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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 deductible investments under sections like 80C, 80CC, 80CCD, 80D, 80DD, 80DDB, 80E, 80GG, 80U etc.

No tax is required to be deducted at source if the estimated total income of the employee is less than the minimum taxable income (Rs. 2,50,000/- in case of Individual, HUF, AOP, BOD and AJP. Nil for others.)

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 which is taxable in the hands of an employee (with effect from 01.06.2015).

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. 5000/- 10% 10%
194 Dividend other than the dividend as referred to in Section 115-O - 10% 10%
194 A Income by way of interest other than 'Interest on securities' 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/- 30% 30%
194 C (1) Payment to Contractors Rs. 30000/- for single payment

Rs. 75000/- for aggregate
payment during Financial Year

1% 2%
194 C (2) Payment to Sub-Contractors / for Advertisements
194 D Payment of Insurance Commission Rs. 20000/- 10% 10%
194 EE Payment of NSS Deposits Rs. 2500/- 20% NA
194 F Repurchase of units by Mutual Funds / UTI Rs. 1000/- 20% 20%
194 G Commission on Sale of Lottery tickets Rs. 1000/- 10% 10%
194 H Commission or Brokerage Rs. 5000/- 10% 10%
194 I Rent of Land, Building or Furniture Rs. 180000/- 10% 10%
Rent of Plant & Machinery Rs. 180000/- 2% 2%
194 IA Transfer of Immovable Property (w.e.f. 01.06.2013) Rs. 50 lacs 1% 1%
194 J Professional / technical services, royalty Rs. 30000/- 10% 10%
194 J (1) Remuneration / commission to director of the company - 10% 10%
194 J (ba) Any remuneration / fees / commission paid to a director of a company, other than those on which tax is deductible u/s 192. - 10% 10%
194 L Compensation on acquisition of Capital Asset Rs. 100000/- 10% 10%
194 LA Compensation on acquisition of certain immovable property Rs. 200000/- 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.

Consequences of failure to deduct tax:
Interest - 1% of the tax deductible.
Penalty - equal to the amount of tax deductible but not deducted.

Due Dates for depositing TDS

QuarterSalary PaymentsOther Payment
April to February7th of next month7th of next month
March30th April30th April

Consequences of default :

Interest @ 1.5% of tax not deposited is payable u/s 201(A).

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 under Section 276(B).

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

Quarter endingDue DateForms
30th June15th July of the financial yearForm 27Q, Form 27EQ
30th September15th October of the financial yearForm 27Q, Form 27EQ
31st December15th January of the financial yearForm 27Q, Form 27EQ
31st March15th May of the financial year immediately following the financial year in which deduction is madeForm 27Q, Form 27EQ
Penal Provisions for failure / default in submitting returns /statements
Section 201(1A)
Deduction of Tax from Salary
Failure to Deduct TDS Interest 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
Failure to Deposit TDS Interest 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, and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-section (3) of section 200:
Section 234EFailure to TDS return 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 271H(i) If 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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