Nature of Payment/ Section Rate of TDS When to deduct Time of Deposit to Central govt. Grant of TDS certificate Annual Returns relating toTDS Person responsible for deduction
Form No. Time Limit
1. Salary + Value of perquisites (Sec. 192) Average tax rate On payment By Govt. A/c same day
By others within 7 days Form 16 within 30th April 24 May-31 Employer/Principal Officer/ Payer/ DDO
(Sec. 194A) Company- 20%
Others - 10% On payment / credit whichever is earlier One week from end of month Form 16A within 1 month 26A June-30 Employer/Principal Officer/ Payer/ DDO
3. Contract/ Sub contract
(Sec. 194C) Contract-2%
Advert. 1% On payment / credit whichever is earlier One week from end of month Form 16A within 1 month 26C June-30 Employer/Principal Officer/ Payer/ DDO
4. Insurance commission
(Sec. 194D) 10% On payment / credit whichever is earlier One week from end of month Form 16A within 30th April 26D June-30 Employer/Principal Officer/ Payer/ DDO
5. Rent payment
(Sec. 194I) Individuals/HUFs-15%
Others- 20% On payment / credit whichever is earlier One week from end of month Form 16A within 1 month 26J June-30 Employer/Principal Officer/ Payer/ DDO
6. Fees to Professional
(Sec. 194J) 5% On payment / credit whichever is earlier One week from end of month Form 16A within 1 month 26K June-30 Employer/Principal Officer/ Payer/ DDO
7. Payment to non-residents
(Sec. 195) As per Part-II 1st Schedule On payment / credit whichever is earlier One week from end of month Form 16A within 1 month 27 Within 14 days from end of quarter Employer/Principal Officer/ Payer/ DDO
8. Repayment of NSS etc.
(Sec. 194-EE) 20% On payment On the day of deduction Form 16A within 1 month 26F June-30 Employer/Principal Officer/ Payer/ DDO
9. Int. on Securities
(Sec 193) 10% On payment/ credit whichever is earlier One week Form 16A within one month 25 June 30 Govt. State/ Central/ Local Auth./ Corpn./ Co. etc.
(Sec. 194) up to 31-5-97 20% Before payment or distribution Within 7 days Form 16A within one month 26 April 30 Principal Officer/ Payer
11. Lottery/ Crossword
(Sec. 194B) 40% On Payment Within 7 days Form 16A within one month 26B May 31 Principal Officer/ Payer
12. Horse Race
(Sec. 194BB) 40% On Payment Within 7 days Form 16A within one month 26BB May 31 Principal Officer/ Payer
13. Re-purchase of units by mutual funds or UTI
(Sec. 80CCB/ 194F) 20% On Payment Within one week of deduction Form 16A within one month 26G June 30 Principal Officer/ Payer
14. Commission on Lottery tickets
(Sec. 194G) 10% On Payment By Govt. same day, by others within 7 days Form 16A within one month 26H June 30 Principal Officer/ Payer
15. Income from units of mutual funds
(Sec. 194K) Company-20%
On Payment Within 7 days Form 16A within one month 26 April 30 Principal Officer/ Payer
16. Non resident Sportsman/ Sports asso./Inst.
(Sec. 194E) 10% On Payment/ credit Govt. a/c same day, by others one week from end of month Form 16A within one month 27 Within 14 days from end of quarter Principal Officer/ Payer
17. Units of Non-residents except Co.
(Sec. 196A) w.e.f. 1-7-95
(if acquired out of NRI a/c by Ind./HUF) 20%
On Payment/ credit Govt. a/c same day, by others one week from end of month Form 16A within one month 27 Within 14 days from end of quarter Principal Officer/ Payer
18. Income from units
(As per Sec. 115AB/ 196B) w.e.f. 1-6-92 10% On Payment/ credit Govt. a/c same day, by others one week from end of month Form 16A within one month 27 Within 14 days from end of quarter Principal Officer/ Payer
19. Intt/Div/LTCG income of N.R.
(Sec. 115AC & 196C) w.e.f.1-6-93 10% On Payment/ credit Govt. a/c same day, by others one week from end of month Form 16A within one month 27 Within 14 days from end of quarter Principal Officer/ Payer
20. Income of FII from securities
(Sec. 115AD & 196D) w.e.f. 1-6-93 10% On Payment/ credit Govt. a/c same day, by others one week from end of month Form 16A within one month 27 Within 14 days from end of quarter Principal Officer/ Payer
IMPORTANT NOTES :
1. Sec. 192 - Salary A] Rate of Tax for F.Y. 1998-99 50,000- 60,000 - 10%
60,001-1,50,000 - 20%
above 1,50,000 - 30%
2. Sec. 194A A] Limit of interest in case of term deposits exceeding Rs. 10,000/-
B] In other cases : Rs. 2,500/-
3. Sec. 194B- Horse Race Payment exceeding Rs. 2,500/-
4. Sec. 194B- Lottery/ Puzzle Payment exceeding Rs. 5,000/-
5. Sec. 194C - Contractors/ Subcontractors includes Broadcasting, telecasting, carriage of goods and passengers by any mode other than Rly. and chartering a plane.Payment for advertisement contracts exceeding Rs. 20,000
6. Sec. 194D - Insurance Commission In excess of Rs. 5,000 in a F.Y.
7. Sec. 194E- Non Resident Sportsman/ Institution Return within 45 days from end of quarter/ within 2 months & 14 days from end of F.Y.
8. Sec. 194EE - Repayment of NSS If exceeds Rs. 2,500 p.a.
9. Sec. 194G- Lottery ticket Commission exceeding Rs. 1,000/-
10. Sec 194I - Rent Payment Exceeding Rs.1,20,000 p.a.
11. Sec. 194J - Payment to professional/ technical services Exceeding Rs. 20,000 p.a.
12. Sec. 194K- as per section 10(23D) exceeding Rs. 10,000/- w.e.f. 1-7-95.
13. Sec. 195 - Any payment except interest on security to non-resident.
14. Payee/ Principal Officer stands for any person responsible for payment of disbursement to the fund.
15. Penal Provisions:
1] Failure to deduct tax at source on average rate/ applicable rate Sec. 201(1) & Interest 15% p.a. u/s. 201(1A) Penalty u/s. 221, 271C equal to amount of tax not deducted.
2] Failure to deposit tax deducted Interest u/s. 201(1A), Penalty u/s. 221, Prosecution u/s. 276B, RI 3 months to 7 years & fine.
3] Failure to issue TDS certificate Sec. 272A(2)(g) Rs.200 per day max. Rs. 100 per day minimum per certificate
4] Failure to submit Returns/ Statement Sec. 272A(2)(c) Rs.200 per day max. Rs. 100 per day minimum per certificate
5] Failure to recover tax and pay u/s. 226(2) Sec. 272A(2)(h) Rs.200 per day max. Rs. 100 per day minimum per certificate
6] Failure to deliver declaration to CIT/ CCIT u/s. 197A within 7th of next month Sec. 272BB Rs.5000 maximum
16. The TDS provisions form Sec. 192 to 206B of Income-Tax Act may be referred.
17. Form No. 27 on payment of NRI to be filled within 14 days of end of the quarter, in case of last day of Accounting year after expiry of 2 months and 14 days.
18. A consolidated certificate in form no. 16A for F.Y. may be issued within one month from the end of F.Y. at the request of payee.
19. TDS out of actual payment on March 31 or on the last day of F.Y. is to be deposited by 7th April or 7th of the first month of next financial year.
20. TDS out of amount credited only in books (excluding actual amount paid) is to be deposited by 31 May or within two months from the end of F.Y. as the case may be.
21. Certificate to be issued in form No. 16/ 16A within 2 months and 7 days from end of F.Y. in case of amount credited on last day of financial year.
OBLIGATION OF TAX DEDUCTORS AND PROCEDURES
TAN (TAX DEDUCTORS ACCOUNT NUMBER)
1. Compulsory for all those who are responsible for deduction of tax. (Refer TDS at a Glance for nature of
payments requiring TDS)
2. Application to ITO, TDS for TAN - in form No.49-B in duplicate [See Rule 114(A)]
3. Only one TAN is required for different types of deductions.
4. TAN number must be quoted properly on all Challans, Returns, Form No.16/16A and in all correspondences with Income-tax Department.
5. TAN number consists of 8 digits.
6. First Alphabet - denotes first alphabet of name which is followed by next Four/Five numeric digits and One alphabet.
7. There is a bracket ( ) after last alphabet and bracket() should be fill-up in the following manner. The alphabet in bracket indicates nature of payment and is very important. Following alphabet should be used within bracket() while filing of different returns under TDS.
( S )
( I )
( N )
for INSURANCE COMMISSION
( T )
for INTEREST ON SECURITIES
( D )
( L )
( H )
for WINNING FROM HORSE RACE
( C )
( F )
for OTHER TYPES OF PAYMENT
For example :
TAN No. for Bhonsle Brothers may be B-66167-A( )
( ) should be filed by (S) while filing salary return in Form No.24 u/s such as S-55867-A(S)
In the return for interest u/s.194A the TAN No.will be quoted as S-55867-A(I)
In the return for contracts the TAN No. will be quoted as S-55867-A(C)
>> The alphabets shall be changed within the bracket for each return and for each type of payments while the
remaining portion of TAN No. will be same.
>> Use correct alphabet in ( ) of TAN No. for different types of payments.
>> Use correct TAN No. on Challans and in all correspondences accordingly.
>> Do not change, after TAN Number in any circumstances which is out of bracket ( )
TAN NUMBER MUST BE QUOTED ON
All the Challans - payment for TDS (as per Sec.200)
All Certificates - Issue in form No.16/16A (Sec. 203 r.w.r.31)
All Returns - Required under TDS u/s.206
All other documents and correspondence with TDS range/ITO, TDS
CONSEQUENCES OF FAILURE TO APPLY OR QUOTE TAN NUMBER
Penalty up to Rs.5,000 for each defaults u/s.272BB
PROCEDURE FOR DEDUCTION OF TAX ON PAYMENTS OR CREDITS
Deduction at Source is to be made on disbursement or credit whichever is earlier.
Identify the different heads under which the payments are liable to TDS on disbursement/ payment or credit.
Deduct the taxes as per applicable rates.
Deposit the taxes deducted to Central Government Account within due dates.
Use correct challans for payment of TDS to the Government Account. Challans are
ITNS-269 (RED) for TDS on payments to Companies.
ITNS-271 (BLUE) for TDS on payments to other than companies.
Fill-up all the columns of the challans correctly specifying the designation of jurisdictional ITO-TDS, TAN No.
Refer "TDS at a Glance" for assistance or any clarifications.
TDS CERTIFICATES & RETURNS
Issue certificate to the payees in form No.16/16A within the stipulated time limit (refer TDS at a Glance and Rule 31 of I.T. Rules, 1962 for assistance).
Do file the return of TDS in the prescribed form within the prescribed time limit. (refer TDS at a Glance and 37A of I.T. Rules, 1962)
Use the correct form no. for each TDS return to be filed on different types of payments.
Fill-up all the columns of the TDS returns positively specifying the full name and designation of the person signing the return.
Do mention ‘NOT APPLICABLE’ if a particular column is not relevant but do not leave it blank.
Do enclose one counter part of original challan with the return of TDS for the TDS paid.
Enclose one copy of form no. 16/16A with the TDS return (Refer Circular No.632,654,666 & I.T. fourth amendment Rules, 1997 w.e.f. 19.03.97).
DEDUCTION OF TDS OUT OF SALARY PAYMENTS
For TDS on salary payments - work out the anticipated salary of each employee on the basis of previous years salary in the beginning of the year.
Take care of anticipated increase in salary of each employee during the current year while forming the estimate of the salary payments to be made during the year.
Work out the tax to be deducted at source on the anticipated salary at the prescribed rates and divide the same by 12.
Deduct 1/12 of the tax in every month from the 1st month of the financial year i.e. April.
Increase the amount of monthly TDS from the month in which any unforeseen increase is made to the salary of any employee on account of any Bonus, Arrears of Salary, Dearness Allowance, etc. which could not be foreseen in the beginning of the year.
Reduce the TDS amount in the last quarter or month if any excess deduction made in the earlier months.
Do obtain necessary evidences for savings/payments before allowing credit for granting of rebate/ deductions.
Please write short note with the TDS return on variations of TDS made in different months specifying the reasons for increased TDS deduction during the close of the year,specially if TDS is not made in equal installments during the 12 months.
Pay interest @ 15% per annum u/s.201(1A) of the Income-tax Act on differed payments i.e. on TDS amount which was deductible in the initial months of the financial year from the month in which TDS was due to the date of payment of such TDS amount.
Deductions / Rebates to be considered by DDOs for determining TDS liability on salary payments to employees.
A. DEDUCTION FROM GROSS TOTAL INCOME
Amount paid/deposited towards annuity plan of LIC for receiving pension from the fund – maximum Rs.10,000 in a year (Section 80CC)
Amount paid by cheque towards Mediclaim upto Rs.10,000 (80D)
Amount paid for medical treatment of handicapped dependent upto Rs.40,000 (See Section 80DD for details and Rule 11A).
Deduction for expenditure on medical treatment of certain disease or ailment for assessee himself or dependent upto Rs.15,000. (Refer Section 80DDB Rule 11DD for conditions, details, etc.)
Re-payment of loan taken for higher education upto Rs.25,000 (for conditions and details refer Section 80E of I.T. Act, 1961)
No deduction for donations to be considered except, after verification of payments to made to the followings @ 50%:
National Defence Fund
Jawaharlal Nehru Memorial Fund
The Prime Minister’s Draught Relief Fund
The National Children's Fund
The Indira Gandhi Memorial Trust &
The Rajiv Gandhi Foundation
The Prime Minister’s National Relief Fund
The Prime Minister’s Armenia Earthquake Relief Fund
The Africa (Public Contributions - India) Fund
The National Foundation for Communal Harmony
Chief Minister's Earthquake Relief Fund, Maharashtra
National Blood Transfusion Council
State Blood Transfusion Council
Army Central Welfare Fund
Indian Naval Benevolent Fund
Air Force Central Welfare Fund
The Andhra Pradesh Chief Minister's Cyclone Relief Fund - 1996
The National Illness Assistance Fund
The Chief Minister's Relief Fund or Lieutenant Governor's Relief Fund, in respect of any state or Union Territory as the case may be, Subject to certain conditions.
The University or educational Institution of national eminence approved by the prescribed authority.
The National Sports Fund to be set up by Central Government.
The National Cultural Fund set up by the Central Government.
Deduction on account of rent paid by employee for his own residence (to the extent and as per the conditions laid down in Section 80GG of the Act)
Deduction of Rs.40,000 u/s. 80U of the Act for handicapped/disabled persons after satisfying the conditions laid down.
Interest payable on House building loan is allowable u/s.24(1)(VI) to the extent of Rs.30,000 in a financial year under the head income from house property. The loss under the head ‘income from House Property’ due to payment of interest on loan taken for House building is allowable upto Rs.30,000 in a year. The deduction from salary on this account is to be granted after obtaining Form No. 12C from the employee (refer section 192 (2B) for details).
B. REBATE FROM TAX (U/S. 88) (20% OF INVESTMENT/ CONTRIBUTION)
Contribution towards – PPF, GPF, approved superannuation fund, LIC, PLI, etc.
Investment in NSC, VI, VII & VIIIth issue and accrued interest on VI & VIIIth issue of NSCs.
Contribution to ULIP, 1971.
Deposits in 10 or 15 years A/c. under the Post Office Savings Bank (CTD) rules, 1959.
Repayment of HBA Loan not exceeding Rs.10,000 for purchase/construction of a residential house.
Subscription to any units of any mutual fund referred to in Section 10(23) and approved by CBDT.
National Saving Scheme notified by Government and other deductions. (for details refer Sec.88)
Rebate on investment upto Rs.60,000/- @ 20% to be allowed.
Extra 10,000 for investment in debentures or equity shares of public companies engaged in infrastructure and units of mutual fund as approved investing in eligible issue of any company is to be considered for rebate @ 20%.
e.g. Tax Savings Bonds of ICICI
Note: The DDOs must ensure and obtain necessary proof/evidences required to satisfy the genuineness of allowances before allowing above deductions from salary or rebate from tax payable on account of above investments/deposits. The particular section and relevant rule should be referred to ensure correct determination of TDS to be made.
REFUND ON EXCESS TDS BY DDO’S
For excess TDS U/s.192 to 194D – refer circular No.85 dt.21.10.80 and
For excess TDS U/s.195 – refer circular No.769 dt. 6.8.98
· 1 decade ago