• Donations of Rs.11,000 to an institution approved u/s 80G and of Rs.

5,100 to Prime
Minister’s National Relief Fund were given during the year by way of cheque.
Compute the total income and tax payable thereon for the A.Y. 2022-23. Assume Ramdin
does not opt for section 115BAC.

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Illustration 2

From the following details, compute the total income and tax liability of Siddhant, aged
31 years, of Delhi both as per the regular provisions of the Income-tax Act, 1961 and as

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per section 115BAC for the A.Y.2022-23.
Advise Mr. Siddhant whether he would opt for section 115BAC:

Particulars Rs.

Bonus
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Salary including dearness allowance

Salary of servant provided by the employer

3,35,000
11,000
12,000
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Rent paid by Siddhant for his accommodation 49,600
Bills paid by the employer for gas, electricity and water provided 11,000
free of cost at the above flat
In

Siddhant purchased a flat in a co-operative housing society in Delhi for Rs.4,75,000 in

April 2015, which was financed by a loan from Life Insurance Corporation of India of
By

Rs.1,60,000 @15% interest, his own savings of Rs.65,000 and a deposit from a
nationalized bank for Rs.2,50,000 to whom this flat was given on lease for ten years.
The rent payable by the bank was Rs.3,500 per month. The following particulars are
relevant:
a. Municipal taxes paid by Mr. Siddhant - Rs.4,300 (per annum)
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b. House Insurance - Rs.860

c. He earned Rs.2,700 in share speculation business and lost Rs.4,200 in cotton
speculation business.
1F

d. In the year 2015-16, he had gifted Rs.30,000 to his wife and Rs.20,000 to his son who
was aged 11. The gifted amounts were advanced to Mr. Rajesh, who was paying
interest @ 19% per annum.
e. Siddhant received a gift of Rs.30,000 each from four friends.
f. He contributed Rs.50,000 to Public Provident Fund.

Illustration 3
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 Mr. X, an individual set up a unit in Special Economic Zone (SEZ) in the financial year
2017-18 for production of washing machines. The unit fulfils all the conditions of section
10AA of the Income-tax Act, 1961.

During the financial year 2020-21, he has also set up a warehousing facility in a district
of Tamil Nadu for storage of agricultural produce. It fulfils all the conditions of section
35AD. Capital expenditure in respect of warehouse amounted to Rs. 75 lakhs (including

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cost of land Rs. 10 lakhs).

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The warehouse became operational with effect from 1st April 2021 and the expenditure
of Rs.75 lakhs was capitalized in the books on that date.

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Relevant details for the financial year 2021-22 are as follows:

Particulars Amount
Profit of unit located in SEZ 40,00,000

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Export sales of above unit 80,00,000
Domestic sales of above unit 20,00,000
Profit from operation of warehousing facility 1,05,00,000
(Before considering deduction under Section 35AD)
di
Compute income-tax (including AMT under Section 115JC) liability of Mr. X for
In
Assessment Year 2021-22 both as per regular provisions of the Income-tax Act and as
per section 115BAC for Assessment Year 2021-22.
Advise Mr. X whether he should opt for section 115BAC.
By

Illustration 4

Ms. Purvi, aged 55 years, is a Chartered Accountant in practice. She maintains her
accounts on Cash basis.
Her Income and Expenditure account for the year ended March 31, 2022, reads as
follows:
IN

Expenditure Rs. Income Rs. Rs.

Salary to staff 15,50,000 Fees earned:
Stipend to 1,37,000 Audit 27,88,000
1F

articled Assistants
Incentive to 13,000 Taxation services 15,40,300
articled Assistants
Office rent 12,24,000 Consultancy 12,70,000 55,98,300
Printing and 12,22,000 Dividend received on 10,524
stationery 30.4.2021 on shares

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 of X Ltd., an Indian
company (Gross)
Meeting, seminar, 31,600 Income from 7,600
and Conference UTI (Gross), received
on 25.4.2021
Purchase of car (for 80,000 Honorarium received 15,800

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official use) from various
institutions for

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valuation of answer
papers
Repair, 4,000 Rent received from 85,600

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maintenance, and residential flat let out
petrol of car
Travelling expenses 5,25,000
Municipal tax paid in 3,000

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respect of
house property
Net Profit 9,28,224
57,17,824 57,17,824
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Other Information:
a) Allowable rate of depreciation on motor car is 15%.
b) Value of benefits received from clients during the course of profession is
In
Rs.10,500.
c) Incentives to articled assistants represent amount paid to two articled assistants
for passing IPCC Examination at first attempt.
d) Repairs and maintenance of car include Rs.2,000 for the period from 1-10-2021 to
By

30-09-2022.
e) Salary include Rs.30,000 to a computer specialist in cash for assisting Ms. Purvi in
one professional assignment.
f) The travelling expenses include expenditure incurred on foreign tour of Rs.32,000
which was within the RBI norms.
IN

g) Medical Insurance Premium on the health of dependent brother and major son
dependent on her amounts to Rs.5,000 and Rs.10,000, respectively, paid in cash.
h) She invested an amount of Rs.10,000 in National Saving Certificate.
i) She has paid Rs.70,000 towards advance tax during the P.Y. 2021-22.
1F

Compute the total income and tax payable of Ms. Purvi for the assessment year 2022-
23.

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 Illustration 5

Dr. Niranjana, a resident individual, aged 60 years is running a clinic in Surat. Her
Income and Expenditure Account for the year ending March 31st- 2022 is as under:
Expenditure Rs. Income Rs.
By Consultation and medical
To Medicine consumed 35,38,400 58,85,850

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charges
By Income-tax refund

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To Staff salary 13,80,000 (principal Rs.5,000, interest 5,450
Rs.450)
By Dividend from units of UTI
To Clinic consumables 1,10,000 10,500

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(Gross)
By Winning from game show
To Rent paid 90,000 on T.V. (net of TDS of 35,000
Rs.15,000)

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To Administrative
2,55,000 By Rent 27,000
expenses
To Amount paid to
scientific research
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1,50,000
association approved
u/s 35
To Net profit 4,40,400
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59,63,800 59,63,800

Additional information -
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a) Rent paid includes Rs.30,000 paid by cheque towards rent for her residential house
in Surat.
b) Clinic equipment’s are:
01.04.2021 Opening W.D.V. Rs.5,00,000
07.12.2021 Acquired (cost) by cheque Rs.2,00,000
c) Rent received relates to property situated at Surat. Gross Annual Value Rs.27,000.
IN

The municipal tax of Rs.2,000, paid in December 2021, has been included in
"administrative expenses".
d) She received salary of Rs.7,500 p.m. from "Full Cure Hospital" which has not been
included in the "consultation and medical charges".
1F

e) Dr. Niranjana availed a loan of Rs.5,50,000 from a bank for higher education of her
daughter. She repaid principal of Rs.1,00,000, and interest thereon Rs.55,000
during the previous year 2021-22.
f) She paid Rs.1,00,000 as tuition fee (not in the nature of development fees/
donation) to the university for full time education of her daughter.

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 g) An amount of Rs.28,000 has also been paid by cheque on 27th March 2022 for her
medical insurance premium.
From the above, compute the total income of Dr. Smt. Niranjana for the A.Y. 2022-23
under the regular provisions of the Income-tax Act, 1961, assuming that she has not
opted for to pay tax under section 115BAC.

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Illustration 6

Mr. Y carries on his own business. An analysis of his trading and profit & loss for the

ar
year ended 31-3-2022 revealed the following information:
a) The net profit was Rs.11,20,000.
b) The following incomes were credited in the profit and loss account:

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a. Dividend from UTI Rs.22,000 (Gross)
b. Interest on debentures Rs.17,500 (Gross)
c. Winnings from horse races Rs.15,000 (Gross)
c) It was found that some stocks were omitted to be included in both the opening

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and closing stocks, the value of which were:
Opening stock Rs.8,000. Closing stock Rs.12,000.
d) Rs.1,00,000 was debited in the profit and loss account, being contribution to a
di
University approved and notified under section 35(1)(ii).
e) Salary includes Rs.20,000 paid to his brother which is unreasonable to the extent
of Rs.2,500.
In
f) Advertisement expenses include 15 gift packets of dry fruits costing Rs.1,000 per
packet presented to important customers.
g) Total expenses on car were Rs.78,000. The car was used both for business and
personal purposes. ¾th is for business purposes.
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h) Miscellaneous expenses included Rs.30,000 paid to A &Co., a goods transport

operator in cash on 31-1-2022 for distribution of the company’s product to the
warehouses.
i) Depreciation debited in the books was Rs.55,000. Depreciation allowed as per
Income-tax Rules, 1962 was Rs.50,000.
j) Drawings Rs.10,000.
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k) Investment in NSC Rs.15,000.

Compute the total income of Mr. Y for the assessment year 2022-23, assuming that he
has not opted to pay tax under section 115BAC.
1F

Illustration 7

Rosy and Mary are sisters, born and brought up at Mumbai. Rosy got married in 1982
and settled in Canada since 1982. Mary got married and settled in Mumbai. Both of
them are below 60 years. The following are the details of their income for the previous
year 2021-22:
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 S.No. Particulars Rosy Rs. Mary Rs.
1. Pension received from State Government - 60,000
2. Pension received from Canadian Government 20,000 -
3. Long-term capital gain on sale of land at Mumbai 1,00,000 50,000
4. Short-term capital gain on sale of shares of Indian 20,000 2,50,000
listed companies in respect of which STT was paid

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5. LIC premium paid - 10,000
6. Premium paid to Canadian Life Insurance 40,000 -

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Corporation at Canada
7. Mediclaim policy premium paid vide account - 25,000
payee cheque

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8. Investment in PPF - 20,000
9. Rent received in respect of house property 60,000 30,000
at Mumbai

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Compute the taxable income and tax liability of Mrs. Rosy and Mrs. Mary for the
Assessment Year 2022-23 and tax thereon, ignoring the provisions of Section 115BAC.
di
In
By
IN
1F

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 CHAPTER 13 - ADVANCE TAX, TDS AND TCS

General provisions

Tax collected in
the previous year

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itself by way of

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Advance tax Self
Tax deducted at Tax collected
(sec 207 to assessment tax
source at source
211) (Sec.140A)

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Advance tax – Sec 207 to Sec 211
➢ The scheme of advance tax is based on the concept “Pay as you earn”.
➢ Under this scheme assessee needs to estimate its income and tax liability of the previous

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year and pay tax on basis of such estimation in the previous year itself.
 Applicable to
➢ All assessee whose advance tax payable is ₹ 10,000 or more.
 Not applicable to
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➢ Senior citizens (age being 60 years or more) not having any income chargeable under the head
“Profits and gains of business or profession”
 Computation of advance tax
A. On assessee’s own motion
In
1. Make an estimate of current year’s income (excluding income covered u/s 44AD or
44ADA), considering brought-forward losses, after deducting all allowable deductions
under chapter VIA.
(The estimate is not required to be filed with the tax authorities.)
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2. Compute the tax liability on above estimated income at the rates in force during the
financial year and reduce rebate, If any.
3. Add surcharge (if applicable). And Health and Education cess.
4. Deduct tax deducted or collected at source.
(Only if tax has actually been deducted at source, the same can be reduced for computing
advance tax liability of the payee. Tax deductible but not so deducted cannot be reduced
for computing advance tax liability of the payee)
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5. The amount so derived is the advance tax payable.

6. For subsequent instalment, check if estimate of income made earlier requires revision.
7. If so, revise the estimation and recompute tax liability.
8. From the advance tax payable for that instalment deduct the amount already paid.
1F

9. Pay the remaining amount.

B. On receipt of order from the Assessing Officer

Conditions to be satisfied for issuing such order
1. The assessee has already been assessed by way of a regular assessment in any previous
year.
2. The Assessing Officer is of opinion that such person is liable to pay advance tax.

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 3. Such order can be passed at any time during the financial year but not after last day of
February.
4. Such order must be made in writing.
5. Such order also specifies the amount of advance tax and the instalments thereof to be paid
by the assessee.
Note: Such order can be issued even if assessee has paid any instalment of advance tax during
the year, which is, in the opinion of the Assessing Officer, not as per provision of sec. 211.
The above order can be served by the Assessing Officer at any time during the financial

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year but not later than the last date of February.
Determination of advance tax by the Assessing Officer

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The amount determined by the Assessing Officer shall be the higher of the following –
1. Tax on latest assessed income as per regular assessment; or
2. Tax on income declared by the assessee in the return relating to the previous year

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subsequent to the previous year for which regular assessment has been made.

 Procedure to be followed by assessee on receipt of such order

Case Advance tax to be paid Whether intimation to
by the assessee AO is required

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Where income estimated by the On the basis of the order No
Assessing Officer is correct of the Assessing Officer
Where assessee estimates his On the basis of his own No
current income to be higher than that estimate
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estimated by the Assessing Officer
Where assessee estimates his On the basis of his own Yes, Assessee shall submit
current income to be lower than that estimate his own estimate to the
In
estimated by the Assessing Officer Assessing Officer (in
Form 28A)

 Due date for payment of advance tax [Sec. 211]

Assessee Due date of instalment Minimum amount payable
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(of previous year)

An eligible assessee On or before March 15 100% of advance tax liability
referred to in sec. 44AD
or 44ADA
Other Assessee On or before June 15 Up to 15% of advance tax liability
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On or before September 15 Up to 45% of advance tax liability

On or before December 15 Up to 75% of advance tax liability
On or before March 15 Up to 100% of advance tax liability

➢ Any amount paid u/s 211 on or before 31st March of the previous year, shall be treated as
1F

advance tax paid during the financial year.

➢ Where it is not possible to estimate

• capital gain
• casual gain
• income under the head “Profits and gains of business or profession” accrues for the first
time, or
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 • the amount of dividend income
the assessee can pay whole of the amount of tax payable in respect of such income, had
such income been a part of the total income, as part of the remaining instalments of
advance tax which are due or where no such instalments are due, by the 31st day of March
of the financial year
➢ Net agricultural income has to be considered for the purpose of computing advance tax.
➢ If any assessee does not pay any instalment within due date he shall be deemed to be an
assessee in default in respect of such instalment.

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➢ Any sum, other than a penalty or interest, paid by an assessee as advance tax shall be treated
as a payment of tax and credit for such shall be given to the assessee in the regular

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assessment.
➢ If advance tax payable is less than ₹ 10,000 then interest u/s 234B and 234C for defaults in
payment of advance tax is not applicable. However, interest u/s 234A regarding interest for

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belated filing of return would be attracted.

Sec 234B - Interest for non-payment or short-payment of advance tax

 Applicability -

• non-payment of advance tax or

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➢ Interest under section 234B is attracted for

• payment of advance tax of an amount less than 90% of assessed tax.

 Interest –
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➢ The interest liability would be 1% per month or part of the month from 1st April following
the financial year up to the date of determination of income under section 143(1).
➢ Such interest is calculated on the amount of difference between the assessed tax and the
In
advance tax paid.
➢ Assessed tax is the tax calculated on total income less TDS or TCS; relief u/s 89; Tax credit
allowed as per 115JD.
➢ However, where self-assessment tax is paid by the assessee under section 140A or
otherwise, interest shall be calculated up to the date of payment of such tax and reduced
By

by the interest, if any, paid under section 140A towards the interest chargeable under this
section.
Note:
(i) "tax on total income as determined under Section 143(1)" shall not include the
additional income-tax, if any, payable under section 140B or section 143; and
(ii) tax on the total income determined under such regular assessment shall not include
IN

the additional income-tax payable under section 140B.

Sec 234C - Interest payable for deferment of advance tax

1F

Assessee Due date Shortfall in advance Period

tax
An eligible On or before March 100% of tax due on Simple Interest @ 1% per
assessee referred 15 returned income (-) month or part of the
to in sec. 44AD or advance tax paid month
44ADA

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 Assessee Due date Shortfall in advance tax Period
Other Assessee On or before 15% of tax due on returned Simple Interest @ 1% per
June 15 income (-) advance tax paid month or part of the
up to 15th June month for 3 months
➢ If the advance tax paid is
not less than 12% of the tax
due on the returned

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income then no interest is
payable

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On or before 45% of tax due on returned Simple Interest @ 1% per
September 15 income (-) advance tax paid month or part of the
up to 15th September month for 3 months

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➢ If the advance tax paid is
not less than 36% of the tax
due on the returned
income, then no interest is
payable

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On or before 75% of tax due on returned Simple Interest @ 1% per
December 15 income (-) advance tax paid month or part of the
up to 15th December month for 3 months
On or before 100% of tax due on returned Simple Interest @ 1% per
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March 15 income (-) advance tax paid month or part of the
up to 15th March month for 1 month

 Non-applicability of interest under section 234C in certain cases:

In
➢ where such shortfall is on account of under-estimate or failure to estimate –
(i) The amount of capital gains.
(ii) Casual Income
(iii) Income under the head “Profits and gains of business or profession” in cases where
By

the income accrues or arises under the said head for the first time.
(iv) The amount of dividend
However, the assessee should have paid the whole of the amount of tax payable in respect of
such income as part of the remaining instalments of advance tax which are due or where no
such instalments are due, by the 31st day of March of the financial year.
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Sec 190 – Deduction of tax at source and advance payment

 Applicability -
• All assessee
 Explanation–
1F

➢ Income tax is recovered through TDS, TCS, and Advance tax and for non-monetary
perquisites as per section 192(1A).
➢ Amount of tax to be paid after adjusting TDS, TCS, tax relief as per Section 89, tax credit to
claimed as per section 115JD, any tax or interest payable according to the provisions of
Section 191(2) and advance tax.

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 Sec 191 – Direct payment of tax
➢ Section 191(1): In the following cases, tax is payable by the assessee directly –
(1) in the case of income in respect of which tax is not required to be deducted at source; and
(2) income in respect of which tax is liable to be deducted but is not actually deducted.

➢ The proceedings for recovery of tax necessarily had to be taken against the assessee whose

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tax was liable to be deducted, but not deducted.
➢ If any person, including the principal officer of the company –

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(1) who is required to deduct tax at source; or
(2) an employer paying tax on non-monetary perquisites under section 192(1A),
does not deduct the whole or part of the tax, or after deducting fails to pay such tax

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deducted, then, such person shall be deemed to be an assessee-in-default.
➢ However, if the assessee himself has paid the tax, this provision will not apply.

➢ Section 191(2): If Income of assessee, includes value of specified security or sweat equity
shares allotted or transferred free of cost/ concessional rate by his employer being eligible

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start-up then income-tax on such has to be paid by assessee within 14 days from the earliest
of
− After expiry of 48 months from the end of relevant A.Y; or
− From the date of the sale of such by the assessee; or
di
− From the date of assessee ceasing to be employee of such employer
In
Summary of TDS provisions

Sec. Income Threshold limit Payer Payee Tax rate

Time of
for deduction deduction
By

192 Salary Basic exemption Employer Employe Average At the time

limit (₹2,50,000/ e rate of of payment
₹3,00,000) income- tax
as the case may computed
be). on the basis
of the rates
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in force
192A Premature Payment or Trustees of Individual 10% At the time
withdrawal aggregate EPF scheme or (Employee [In case of of payment
from payment ≥ any ) PAN not
Employee ₹ 50,000 authorised furnished
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Provident person under TDS@

Fund the Scheme Maximum
Marginal
Rate]
193 Interest on > ₹ 10,000 in a Any person Any 10% At the time
securities F.Y., in case of responsible resident [In case of of credit of
interest on 8% PAN not such
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 Savings for paying the furnished income to
(Taxable) Bonds, income TDS@ the account
2003/7.75% 20%] of the payee
Savings or at the
(Taxable) Bonds, time of
2018. payment,
whichever
> ₹ 5,000 in a F.Y., is earlier.

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in case of interest
on debentures

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issued by a
public company

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No threshold
specified in any
other case.
194 Dividend - Principle Resident 10% Before
distributed officer of sharehol making any

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or paid domestic der payment by
company any mode
194A Interest > ₹ 40,000 in a Any person Any 10% At the time
other than F.Y., in case of (other than Resident of credit of
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interest on interest credited an individual such
securities or paid by – or HUF whose income to
total sales, the account
(i) A banking Co.
of the payee
In
gross receipts
(ii) A Co- opera or at the
or turnover
tive society time of
from
engaged in payment,
business or
banking business whichever
profession do
(iii) A post office
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not exceed the is earlier.

on any deposit
limits Rs. 1
under a notified
crore and Rs.
scheme.
50 lakhs
In all the above respectively
cases, if the payee during the
IN

is resident senior immediately

citizen, tax preceding
deduction limit is F.Y.)
₹50,000.
>₹50,000 interest
1F

on the
compensation
amount awarded
by the Motor
Accidents Claims
Tribunal
> ₹5,000 in a F.Y.,
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 in other cases.
194B Winnings > ₹10,000 The person Any 30% At the time
from any responsible Person of payment
lottery, for paying the
crossword income
puzzle or
card games
or other

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games of
any sort

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(including
Winning by
Jack pot)

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194B Winnings > ₹ 10,000 Book maker Any 30% At the time
B from horse or a person Person of payment
race holding
licence for
horse racing

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or for
arranging for
wagering or
betting in any
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racecourse.

194C Payments Single sum Central/state Any 1% of sum At the time

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to credited or paid govt., Local Resident paid or of credit of
contractors > ₹ 30,000 (or) authority, contracto credited, if such sum to
and Sub- The aggregate of Central/State r for the payee is the account
contractors sums credited or provincial carrying an Individ. of the payee
paid to a corp., out any or HUF or at the
By

contractor company, work 2% of sum time of

during the FY > firm, trust, Co- (includin paid or payment
₹1 lac operative g supply credited, if whichever
Individual or society, of the payee is is earlier.
HUF need not university labour) any other
deduct tax where established person.
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sum is credited under

or paid Central/State
exclusively for provincial act,
personal Govt of
purposes. foreign state
1F

or foreign
entp.
Individual/
HUF/
AOP/BOI
whose total
sales, gross

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 receipts or
turnover
from
business or
profession
exceed the
limits Rs. 1
crore and Rs.

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50 lakhs
respectively

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during the
immediately
preceding

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F.Y.)

194D Insurance > ₹15,000 Any person Any 5% At the time

Commission in a FY responsible Residen of credit of
for paying any t such sum to

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the account
Income by
of the payee
way of remu-
Or the time
neration or
of payment
reward for
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whichever
soliciting or
is earlier.
procuring
insur. busin.
In
194D Any sum ≥ ₹1,00,000 Any person Any 5% At the
A under a Life (aggregate responsible resident time of
Insurance amount of for paying payment
Policy payment to a any sum
payee in a under a LIP,
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financial year) including the

sum allocated
by way of
bonus
194E Payment to Any person Non- 20% (Plus At the time
non- surcharge if
IN

responsible resident of credit of

resident for making sportsma applicable such sum
sportsmen the payment n and health to the
or sports (includin and account of
association g educational the payee
1F

of income Athlete) cess @ 4%) or at the

referred to or enter- time of
in sec. tainer payment,
115BBA who is Whichever
not a is earlier.
citizen of
India or
non-
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 resident
sports
associ. or
institutio
n
194E Payment of ≥ ₹ 2,500 in a FY Any person Individua 10% At the
E deposit responsible l time of
under

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for paying or HUF payment
National
Saving

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Scheme
194F Repurchase Any amount Any person Any 5% At the
of units by liable to pay person time of

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Mutual as per Section payment
funds or 80CCB(2)
Unit Trust of
India
194G Commission > ₹ 15,000 in FY Any person Any 5%

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At the time
on sale responsible for person of credit of
of lottery paying any stocking, such sum
tickets income by way distributi or at the
of commission ngpurcha time of
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remuneration, sing, or payment,
prize on lottery selling Whichever
tickets lottery is earlier.
In
tickets.
194H Commission > ₹ 15000 in a FY Any person Any 5% At the time
or (other than resident of credit of
brokerage an Ind./ HUF such sum
whose to the
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total sales, account of

gross receipts the payee
or turnover or at the
from time of
payment,
business or
profession do Whichever
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not exceed is earlier.

the limits Rs.
1 crore and
Rs. 50 lakhs
1F

respectively
during the
immediately
preceding
F.Y.
responsible
for paying
commission
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 or brokerage.
194-I Rent > ₹2,40,000 in a Any person Any For P & M or At the time
financial year (other than resident equip.- 2% of credit of
Indiv./HUF such sum
whose total For L&B, to the
sales, gross land appurt- account of
receipts or enant to a the payee

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turnover from building, or at the
does not furnitureor time of
exceed the fittings - payment,

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limits Rs. 1 10% Whichever
crore and Rs. is earlier.
50 lakhs

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respectively
during the
immediately
preceding
F.Y.

194- Payment on Consideration go responsible

for
rent.
Any
paying

person Resident 1% of such At the time

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IA transfer of for the transfer being transfer sum or the of credit of
certain of an immovable transferee or stamp duty such sum
immovable property and the other than a value of to the
In
property stamp duty value person such account of
other than of such property, referred in sec. property, the payee
agriculture are both, < ₹ 50 194LA, WIH or at the
land Lakhs responsible for time of
(Consideration paying the payment,
By

includes club compensation Whichever

membership fee, compulsory is earlier.
car parking fee, acquisition of
electricity or immovable
water facility fee, property. (No
maintenance fee, requirement to
IN

advance fee or obtain TAN u/s

any other 203A for the
charges of payer)
similar nature,
which are
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incidental to
transfer of the
immovable
property
194- Payment of > ₹ 50, 000 for a Individual/ Any 5% At the time
IB rent by month or part of HUF (other Residen [In case of of credit of
certain a month than those t PAN not rent, for the

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 individuals referred in furnished last month
or HUF Section 194- TDS@ of the PY or
I) 20%] the last
month of
(No In case of tenancy, if
requirement TDS as per the
to obtain TAN Section property is
u/s 203A for vacated

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206AA or
the payer) 206AB, such during the
deduction is year, as the

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≤ amount of case may be,
rent payable to the
for the last account of

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month of the the payee or
previous at the time
year or the of payment,
last month of whichever
the tenancy is earlier
194-
IC
Payment
under
specified
agreement
No threshold
specified.

go Any person
responsible
for paying any
sum by way of
Any
Residen
t
10% At the time
of credit of
such
income to
di
referred to consi- the account
in section deration not of the
45(5A) being in kind payee or at
In
under a the time of
registered payment,
agreement, whichever
where in L or is earlier
B or both are
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handed over
by the
owner for
development
of real estate
project, for a
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consideration,
being a share
in L or B or
both in such
1F

project, with
payment of
part
consideration
in cash.

1.Fees for > ₹ 30,000 in a Any person, Any 2% - In case At the time
194J Professional FY, for each other than an Residen Payee of credit of
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 Services. category of individual or t engaged such sum
2. Fees for income. HUF; only in the to the
technical (However, this However, in business of account of
services, limit does not case of fees for operation the payee
3. Royalty apply in case of professional or of call or at the
4. Non- payment made technical centre time of
compete to director of services paid payment,
a company).

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fees, or credited by 2%- in case Whichever
5. Director’s individual/ of fee for is earlier.

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remunertion HUF whose technical
total sales, or service (not
gross receipts being
exceeds the professiona

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limits Rs. 1 l services)
crore and Rs. or royalty
50 lakhs in the
respectively nature of

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during the considerati
immediately on for sale,
preceding F.Y distributio
is liable to n or
deduct tax u/s exhibition
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194J, except of
where such cinematogr
fees aphic films
In
credited or
paid 10% - In all
exclusively for other cases
his personal
purposes
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194K Income in > ₹ 5,000 in a FY Any person Any 10% At the

respect of (not applicable (UTI/Mutual resident time of
units to income from Fund) credit of
Capital gains) such sum
to payee
IN

194L Compensa- > ₹ 2,50,000 in Any person Any 10% At the

A tion on a FY responsible Residen time of
acquisition for paying any t payment
sum in the
Of certain
nature of
1F

immovable
compensation
property
other than or enhanced
compensation
agriculture
land on compulsory
acquisition of
immovable
property

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 194M Contractual > ₹ 50,00,000 in Any person, Any 5% At the time
commissio a FY being an resident of credit of
n (not individual or a such sum or
being Hindu at the time
insurance undivided of payment
commissio family (other whichever
n referred than those is earlier
to in

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who are
section required to
194D) or deduct

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brokerage income-tax as
or by way per u/s 194C,
of fees for 194H or 194J)

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professiona [For Sec 194C,
l services 194H or 194J
during the Indv/HUF
financial whose total
year, sales, gross

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turnover from
business
profession
or

or
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exceed the
limits Rs. 1
crore and Rs.
In
50 lakhs
respectively
during the
immediately
preceding F.Y
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is liable to
deduct tax]
194N TDS on Being the Every person Any 2% of sum At the time
cash amount or (being a person paid of payment
Withdrawa aggregate of banking maintain
l amount as the company, a ing one
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case may be in co-operative or more

cash > Rs. 1 crore society account
during the P.Y carrying on
banking
business, post
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office)
194- Certain > Rs. 5 lakh e-commerce e- 1% At the time
O payments (Gross amount of operator commer of credit of
by e- sales or services ce such sum or
commerce or both) particip at the time
operator to ant of payment
e-
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 commerce whichever
participant is earlier
194 P Deduction Basic Exemption Banking Senior Deduct tax
of tax in Limit (Rs. company as Citizen – on such total
case of 3,00,000 or the central
Resident income
specified 5,00,000 as the government , Age ≥ based on
senior case may be) may notify in75 years, rates in
citizen Official having force after

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Gazette pension giving effect
and to Chapter

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interest VIA and
income rebate
from under

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specified section 87A
bank
194Q Deduction Being the Buyer, whose Resident TDS at 0.1% Time of
of tax at amount > 50 total sales, Seller of such sum credit or
source on Lakhs gross receipts exceeding time of

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payment of or T/O from Rs. 50 Lakhs payment
certain sum the business is whichever
for > Rs. 10 crores Calculation is earlier.
purchase of during the FY of threshold
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goods immediately of ₹ 50 If tax is
preceding the Lakhs shall deducted at
[w.e.f FY in which be the time of
01.07.2021 purchase of computed credit,
In
] goods is from 1st deduct tax
carried out. April 2021. on amount
credited
T/O or without
By

receipts from including

non-business such GST
activity is not
counted for If tax is
calculation of deducted at
limit of ₹ 10 the time of
IN

Crores payment,
deduct tax
on whole
amount.
194R Any benefit Value or Any person, Resident 10% of the
1F

or aggregate of other than an value/aggre

perquisite, value of the individual or gate value of
whether benefit or HUF. such benefit
convertible perquisite or
into money provided or However, perquisite
or not, likely to be provisions of
arising provided during this section
from shall apply to a
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 business or the financial year person being
profession, > ₹ 20,000 an individual
by such or a Hindu
resident undivided
family, whose
total sales,
gross receipts
or turnover > ₹

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1 Crore in case
of business or

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₹ 50 Lakhs in
case of
profession,

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during the
financial year
immediately
preceding the
financial year

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in which such
benefit or
perquisite, as
the case may
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be, is provided
by such person

Additional points to remember

In
Sec 192 –
➢ For computation of total income in case employee intents to opt for concessional rate of
tax u/s 115BAC and
➢ Intimates his deductor (employer) => Deduct tax as per provisions of Section 115BAC
By

➢ Do not intimate his deductor (employer) => Deduct tax without considering provisions of
Section 115BAC
➢ In cases where an assessee is simultaneously employed under more than one employer
or the assessee takes up a job with another employer during the financial year, he may furnish
the details of the income under the head “Salaries” due or received by him from the other
employer, the tax deducted therefrom and such other particulars to his current employer.
➢ Thereupon, the subsequent employer should take such information into consideration and
IN

then deduct the tax remaining payable in respect of the employee’s remuneration from
both the employers put together for the relevant financial year.
➢ Deduction of tax at source should be made after allowing relief under section 89(1), where
eligible.
1F

➢ A tax payer can declare the following additions information for allowing to the employer
to compute TDS:
➢ particulars of such other income;
➢ particulars of any tax deducted under any other provision;
➢ loss, if any, under the head ‘Income from house property’. (Only loss from house property
is considered and not losses under other head)

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 ➢ The employer shall furnish to the employee (whose salary exceeds ₹ 150,000), a statement
in Form No. 12BA giving correct and complete particulars of perquisites or profits in lieu
of salary provided to him and the value thereof.
➢ It is the responsibility of the employer to obtain from the assessee, the following evidence
or proof or particulars of prescribed claims
House Rent Allowance Name, address and PAN of the landlord(s)
where the aggregate rent paid during the
previous year exceeds ₹ 1 lakh.

n
Leave Travel Concession or Assistance Evidence of expenditure
Deduction of interest under the head “Income Name, address and PAN of the lender

ar
from house property”
Deduction under Chapter VI-A Evidence of investment or
expenditure.

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Sec 192 A –
➢ The withdrawal of accumulated balance by an employee from the RPF is exempt from
taxation.

go
➢ However premature withdrawal, before continuous service of five years (other than the
cases of termination due to ill health, contraction or discontinuance of business, cessation
of employment etc.) is subject to tax.
di
Sec 193 -
➢ No tax deduction is to be made from any interest payable:
➢ on 4¼% National Defence Bonds 1972, held by resident
In
➢ on 4¼% National Defence Loan, 1968 or 4¾% National Defence Loan, 1972
➢ on National Development Bonds
➢ on 7-year National Savings Certificates (IV Issue)
➢ on debentures issued by any institution or authority or any public sector company or any
By

co-operative society as notified by the Central Govt.

➢ on securities to LIC, GIC, subsidiaries of GIC or any other insurer in which they have full
beneficial interest
➢ on any security issued by a company, where such security is in dematerialised form and is
listed on a recognised stock exchange in India.

Sec 194 –
IN

Non-applicability of TDS under section 194

➢ The dividend is paid by any mode other than cash and.
➢ The amount of such dividend or aggregate of dividend distributed or paid or likely to be
distributed or paid during the financial year by the company to such shareholder does not
1F

exceed Rs. 5,000.

➢ Dividend credited or paid to LIC, GIC, subsidiaries of GIS or any insurer provided, the
shares are owned by them/them have full beneficial interest in such shares, business trust
or any other person as may be notified by the CG in the Official Gazette.

Sec 194A –
➢ Where the bank or co-operative society is following core banking system, tax shall be
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 deducted at source on
➢ accrual of interest at the end of financial year or
➢ at periodic intervals as per practice of the bank or
➢ as per the depositor's / payee's requirement or
➢ on maturity or on encashment of time deposits,
➢ whichever event takes place earlier,

n
➢ whenever the aggregate of amounts of interest income by the banks exceeds the limits
specified in section 194A.

ar
➢ Non-applicability of TDS under section 194A
o Interest paid or credited by a firm to any of its partners.

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o Income paid or credited by a co-operative society (other than a co- operative
bank) to a member thereof or to any other co-operative society.
o Interest paid or credited in respect of deposits under any scheme framed by the
Central Government and notified by it in this behalf.
o Interest income credited or paid in respect of deposits (other than time deposits

go
made after 1.7.1995) with a bank for which the Banking Regulation Act, 1949
applies.
o Interest credited or paid in respect of deposits with primary agricultural credit
society or a primary credit society or a co-operative land mortgage bank or a co-
di
operative land development bank.
o Interest income credited or paid by the Central Government under any
provisions of the Income-tax Act, 1961, the Wealth- tax Act, 1957, the Gift-tax Act
or the Interest Tax Act.
In
o Interest paid or credited to the following entities:
▪ banking companies, or co-operative societies engaged in the business of
banking, including co-operative land mortgage’ banks
▪ Financial corporations established under any Central, State or Provincial
By

Act.
▪ Life Insurance Corporation of India.
▪ Companies and co-operative societies carrying on the business of
insurance.
▪ the Unit Trust of India; and
▪ notified institution, association, body or class of institutions, associations or
bodies (National Skill Development Fund has been notified by the Central
IN

Government for this purpose) [ No notification to be issued in this regard on

or after 1.4.2020]
o income paid or payable by an infrastructure capital company or infrastructure
capital fund or infrastructure debt fund or public sector company or scheduled
1F

bank in relation to a zero-coupon bond issued on or after 1.6.2005.

➢ A Co-operative society under this section is liable to deduct tax if: -
− Total sales, Gross receipts or Turnover exceed Rs. 50 Crores during the F.Y
immediately preceding the F.Y in which interest is credited and
− The amount of interest is credited or paid or likely to be credited or paid, during
the F.Y is more than Rs. 50,000 (being senior citizen) or Rs. 40,000 (other cases)

➢ Interest credited or paid of Co-operative society:

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 − To its members or any other co-operative societies
− In respect of deposits with a primary agricultural credit society or a primary
credit society or a co-operative land mortgage bank or a co-operative land
development bank.
− In respect of deposits with a co-operative bank other than co-operative society
or bank engaged in carrying on business of banking.

➢ Central Government is entitled to issue notification for non-deduction of tax at source

n
or at lower rate from such payment to such class of persons specified in such
notification.

ar
Sec 194 C
➢ This section will apply only in relation to ‘works contracts’ and ‘labour contracts’ and
will not cover contracts for sale of goods.

Le
➢ Work includes –
o advertising.
o broadcasting and telecasting including production of programmes
o carriage of goods or passengers by any mode of transport other than by
railways.

go
o catering.
o manufacturing or supplying a product according to the requirement or
specification of a customer by using material purchased from such customer or
its associate, being a person related to the customer as defined u/s 40A(2)(b).
di
o If goods are purchased from some other supplier, then it would become sale.
➢ Where the material component has not been separately mentioned in the invoice, tax shall
be deducted on the whole of the invoice value
➢ Non-applicability of TDS (Section 194C(6))
In
➢ TDS is not applicable to a contractor, who fulfills the following three conditions
cumulatively:
➢ is engaged in the business of plying, hiring or leasing goods carriages
➢ owns ten or less goods carriages at any time during the previous year
By

➢ has furnished a declaration to this effect along with his PAN

Sec 194E
➢ Income referred to in section 115BBA
o income received or receivable by a non-resident sportsman (including an
athlete) by way of-
▪ participation in any game or sport in India (However, games like
IN

crossword puzzles, horse races etc. taxable under section 115BB are not
included herein); or
▪ advertisement; or
▪ contribution of articles relating to any game or sport in India in
1F

newspapers, magazines or journals.

o Guarantee amount paid or payable to a non-resident sports association or
institution in relation to any game or sport played in India. However, games like
crossword puzzles, horse races etc. taxable under section 115BB are not included
herein.
o income received or receivable by a non-resident entertainer (who is not a citizen
of India) from his performance in India.

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 Sec 194H –
➢ Non-applicability of TDS
➢ Amount payable to person carrying on specified profession as per Sec 44AA
➢ Commission or brokerage payments by BSNL or MTNL to their public call office (PCO)
franchisees
➢ In case of advertising business –
➢ Payment by client to the advertising agency – TDS is deductible u/s 194C

n
➢ Fees/charges taken or retained by advertising companies from media companies for
canvasing/booking advertisements - subject to 194H

ar
Sec 194 I –

Le
➢ “Rent” means any payment, by whatever name called, under any lease, sub- lease,
tenancy or any other agreement or arrangement for the use of (either separately or
together) of P&M / L&B / F&F whether or not they are owned by the payee.
➢ Non-applicability of this section -
➢ Cooling charges paid by the customers of the cold storage. However, 194C would apply

go
to such case.
➢ Payment of PSF (Passenger service fee) by an airline to Airport Operator.
➢ Lump sum lease premium or one-time upfront lease charges, which are not adjustable
against periodic rent, paid or payable for acquisition of long-term leasehold rights over
di
land or any other property
➢ 194-I would be required to be made on the amount of rent paid/payable without
including the GST component.
In
Sec 194 J –
➢ “Professional services” includes
➢ Those defined u/s 44AA (specified professions)
➢ Notified by the CBDT for the purposes of section 44AA (authorised representatives, film
By

artist & company secretary)

➢ Persons in relation to the sports activities, as notified by the CBDT (Umpires and Referees,
Coaches and Trainers, Team Physicians and Physiotherapists, Event Managers,
Commentators, Anchors and Sports Columnists.)
therefore, all other professions would be outside the scope of section 194J.
➢ Fees for technical services includes:
1. Managerial services 2. Technical services 3. Consultancy services 4.Provision of
IN

services of technical or other personnel.

➢ Following are excluded from technical services:
➢ Consideration for any construction, assembly, mining or like project, or
➢ Consideration which is chargeable under the head ‘Salaries’
1F

➢ TPAs (Third Party Administrator’s) who are making payment on behalf of insurance
companies to hospitals for settlement of medical/insurance claims etc. under various
schemes sec. 194J is applicable.
➢ The consideration for use or right to use of computer software is royalty. Hence, 194J
would be attracted in respect of consideration for use or right to use computer software.

Sec 194 N –

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 ➢ 1) If recipient not furnished return of Income for all the last 3 years, the sum of payment
shall mean the aggregate of amounts, as the case may be in cash > Rs. 20 lakhs during the
P.Y.
2) Tax deducted at 2% of sum (aggregate amount being cash paid > Rs. 20 lakhs but ≤ Rs.
1 crore); 5% of sum (aggregate amount being cash paid > Rs. 1 crore)
➢ Every person has to furnish particulars of amount paid or credited on which tax was not
deducted in consequence of exemption as per Rule 31A.
➢ As per Rule 37BA(3A) credit for TDS shall be given to person from whose account tax is

n
deducted and paid to CG account for A.Y relevant to P.Y in which such tax deduction is
made.

ar
➢ Non-applicability of TDS:
1)Any payment made to
➢ Government

Le
➢ Any banking company or co-operative society engaged in carrying on the business of
banking or post-office
➢ Any business correspondent of a banking company or co-operative society engaged in
carrying on the business of banking, in acc with RBI guidelines
➢ Any white label ATM operators of banking company or co-operative society engaged in

go
carrying on the business of banking, in acc with RBI guidelines under Payment and
Settlement System Act, 2007.
2) Cash Replenishment Agencies and franchise agents of white label ATM Operators;
Commission agent or trader, operating under Agriculture Produce Market Committee
di
and registered under any law relating to Agriculture Produce Market.
Full-fledged money changers licenced by RBI and its franchise agent.

Sec 194 O –
In
➢ Deemed credit: any payment made by a purchaser of goods or receipt of service directly
to an e-commerce participant for the sale of goods or providing services or both.
➢ Non-applicability of TDS:
1)Any amount paid to individual/HUF where gross amount of such sale or service or both
By

does not exceed Rs. 5 lakh and has furnished his PAN/ Aadhar.
2) if already deducted by e-commerce operator under this section (No exemption if e-
commerce operator for hosting advertisement or providing any other services which are
not in connection of sale of goods or providing services or both.
➢ In case of difficulty arising in giving affect to the prov of this section, CBDT may issue
guidelines for the purpose of removing the same with approval of CG.
IN

Sec 194P –
The provisions of section 139 shall not apply to a specified senior citizen for the
assessment year relevant to the previous year in which the tax has been deducted under
this section.
1F

Sec 194Q –
Tax is not required to be deducted under this section i.r.o a transaction on which
• Tax is deductible under any of the provisions of the Act.
• Tax is collectible under the provisions of section 206C, other than section 206C(1H).

In case of transaction to which both Section 206(1H) and Section 194Q applies, tax is required to
be deducted under section 194Q
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 Section 194Q is not applicable to
➢ Any sum credited or paid before 1st July 2021.
➢ Transactions in securities and commodities which are traded through recognized stock
exchanges or cleared and settled by the recognized clearing corporation, including those
located in IFSC
➢ Transactions in electricity, renewable energy certificates and energy saving certificates
traded through registered power exchanges.

n
➢ Non-resident whose purchase of goods from seller resident in India is not effectively
connected with the permanent establishment of such non-resident in India.

ar
➢ Purchase of goods from a person, being a seller, who as a person is exempt from income
tax under the Act.
➢ Provisions shall not apply to a buyer in the year of incorporation

Le
➢ If tax has been deducted by the e-commerce operator on a transaction u/s 194-O, that
transaction shall not be subjected to tax deduction u/s 194Q.
➢ If a transaction is both within the purview of section 194-O as well as section 194Q, tax is
required to be deducted u/s 194-O and not u/s 194Q.
➢ If a transaction is both within the purview of section 194Q as well as section 206C(1H),

go
then, tax is required to be deducted u/s 194Q

If tax was deducted on purchase and buyer returned the goods and seller refunded the money –
➢ TDS may be adjusted against the next purchase against the same seller.
di
➢ No adjustment is required if the purchase return is replaced by the goods by the seller.

Tax shall be deducted u/s 194Q on the amount credited without including GST. However, if the
tax is deducted on payment basis, the tax would be deducted on the whole amount.
In

Goods which are subject to VAT/Sales tax/Excise duty/CST, tax is deducted at the time of credit
of amount in the account of the seller and VAT/Sales tax/Excise duty/CST is indicated separately
in the invoice, Tax has to be deducted on the amount credited (without including such VAT/ Sales
By

tax/ Excise duty/CST. If tax is deducted on payment basis, tax has to be deducted on the whole
amount.

If department of government is carrying on business/commercial activity, it can be regarded as a

buyer and Section 194Q is applicable subject to fulfilment of conditions.

Department of Central government and State government shall not be treated as seller. Hence no
IN

tax can be deducted under section 194Q

194R -
➢ This section is with effect from 1st July 2022.
1F

➢ Where the benefit or perquisite, is wholly in kind or partly in cash and partly in kind but
such part in cash is not sufficient to meet the liability of deduction of tax in respect of whole
of such benefit or perquisite, the person responsible for providing such benefit or
perquisite shall, before releasing the benefit or perquisite, ensure that tax required to be
deducted has been paid in respect of the benefit or perquisite

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 ➢ CBDT may, with the previous approval of the Central Government, issue guidelines for the
purpose of removing the difficulty under this section.

Miscellaneous provisions
Sec 195A –

n
➢ Where any income is paid ‘net of tax’ (i.e., tax chargeable on such income shall be borne by the
payer), then for the purpose of deducting tax, such income is required to be grossed up .

ar
➢ However, grossing up is not required in case of tax on non-monetary perquisite paid by the
employer.
➢

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Sec 196 –
➢ No deduction of tax shall be made by any person from any sums payable to-
(i) the Government; or
(ii) the Reserve Bank of India; or
(iii) a corporation established by or under a Central Act, which is, under any law for the time

(iv) a Mutual Fund specified u/s 23D

Sec 197 – go
being in force, exempt from income-tax on its income; or
di
➢ On an application being made (in form 13), the Assessing Officer shall issue a certificate for
deduction of tax at such lower rate or no deduction of tax. Wherever he is satisfied that it is
justified by the Assessee.
In
➢ Such an application can be made in case of income receivable u/s 192, 193,194, 194A, 194C,
194D, 194G, 194H, 194I, 194J, 194K and 194LA, 194LLB, 194LLC, 194M and 194-O.
➢ Such certificate shall be valid for such period of the previous year as may be specified in the
certificate, unless it is cancelled by the Assessing Officer at any time before the expiry of the
specified period.
By

➢ The certificate shall be valid only with regard to the person responsible for deducting the tax
and named therein.
➢ The certificate shall be issued direct to the person responsible for deducting the tax under
advice to the person who made an application for issue of such certificate.

Sec 197A –
IN

➢ No deduction shall be made under any section from any payment made to New Pension System
Trust referred to in sec. 10(44).
➢ No deduction of tax shall be made u/s 194 (Dividend) and 194EE (NSS), u/s 192A(payment of
accumulated balance of provident fund) or 193 (interest on securities) or 194A (other
interest) or 194D (insurance commission) or 194DA (payment in respect of life insurance
1F

policy) or 194-I (rent) or 194-K(Units), if

1. The payee is a resident individual.
2. The aggregate amount of income paid or credited does not exceed basic exemption limit
3. Such individual furnishes to the payer, a declaration in writing in duplicate in the Form
15G (Form 15H in case of senior citizen).
4. Such declaration states that the tax on his estimated total income of the previous year in
which such income is to be included in computing his total income will be nil.

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 5. On receipt of the declaration, the person responsible for making payment should deliver
one copy to Chief commissioner or Commissioner on or before 7th of the month following
the month in which the declaration is furnished.
➢ No tax will be deducted from interest payments by an offshore banking unit to a non-resident
or not ordinarily resident in India.
➢ No deduction shall be made from such specified payment to notified institution, association or
body as notified by Central government.

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Sec 198-
➢ All sums deducted under this chapter shall be deemed as income for the purpose of computing

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the assessee’s total income.
However
➢ tax u/s192A on non-monetary perquisites shall not be deemed as income.

Le
➢ the sum deducted in accordance with the provisions of section 194N for the purpose of
computing the income of an assessee, shall not be deemed to be income received

Sec 199-
➢ Tax deducted at source in accordance with above provisions and paid to the credit of central

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government shall be treated as payment of tax on behalf of the person from whose income it is
deducted. Thus the person can claim credit of the same while filing his return of income.
➢ CBDT has powers to frame rules in this behalf. It can also specify the AY for which such credit
may be taken.
di
➢ Where whole or part of income is assessable in the hands of another person, credit of the tax
deducted from such income shall be given to such other person and not the deductee.
➢ The deductee should file a declaration with the deductor and the deductor should report the
tax deduction in the name of the other person.
In
Sec 200 –
➢ The persons responsible for deducting the tax at source should deposit the sum so deducted
to the credit of the Central Government.
By
IN
1F

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