document modified on 26.08.2016

TDS Rates and Returns

TDS Rate for Payment of Salary and Wages

SectionPayment of Salary and Wages
Section 192Criterion of Deduction :

TDS is deducted if the estimated income of the employee is taxable.

Employer must not deduct tax on non-taxable allowances like conveyance allowance, rent allowance, medical allowance and deductions allowed under sections like 80C to 80U.

No tax is required to be deducted at source if the estimated total income of the employee is less than the minimum taxable income.

TDS Rate :

As per Income Tax, Surcharge and Education Cess rates applicable on the estimated income of employee for the year.

Section 192A Payment of accumulated balance of provident fund exceeding Rs. 50,000/- (Rs. 30,000/- upto 31.05.2016) which is taxable in the hands of an employee.

TDS Rate : 10%

TDS Rates for Payments other than Salary and Wages to Residents (including domestic companies)

SectionFor Payment ofOn Payments ExceedingIndividual/HUFOthers
193 Interest on Securites Rs. 10,000/- 10% 10%
194 Dividend other than the dividend as referred to in Section 115-O Rs. 2,500/- 10% 10%
194 A Income by way of interest other than 'Interest on securities' by banks Rs. 10000/- 10% 10%
194 A Interest other than on securities by others Rs. 5000/- 10% 10%
194 B Winnings from Lotteries / Puzzle / Game Rs. 10000/- 30% 30%
194 BB Winnings from Horse Race Rs. 5000/-
(Rs. 10,000/- till 31.5.2016)
30% 30%
194 C Payment to Contractors Rs. 30,000/- for single payment and Rs. 1,00,000/- for aggregate payment during Financial Year


(Rs. 75,000/- for aggregate payment during Financial Year upto 31.05.2016)

1% 2%
194 D Payment of Insurance Commission Rs. 20000/-
(Rs. 15,000/- till 31.5.2016)
5%
(10% till AY 31.5.2016)
5%
(10% till AY 31.5.2016)
194 DA Life Insurance Policy Rs. 1,00,000/- 1%
(2% till 31.5.2016)
1%
(2% till 31.5.2016)
194 EE Payment of NSS Deposits Rs. 2500/- 10%
(20% till 31.5.2016)
NA
194 F Repurchase of units by Mutual Funds / UTI No minimum 20% 20%
194 G Commission on Sale of Lottery tickets Rs. 15,000/-
(Rs. 1,000/- till 31.5.2016)
5%
(10% till 31.5.2016)
5%
(10% till 31.5.2016)
194 H Commission or Brokerage Rs. 15,000/-
(Rs. 5,000/- till 31.5.2016)
5%
(10% till 31.5.2016)
5%
(10% till 31.5.2016)
194 I Rent of Land, Building or Furniture Rs. 180000/- 10% 10%
Rent of Plant & Machinery Rs. 180000/- 2% 2%
194 IA Consideration for transfer of an immovable property other than agricultural land Rs. 50 lacs 1% 1%
194 J Professional / technical services, royalty Rs. 30000/- 10% 10%
194 LA Compensation on acquisition of certain immovable property Rs. 250000/-
(Rs. 200000/- till 31.5.2016)
10% 10%
194 LBA Income distribution by a Business Trust u/s 115UA No minimum 10% 10%
194 LBB Income distribution by a Investment Fund u/s 115UB No minimum 10% 10%
194 LBC Income distribution by a Securitisation Trust u/s 115TCA No minimum 25% 30%
Any other Income No minimum 10% 10%
Notes:
  1. No surcharge or education cess is deductible / collectible at source on payments made to residents (Individuals / HUF / Society / AOP / Firm / Domestic Company) on payment of incomes other than salary or wages.
  2. TDS at higher rate of 20% or TDS rate, whichever is higher, has to be deducted if the deductee does not provide PAN to the deductor.(section 206AA)

All persons who are required to deduct tax at source or collect tax at source on behalf of Income Tax Department are required to apply for and obtain Tax Deduction or Tax Collection Account Number (TAN).

Point of Deduction of TDS

Salary : At the time of payment

Other Payments : When income paid or credited including credit to "Payable" or "Suspense" account.

Due Dates for depositing TDS

Tax deducted at source shall be deposited to the credit of Central Government in accordance with the following provisions:

  1. 1) In case deductor is an office of the Government
    • a) Where tax is paid without production of an income-tax challan:
      On the same day when tax is deducted
    • b) Where tax is paid accompanied by an income-tax challan:
      On or before 7 days from the end of the month in which the deduction is made or income-tax is due under Section 192(1A)
  2. In case of any other deductor
    • a) Where the amount is credited or paid in the month of March:
      On or before 30th day of April
    • b) In any other case:
      On or before 7 days from the end of the month in which the deduction is made or income-tax is due under sub-section (1A) of Section 192

Any sum deducted under section 194-IA shall be paid to the credit of the Central Government within a period of 30 days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form No. 26QB.

Mode of payment of TDS:

Taxes deducted at source shall be deposited to the credit of the Central Government in following modes:

  1. E-Payment: E-Payment is mandatory for :
    • All the corporate assesses.
    • All assesses (other than company) to whom provisions of section 44AB of the Income Tax Act, 1961 are applicable.
  2. Physical Mode:

    By furnishing the Challan No. 281 in the authorized bank branch

Note : When tax is deducted/collected by government office, it can remit the amount to the Central Government without production of an Income-tax challan and by making only book adjustment. In such a case, it has to furnish Form No. 24G to NSDL with in prescribed time-limit.

Consequences if default is made in payment of TDS

A deductor would face the following consequences if he fails to deduct TDS or after deducting the same fails to deposit it to the credit of Central Government's account:

  1. Disallowance of expenditure: As per section 40(a)(i) of the Income-tax Act, any sum (other than salary) payable outside India or to a non-resident, which is chargeable to tax in India in the hands of the recipient, shall not be allowed to be deducted if it is paid without deduction of tax at source or if tax is deducted but is not deposited with the Central Government till the due date of filing of return.

    However, if tax is deducted or deposited in the subsequent year, as the case may be, the expenditure shall be allowed as deduction in that year.

    Similarly, as per section 40(a)(ia), any sum payable to a resident, which is subject to deduction of tax at source, would attract 30% disallowance if it is paid without deduction of tax at source or if tax is deducted but is not deposited with the Central Government till the due date of filing of return.

    However, where in respect of any such sum, tax is deducted or deposited in subsequent year, as the case may be, the expenditure so disallowed shall be allowed as deduction in that year.

  2. Levy of interest: As per section 201 of the Income-tax Act, if a deductor fails to deduct tax at source or after the deducting the same fails to deposit it to the account of Central Government then he shall be deemed to be an assessee-in-default and liable to pay simple interest as follows:
    1. at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and
    2. at one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid.
  3. Levy of Penalty: Penalty of an amount equal to tax not deducted could be imposed under section 271C. Penalty shall be charged under section 221 if deductor fails to deduct and pay tax to the credit of Central Government. The penalty shall be levied to the extent the Assessing Officer directs, however, the total amount of penalty shall not exceed the amount of tax in arrears.
  4. Prosecution: If a person fails to pay to the credit of the Central Government the tax deducted at source by him he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine.

Issue of TDS Certificate

1. Section 192 (TDS on Salary) :

The certificate on Form No. 16 should be issued by the deductor by 31st day of May of the financial year immediately following the financial year in which the income was paid and tax deducted.

2. In all other cases :

The certificate on Form No. 16A should be issued within fifteen days from the due date for furnishing the "statement of TDS" under rule 31A.

Penalty on Failure to Issue TDS Certificate: Rs. 100/- every day for the period failure continues subject to a maximum of TDS amount.

Forms for submitting Quarterly Statements of Tax Deducted at Source (Rule 31A)

(a) Statement of deduction of tax under section 192 in Form No. 24Q

(b) Statement of deduction of tax under sections 193 to 196D in :

  1. Form No. 27Q in respect of the deductee who is a non-resident not being a company or a foreign company or resident but not ordinarily resident; and
  2. Form No. 26Q in respect of all other deductees.

Due Dates for submitting TDS / TCS Statements

ParticularsFormsQuarter EndingDue Date
TDS on Salaries / Perquisites u/s 192(1A)24 QJune31st July
September31st October
December31st December
March31st May
TDS in cases other than TDS on Salaries/Perquisites26 Q
27 Q
June31st July
September31st October
December31st December
March31st May
TCS27 EQJune15th July
September15th October
December15th December
March15th May

TDS / TCS Statements by Government Offices

Where the tax deductor/collector is a Government Office and the TDS / TCS has been deposited without an accompanyine challan, the PAO/TO/DDO etc. shall be required to furnish a statement of TDS/TCS in form 26G within 15 days from the end of the relevant month and by 30th April (for the month of March) in the prescribed manner.

Penal Provisions for failure / default in submitting returns /statements

SectionFailure typePenal Provisions
Section 234EFailure to submit TDS/TCS statement in timeFine of Rs. 200/- every day during which the failure continues will be levied on deductor as long as the default continues, subject to a maximum of TDS amount.
The interest is to be paid from the date on which TDS was deducted and not from the date on which deposit of TDS was due.
Section 272A(2)Failure to submit returns prescribed under Section 200(3)Penalty between ranging from Rs 10,000 to Rs 1,00,000, is payable TDS return is not submitted within a year of the due date or if the submitted return has incorrect details (such as PAN, Challan, TDS amount).
Section 271HIf deductor defaults for more than 1 year in filing TDS Statement or if deductor furnishes incorrect details like PAN, TDS amount, Challan particulars etc.Penalty which shall not be less than ten thousand rupees but which may extend to one lakh rupees.

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