Tax Deducted at Source

Tax Deducted at Source (TDS) is a means of collecting income tax in India, under the Indian Income Tax Act of 1961. Any payment covered under these provisions shall be paid after deducting prescribed percentage.It is managed by the Central Board for Direct Taxes (CBDT) and is part of the Department of Revenue managed by Indian Revenue Service (IRS). It has a great importance while conducting tax audits. Assessee is also required to file quarterly return to CBDT. Returns states the TDS deducted & paid to government during the Quarter to which it relates.

TDS on Dividends

Section 194 of Income Tax Act, 1961 by lawnotes.^[1]

• TDS provisions under this section are attracted only in respect of deemed dividend u/s 2(22)(e), If such dividend exceeds 2500 in year.
• Rate of deduction of tax in respect of such dividend is 10%.
• Provisions will not apply to dividend receivable by LIC, GIC, its subsidiaries or any other insurer provided shares are owned by them.

TDS on immovable property

Section 194IA of Income Tax Act by Freakans.^[2]

• This provision is applicable in respect of transactions effected on or after June 1, 2013.
• It seeks deduction of tax at source on transfer of certain immovable property other than agricultural land
• Any person being a transferee who is liable to Pay to a resident by way of consideration for transfer of any immovable property exceeding 50 Lakhs shall at the time of credit of such sum to the account of the transferor or at the time of payment in whatever manner, has to deduct tax at source at 1% only

This TDS is required to be deducted by buyer of the property, as against other TDS deduction where in, seller deducts income tax and deposit TDS with the government.^[3]

TDS on contractor

Section 194C of Income Tax Act^[4]

Section 194C of Income Tax Act - Tax need to be deducted 1% (for individual, HUF)/ 2% (for others) of payment where payment is made for carrying out any work (including supply of labour for carrying out any work and advertisements) by a contractor/sub-contractor. Such work must be in pursuance of a contract (including sub contract) between the contractor and payer. TDS is to be made at the time of credit to the account of contractor or at the time of payment in cash or by cheque or draft or by any other mode whichever is earlier.

TDS Certificates

A deductor is required to issue a TDS certificate to the deductee within a specified time.^[5]

He has to issue TDS Certificates within one month of the next financial year.

Impact of non-compliance to TDS

Income Tax Act, 1962^[6]

• Disallowance u/s. 40(a) (ia) of Income Tax Act, 1962 (Act)
• Raising of demand u/s. 201(1) of the Act
• Charging of Interest u/s. ./[.

(1A) of the Act.

• Levying penalty u/s. 271C of the Act.

TDS rate chart for FY 2014-15 & AY 2015-2016

For PY 2014-15 asd & AY 2015-16. Tax is deductible at source at the rates given in table (Infra). If PAN of the deductee is not intimated to the deductor, tax will be deducted at source by virtue of section AA either at the rate given in the table or at the rate of 20 per cent, whichever is higher. Further, under section 94A(5), if payment or credit is made or given to a deductee who is located in a notified jurisdictional area, tax is deductible at the rate given in the table or at the rate of 30 per cent, whichever is higher amount.receives it.^[7] 5

See also

• Income tax in India

References

• TDS-Tax Deducted At Source, Complete understanding and Legal Procedures

External links

• TDS Rates for 2010–11
• TDS Rates for 2012–13
• TDS Rates for 2013–14
• Indian Income Tax Department
• Tax Information Network
• TDS/TCS COMPLIANCES FOR 3RD QUARTER OF F.Y. 2012–13
• TDS/TCS Rates Chart for F.Y. 2014-15
• TDS/TCS Rates Chart for F.Y. 2015-16
• How to E-File TDS Online 2015-16