to an e-commerce participant through its digital or electronic facility or platform	5,00,000	1% [5% in case PAN is not furnished by the e-commerce participant]
194P	R	Payment of pension or interest to specified senior citizens of age 75 years or more by specified bank	Basic exemption limit of senior citizens or super senior citizens	Normal tax slab rates
194Q	R	Payments for the purchase of goods	50,00,000	0.1% [5% in case PAN is not furnished by the seller]
194R	R	Perquisite or benefit, whether convertible into money or not, provided by any person to a business or profession.	20,000	10% [0% if the provider of such facility is an individual or HUF, whose total sales, gross receipts or turnover does not exceed Rs 1 Crore in case of business or Rs 50 lakh in case of profession, during the FY immediately preceding the FY in which such benefit or perquisite, as the case may be, is provided by such person.
194S	R	TDS on the transfer of virtual digital asset [See Note: 3 below for “Specified Person”]	A. 50,000 If the consideration is payable by specified persons B. 10,000 If the consideration is payable by any person other than specified persons	1%

 

Important notes:

1. Section 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 (not being a loss under any such head other than the loss under the head "Income from house property") for the same financial year, he may send to the person responsible for making the payment the particulars of—

a)      Such other income and of any tax deducted thereon under any other provision of this Chapter;

b)     The loss, if any, under the head "Income from house property", in such form and verified in such manner as may be prescribed1, and thereupon the person responsible as aforesaid shall take—

(i) Such other income and tax, if any, deducted thereon; and

(ii) The loss, if any, under the head "Income from house property", also into account for the purposes of making the deduction under sub- section (1):

Provided that this sub-section shall not in any case have the effect of reducing the tax deductible except where the loss under the head "Income from house property" has been taken into account, from income under the head "Salaries" below the amount that would be so deductible if the other income and the tax deducted thereon had not been taken into account.

 

2. Refer: Section 194N

Defaulter means the recipient who has not filed the returns of income for all the 3 assessment years relevant to the 3 previous years, for which the time limit to file return of income u/s 139(1) has expired, immediately preceding the previous year in which the payment of the sum is made to him.

 

3. Refer: Section 194S

Specified person means a person,

a)      Being an individual or an HUF, whose total sales, gross receipts or turnover from the business carried on by him or profession exercised by him does not exceed Rs 1 crore in case of business or Rs 50 lakh in case of profession, during the financial year immediately preceding the financial year in which such virtual digital asset is transferred.

b)     Being an individual or an HUF, not having any income under the head “Profits and gains of business or profession”.

 

4. Abbreviations

a)      ”R” denotes Resident,

b)     “FC” denotes Foreign company, and

c)      “NR” denotes Non-Resident.