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Lets discuss about TDS with our Expert – CA Priyanka Bairwa

Economy, GST

What is TDS and how does it work?

Discussing in brief what exactly the TDS is? 

TDS is applicable to the various incomes received such as salaries, interest received etc. The government uses TDS as a tool to collect tax in order to minimize tax evasion by taxing the income which is deducted when income is generated rather than at later date.

TDS works on the concept that every person making a specified type of payments to any person shall deduct tax at the rates prescribed in the Income Tax Act at a source and deposit the same into the government’s account.

After an overview of TDS, it is important to know as to who is liable to deduct  TDS?

Every person other than Individual and HUF who are responsible to make payments of the nature covered by various sections relating to TDS shall deduct TDS.

An Individuals or an H.U.F. is not liable to deduct TDS on such payment except where the individual or H.U.F. is carrying on a business/profession where accounts are required to be audited u/s 44AB, in the immediately preceding financial year. A person is liable to get its accounts audited u/s 44AB if during the relevant financial year its gross sales, turnover or gross receipts exceeds Rs. 1 Crore (Business) or Rs. 50 Lacs in case of a profession.

CBDT press release on 20 june 2016 :-If your annual gross turnover/ receipts from business exceeds Rs. 1 crore, you need to be audited u/s 44AB. But you may avoid tax audit u/s 44AD If your annual gross turnover/ receipt is below Rs. 2 crore

I just want to clarify that an individual who is receiving professionally fees more than 50 lacs but is not liable for tax audit for the reason that he is opting for Sec 44ADA. In that case, is it mandatory for him to obtain TAN No. and deduct tds on his payments?

Persons who are liable to deduct TDS as per above-stated conditions must apply for allotment of ‘TAX DEDUCTION AND COLLECTION ACCOUNT NUMBER’ (TAN) in form No. 49B within one month from the end of the month in which tax was deducted. TAN is mandatory to mention on all transaction related to TDS like TDS certificate, TDS Returns and other related documents. There is a penalty of Rs. 10,000 on failure to apply TAN.

Certain payments other than salary on which TDS is to be deducted are discussed as under:-

Section Nature of Payment  Threshold Rs Indv / HUF TDS Rate (%) Others TDS Rate (%)
192 Salaries  – Basis on Slab
192A Premature withdrawal from EPF                50,000 10
193 Interest on Securities                10,000 10 10
194 Dividends                  2,500 10 10
194A Interest (Banks)                10,000 10 10
194A Interest (Others)                  5,000 10 10
194B Winning from Lotteries                10,000 30 30
194BB Winning from Horse Race                10,000 30 30
194C Contractor – Single Transaction                30,000 1 2
194C Contractor – During the F.Y.              100,000 1 2
194C Transporter (44AE) declaration with PAN
194D Insurance Commission (15G – 15H allowed)                15,000 5 10
194DA Life insurance Policy              100,000 1 1
194E Non-Resident Sportsmen or Sports Association 20 20
194EE NSS(national saving scheme)                  2,500 10 10
194F Repurchase Units by MFs 20 20
194G Commission – Lottery                15,000 5 5
194H Commission / Brokerage                15,000 5 5
194I Rent of Land and Building – F&F           1,80,000 10 10
194I Rent of Plant / Machinery / Equipment           1,80,000 2 2
194IB Rent by Individual / HUF (wef 01.06.2017)  50000/PM 5
194IA Transfer of certain immovable property other than agriculture land           5,000,000 1 1
194J Professional Fees / Technical Fees / etc.                30,000 10 10
194J Payment to Call Centre Operator                30,000 2 2
194LA Compensation on the transfer of certain immovable property other than agricultural land              250,000 10 10
194LB Income by way of interest from infrastructure debt fund 5 5


TDS Due Dates of FY 2018-19 for Return Filing

Quarter Period Last Date of Filing
1st Quarter 1st April to 30th June 31st July 2018
2nd Quarter 1st July to 30th September 31st Oct 2018
3rd Quarter 1st October to 31st December 31st Jan 2019
4th Quarter 1st January to 31st March 31st May 2019


Late Filing of TDS Returns

As per the new rules, effective from April 1, 2017, one is liable to pay a maximum penalty of Rs. 10,000 for late filing of TDS Return. Also, the filing of Form 26Q has been extended to 31st August 2018 from 31st July 2018. Details of penalties for late filing of Form 26Q is mentioned in the table below :

E-Filing Date Total Income below Rs. 5,00,000 Total Income above Rs. 5,00,000
Upto 31st Aug 2018 Rs. 0 Rs. 0
Between 1st Sept and 31st Dec 18 Rs. 1000 Rs. 5000
Between 1st Jan and 31st March 19 RS. 1000 Rs. 1000

 TDS Return Forms

As the deductor is liable to deduct tax and file the TDS Return form as the supporting document, it is important to note that there are various types of TDS Return Forms for different situations. The type of TDS Return Form to be submitted is based on the Nature of Income of the deductee or the type of deductee who pays the TDS.

Type of TDS Return Forms Particulars of the TDS Return Forms
Form 24Q Statement for tax deducted at source from salaries
Form 26Q Statement for tax deducted at source on all payments other than salaries.
Form 27Q Statement for the tax deduction on income received from interest, dividends, or any other sum payable to non-residents.
Form 27EQ Statement of a collection of tax at source.


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