TAX DEDUCTED AT SOURCE - I

KPPM & ASSOCIATES

Chartered Accountants
WHAT IS TDS ?
 • Tax Deducted at Source (TDS) is a system introduced by Income Tax
What Is TDS ? Department.

• Where person responsible for making specified payments such as

salary, commission, professional fees, interest, rent, etc. is liable to
deduct a certain percentage of tax before making payment in full to
the receiver of the payment. As the name suggests, the concept of TDS
is to deduct tax at its source.

Governmen
t
TDS

Income
WHAT IS TAN AND HOW TO APPLY FOR TAN?
• TAN stands for Tax Deduction Account Number. It is 10 digit alpha
numeric number required to be obtained by all persons who are
responsible for deducting or collecting tax. (e.g. “ABCD12345E”)

• Under Section 203A of the Income Tax Act, 1961, it is mandatory to

quote Tax Deduction

• Account Number (TAN) allotted by the Income Tax Department (ITD)

on all TDS returns.

• The procedure for application of TAN is very simple and can be done
online by filling up Form 49B.

• Please refer to NSDL Site in order to Apply For TAN.

What is
TDS Certificate?
TDS certificates are issued by the deductor (the person who is
deducting tax) to the deductee (the person from whose payment the tax
is deducted).

There are mainly four types of TDS certificates issued by the deductor.

1. Form 16: Which is issued by the employer to the employee

incorporating details of tax deducted by the employer throughout
the year.

2. Form 16A: Which is issued in all cases other than salary.

 TDS certificates are issued by the deductor (the person who is deducting
What is tax) to the deductee (the person from whose payment the tax is
TDS Certificate? deducted).

There are mainly four types of TDS certificates issued by the deductor.

Form Certificate of Frequency Due date

Form 16 TDS on salary Yearly 31st May

payment

Form 16 A TDS on non- Quarterly 15 days from

salary payments due date of
filing return
What is
TDS Certificate?

For example,

Mr. A is working as a salaried employee at a company and tax is

deducted on her salary. The company shall provide Mr. A with a
Form 16 describing particulars in detail regarding the amount of
salary paid and tax deducted on the same.

However, had Mr. A been working as a professional and received

professional fees from an organization which is subject to TDS, then
she will be provided Form 16A for the same.
 When TDS should be deducted?
The concept of TDS is based on a simple principle i.e. tax is to be deducted at the time of payment
getting due or actual payment whichever is earlier.

A set of scenarios for will be helpful in understanding the concept:

Say, ABC Private Limited has to make payment of Rs 50,000/- to Mr. XYZ in exchange of professional
services.

Scenario 1:
Mr. XYZ was paid Rs 30,000/- in advance on 15 July. XYZ raised invoice after completion of work on 31
July and rest of payment is to be made.

In such case the company should have deducted tax in the following manner:

On 15 July: Rs 3000/- (@ 10% on advance of Rs 30000/-)

On 31 July: Rs 2000/- (@ 10% of total invoice amount as deducted by tax already deducted i.e. Rs 5000/-
deducted by Rs 3000/-)
 When TDS should be deducted?

Scenario 2:

Mr. XYZ raised the invoice on 15 July and was paid whole consideration at one go on 31st July.

In such whole amount of Rs 5000/- shall be deducted on 15 July, the date when payment got due, and a
net payment of Rs 45000/- shall be made on 31 July.

Scenario 3:

Mr. XYZ is to receive the whole amount of Rs 50,000/- well in advance before completion of the
assignment.

In such particular case tax of Rs 5000/- shall be deducted right at the time of payment of advance and no
tax is to be deducted at the time of making an entry for the bill due.
HOW MUCH TAX SHOULD BE DEDUCTED FROM SALARY?
Persons responsible for paying salary are liable to deduct tax on estimated
salary at normal slab rates subject to following:

1. Exemption Limit: No tax is required to be deducted at source unless the

estimated
salary exceeds basic exemption limit.

2. Exempt allowances: Allowances such as LTC, HRA, Standard deduction

of Rs.40,000 as per prescribed limits and other perquisites not forming part
of salary should be deducted from total salary while calculating taxable
salary.

3. Other deductions: Other deductions such as deductions under section

80C, 80CCC, 80CCD, 80CCG, 80D, 80DD, 80DDB, 80E, 80EE, etc. should
be considered before the calculation of tax on salary.
IMPORTANT TDS SECTIONS
FY 2018-19
Section Nature of Payment When to deduct Rate

192 Payment of salary Monthly- at the time of payment Normal Slab Rate
where estimated yearly net taxable
salary exceeds tax free limit.
192A Payment of accumulated balance of when the amount of 10%
provident fund which is taxable in the payment or aggregate amount of
hands of an employee. payment exceeds Rs. 50,000/-.

193 Interest on securities At the time of credit or payment, 10%

whichever is earlier, when the amount
exceeds Rs. 10,000/-. In case of Debentures
Threshold limit is Rs. 5000/-.
194A Income by way of interest other than At the time of credit or payment, whichever 10%
"Interest on securities" is earlier, when the amount exceeds Rs.
5,000/-. However, limit is Rs. 10,000/- in case
of interest credited by banks including
co-operative banks to its members.
194C Payment to contractor/sub-contractor At the time of credit or payment,
whichever is earlier, when the
a) HUF/Individuals amount of a particular contract 1%
exceeds Rs. 30,000/- or the total
amount of contract
b) Others during the whole year exceeds Rs. 2%
1,00,000/-
Section Nature of Payment When to deduct Rate

194H Commission or brokerage At the time of credit or payment 5%

whichever is earlier when the
amount exceeds Rs. 15000.
194I Rent At the time of credit or payment,
whichever is earlier, when the
amount exceeds Rs. 1,80,000/-
a) Plant & Machinery 2%

b) Land or building or furniture or fitting 10%

194IA Payment on transfer of certain immovable At the time of credit or payment, 1%

property other than agricultural land whichever is earlier, when amount
exceeds Rs. 50 Lacs.

194IB Payment of rent by individual or HUF not New Section W.E.F. 01/06/2017 Explained 5%
liable to tax audit (w.e.f. 01-06-2017) in further slides.
PROVISION RELATING TO TDS [NO PAN – TDS AT HIGHER
RATE]

 Finance Act (2) of 2009 makes PAN compulsory in case of TDS

eligible payments. Failing that, the deductor will be paying TDS at
a higher rate.
 The government of India issued a notification dated January 20,
2010, relating to tax deduction at source (TDS) under Income Tax
Act 1961. This was applicable with effect from 1st April 2010.
 As per the notification, all transactions liable for TDS will have tax
deduction at a higher percent of 20% if the Permanent Account
Number (PAN) of the payees is not available.
New
Section 194IB
(w. e. f. 01-06-2017)

As per Finance Act, 2017, “TDS on Rent” under section 194-IB is liable to be deducted by
Individuals or HUFs (Hindu Undivided Family) (who are not required to have Tax Audit under
section 44AB during the financial year immediately preceding the financial year in which such
income by way of rent is credited or paid) responsible for paying to a resident monthly rent
exceeding ₹ 50,000.

Section 194-IB of the Income Tax Act, 1961 states that for all the transactions with effect from
June 1, 2017, tax @5% should be deducted by the Tenant/ Lessee/ Payer of the property at the
time of making payment of rent (to Landlord / Lessor/ Payee).

Tax so deducted should be deposited to the Government Account through any of the authorized
bank branches.
 Points to be remembered by the Tenant of the Property:
• All individuals or HUFs (except those liable to audit under clause a and b of section 44AB) paying
monthly rent to a resident in excess of Rs. 50,000 are liable to deduct TDS under section 194-IB.

• Deduct tax @ 5 % from the rent payment made to the Landlord.

• Collect the Permanent Account Number (PAN) of the Landlord and verify the same with the Original
PAN card.

• PAN of the Landlord as well as Tenant should be mandatorily furnished in the online Form for
furnishing information regarding the rent.

• Do not commit any error in quoting the PAN or other details in the online Form. For the purpose of
error rectification you have to contact ITD.

• Download and furnish TDS certificate in Form 16C from TRACES and issue to the Landlord / Lessor/
Payee within 15 days from the due date of furnishing of the challan-cum-statement in Form 26QC.

• If the Landlord / Lessor/ Payee is a non-resident, liability to deduct TDS arises under section 195 of
the Income-tax Act, 1961.
 What is Form 26QC?

Ans: Form 26QC is the challan-cum-statement for reporting the transactions

liable to TDS on rent under section 194-IB of the Income-tax Act, 1961. It is an
FAQs on 194IB online form available on the TIN website.

What is the due date of payment of TDS deducted on payment of rent

u/s 194-IB?

Ans: The due date of payment of TDS on rent is thirty days from the end of
the month in which the deduction is made.
Example: If a taxpayer has made payment of rent in the month of December,
then corresponding TDS should be deposited on or before thirty days i.e.
January 30th.

What is the periodicity of filling Form 26QC?

Ans: At the end of the FY or in the month when the premise is vacated /
termination of agreement. However, taxpayer has to mandatorily file the Form
at the end of each Financial Year (in case the agreement period contains more
than one FY and
rent has been paid/credited during the year)

For further FAQs refer: https://www.tin-nsdl.com/faqs/tds-on-rent-of-

property/TDS-FAQ.html
Section Nature of Payment When to Deduct Rate

194J Any sum paid by way of
a) Fee for professional services,
b) Fee for technical services
c) Royalty,
d) Remuneration/fee/commission
to a director or
At the time of credit or payment
whichever is earlier when the
amount exceeds Rs. 30,000.
10%
(2% in case of
payments received or
credited to a payee,
being a person
engaged only in the
business of operation
of call center wef
01.06.2017.)

e) For not carrying out any activity

in relation to any business

f) For not sharing any knowhow,

patent, copyright etc.
 Time limit to Deposit TDS

• The dates of submitting TDS for every

quarter are:

Month of TDS Deduction Quarter ending Due date for TDS Payment
through Challan
For Other than Govt.
Deductors
April 30th June (Q1) 7th May
May 7th June
June 7th July
July 30th September 7th August
August (Q2) 7th September
September 7th October
 Time limit to Deposit TDS

• The dates of submitting TDS for every

quarter are:

Month of TDS Deduction Quarter ending Due date for TDS Payment
through Challan
For Other than Govt.
Deductors
October 31th December 7th November
November (Q3) 7th December
December 7th January
January 31th March (Q4) 7th February
February 7th March
March 30th April
TDS PAYMENT The TDS amount deducted must be deposited to the
government within the due dates specified by the
person deducting the TDS. The TDS payment can be
made online.

Here is a guide for making TDS

Payment online:

Click here to Pay

TDS
 Here is a guide for making TDS Payment
online:
Step 1 – Go to NSDL’s website for e-payment of taxes

Click here to Pay

TDS

Step 2 – Select ‘CHALLAN NO./ITNS 281’ under TDS/TCS section. You will be directed to the e-
payment page.
 Step 3 – In this page the following details have to be entered:

1. Under ‘Tax Applicable’ select ‘Company Deductees’ if the TDS deducted by you is while making payment
to a company. In any other case select ‘Non-Company Deductees’.

2. Enter the TAN and Assessment Year for which the payment is made.

3. Enter the ‘Pin Code’ and select ‘State’ from the drop down.

4. Select whether the payment is made for TDS deducted and payable by you or TDS on regular assessment.

5. Select the ‘Nature of Payment’ and ‘Mode of Payment’ from the drop-down.

6. Click on ‘Submit’ button.

Step 3:
Step 4 – On submission, a confirmation screen will be displayed. If TAN is valid, the full name of the
taxpayer as per the master will be displayed on the confirmation screen.

Step 5 – On confirmation of the data entered, you will be directed to the net banking site of your bank.

Step 6 –The taxpayer should log in to the net banking site with the user id and password provided by the
bank and make the payment.

Step 7 – On successful payment, a challan counterfoil will be displayed containing CIN, payment details
and bank name through which e-payment has been made.

* This counterfoil / Challan / Receipt is a proof of the payment made.

 Filing TDS returns is mandatory for all the persons who have deducted
TDS Returns TDS.

TDS return is to be submitted quarterly and various details need to be

furnished like TAN, amount of TDS deducted, type of payment, PAN of
deductee, etc.

Also, different forms are prescribed for filing returns depending upon the
purpose of the deduction of TDS.

Various types of return forms are as follows:

Form No Transactions reported in return

Form 24Q TDS on Salary
Form 26Q TDS on all payments except salaries
Form 26QB TDS on sale of property
Form 26QC TDS on rent
Form 27Q Statement for deduction of tax from interest,
dividend, or any other sum payable to
non-residents.
 TDS RETURN DUE
TDS Returns
DATE
Form 24Q, Form 26Q & Form
27Q

Q1 • 31 ST July

Q2 • 31 ST October

Q3 • 31 ST January

Q4 • 31ST May
TAX DEDUCTED AT
SOURCE - II

KPPM & ASSOCIATES

Chartered Accountants
Understanding “Winman TDS” Software.
• Winman TDS Software is Software for TDS returns preparation,
generation and e-filing.

• It helps us in TDS payment, generating TDS return Form 24Q, Form

27Q, Form 26Q, Form 27EQ, Form 16, Form 16A and e-filing of TDS
returns.

• The e-TDS Software provides us efficient TDS solution for generation of

TDS NSDL Quarterly statements and thereby helps in filing accurate
TDS returns as per the format prescribed by the Income tax department,
government of India.

• TDS return can be filed by uploading FVU file online by using DSC or by
sending FVU file to NSDL center along with signed Form 27A.

• But for generating FVU file we can use the NSDL utility or any of the
abovementioned software.
 How to create a Winman TDS file ?

• For every client we need to create a separate WinTDS file.

• There is only one WinTDS file is required for one Financial Year and a new file should be created for
every financial year.

• There is a option in WinTDS that you can import basic details of deductor & deductee master.

• You can create WinTDS file by opening a new instance of software & by filling up the basic details of
deductor.

• In the next slide you can see the window which is displayed after opening a new WinTDS file
(Deductor’s Tab).
• Here you can create deductee master, if you are importing
WinTDS file from last FY the deductee master will also be
imported.

• We would require this data through out the whole TDS

compliance procedure.

• Once we enter the Name & PAN no of Deductee it will

automatically show the type of deductee (Company or Non
Company).

• Then we have a very important & useful feature of PAN

validation.
 • Here, in this window we need to enter challan
details as shown in the picture.

• For Example…

• After filling up all challan details here, we can

verify these details with the department’s
database by right clicking on it.

Challan Tab /
Window
 After filling up challan details
• Once the correct challan details are filled up in WinTDS.

• We can go to Deduction Tab & then fill up the details of transactions against which the said TDS was
deducted.

• In the previous example, Challan Amount was Rs. 1,03,000/-. (TDS Rs. 1,00,000 & Interest Rs. 3,000)

• Suppose, the TDS was deducted as follows:

Date Sectio Deductee PAN NO. Amount Paid TDS

n Name / Credited Amount
15/04/2018 194J Pravina HIMPP1946 6,00,000 60,000
R
30/04/2018 194J Malvika Ltd ABCCM1234 4,00,000 40,000
E
 Here we can move from
one challan to another.

Enter Transaction
details here.

In this corner, we can see total

challan amount, Amount deducted
means total deductions entered here
and it also shows balance available
in challan.

Here are shortcut keys

shown for fast work.
• By using “Alt+F” keys or by clicking on “File” a window
will be opened.

• From here we can create new file, save file, Import

from e-return file, Import Previous year’s files.

• From file tab we can also file “Nil Declaration

Statement”.

• We can import “Conso File” by clicking on Revised

return data entry.
• By using “Alt+R” keys or by clicking on “Forms”
a window will be opened.

• From here we can Generate Paper Challans.

• We can also make Online TDS payment from e-

Challan option.

• All other TDS related forms can be generated

from this tab.
• By using “Alt+N” keys or by clicking on
“Online” a window will be opened.

• Requesting for Conso file, Form 16 &

Justification Report can be done from here.

• Online filing of TDS returns can also be done

from here.

• Online correction can also be easily done

through this window as it automatically
redirects you to the TRACES website.
Filing of TDS Return (Through Winman TDS)
Once the TDS Return is prepared, we need to follow steps mentioned
below:-

1. Generate / Validate the TDS Return.

2. Resolve validation errors, if any.

3. Enter PRN no. of latest statement filed in same Form No.

4. Select the path to save e-return files.

5. E-return files includes Form 27A & FVU file (these files are
important for filing TDS return through NSDL).

6. In case of DSC clients, we can file TDS return online at

https://incometaxindiaefiling.gov.in.
 Filing of TDS Return (Through Winman TDS)
In WinTDS,

1. go to “Online “Tab =>

2. Click on “Online Filing” =>

3. Click on “Upload e-return” =>

4. It will redirect you to the Income Tax E-filing website=>

At Income Tax E-filing website,

1. Login with TAN as user ID & Password created at the time of TAN registration =>

2. Click on Upload TDS tab =>

3. Select the year, quarter & type of return (Original / Revised).

4. Zip the FVU file.

Filing of TDS Return (Through Winman TDS)

At Income Tax E-filing website,

5. Sign that Zipped FVU file with DSC by using “Digital Signature Utility”.

6. Then Upload the Zipped FVU file & Signature file generated.

7. In “View TDS” tab download the acknowledgement for uploaded TDS return.
 Form No-26 As

1. What is Form 26AS?

Details of tax deducted on your income by deductors
Details of tax collected by collectors
Advance tax paid by the taxpayer
Self-assessment tax payments
Regular assessment tax deposited by the taxpayers (PAN holders)
Details of refund received by you during the financial year
Details of the High-value Transactions in respect of shares, mutual fund etc.

How to Download Form 26AS?

Form 26AS can be downloaded: On the TRACES website Or via Net Banking Facility of authorized
banks Go to https://incometaxindiaefiling.gov.in and Login using your income tax department login &
password. If you don’t have an account, you’ll need to Register first (see the button on top of LOGIN).
How to Download Form 26AS?
Step-1
 . Enter your PAN number, password and date of birth / date of
incorporation in DD/MM/YYYY format. And enter the captcha
Step-2 code. Now click on LOGIN.
b. Enter PAN e filing website
 a. The following screen will appear. Go to ‘My Account’. Click on ‘View
Form 26AS’ in the drop down
Step-3 b. View Form 26AS
 a. Click on ‘Confirm’ so that you are redirected to the TRACES website.
(Don’t worry, this is a necessary step and is completely safe since it is a
government website).
Step-4 b. TRACES Website
a. You are now on the TRACES (TDS-CPC) website. Select the box on the
screen and click on ‘Proceed’.
STEP-5
b. TRACES TDS-CPC Website
 a. Click on the link at the bottom of the page – ‘Click View Tax
Credit (Form 26AS) to view your Form 26AS’.
Step-6 b. View Tax Credit Traces
a. Choose the Assessment Year and the format in which you want to see the Form 26-AS. If you want
to see it online, leave the format as HTML. You can also choose to download as a PDF. After you have
made your choice, enter the ‘Verification Code’ and click on ‘View/Download’.
b. TRACES Verification code

Step-7
 To open the document you have to enter a password. Form 26AS password
is your DOB in DDMMYYY format. Voila! Your Income Tax Form 26AS will
open
Step-8
 Type of TDS Defaults & Consequences :-
TDS Defaults • Late deduction and / or deposit of TDS.

(i) 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

(ii) 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,

For Example,
 Type of TDS Defaults & Consequences :-
TDS Defaults • Late deduction and / or deposit of TDS.

For Example, TDS amount is Rs.10,000/-

Date of Date of Due date Date of Interest

Transacti Tax of Payment
on deductio Payment
n
01/04/2018 01/04/201 07/05/2018 10/05/2018 10,000*1.5%*2 = 300
8
01/04/2018 10/04/201 07/05/2018 07/05/2018 10,000*1%*1 = 100
8
01/04/2018 10/05/201 07/06/2018 15/05/2018 10,000*1%*2 = 200
8
01/04/2018 10/05/201 07/06/2018 30/06/2018 10,000*1%*2 = 200
8 10,000*1.5%*2 = 300
 Type of TDS Defaults & Consequences :-
TDS Defaults • Late return filing.

 As per Section 234E where a person fails to deliver the statement within
the time prescribed in sub-section (3) of section 200 or the proviso to sub-
section (3) of section 206C, he shall be liable to pay, by way of fee, a sum
of two hundred rupees for every day during which the failure
continues.

 The amount of fee referred to in sub-section (1) shall not exceed the
amount of tax deductible or collectible, as the case may be.
 Type of TDS Defaults & Consequences :-
TDS Defaults • Furnishing incorrect information.

As per Section 271H, Without prejudice to the provisions of the Act, a

person shall be liable to pay penalty, if, he
(a) fails to deliver or cause to be delivered a statement within the time
prescribed in sub-section (3) of section 200 or the proviso to sub-section (3)
of section 206C; or
(b) furnishes incorrect information in the statement which is
required to be delivered or caused to be delivered under sub-section (3)
of section 200 or the proviso to sub-section (3) of section 206C.
(2) The penalty referred to in sub-section (1) shall be a sum which shall
not be less than ten thousand rupees but which may extend to one
lakh rupees.
 Type of TDS Defaults & Consequences :-
TDS DEFAULTS
• Late download of TDS certificate from TRACES website.

 Under the provisions of section 203 of the Income Tax Act, 1961 read with
rule 31A, Certificate of tax deducted at source is to be furnished
within fifteen (15) days from the due date for furnishing the statement of
tax deducted at source. Failure to comply with the provisions of the Act
will attract penalty under the provisions of section 272A of the Act, a sum
of one hundred rupees for every day during which the failure
continues.”

 It is mandatory to issue certificate for deduction of tax by the deductor to

the deductee within 15 days of due date of furnishing of TDS return. Non
Compliance of this results in penalty of Rs. 100 per day per certificate till
the date of default. Language of the section suggest the calculation of 15
days period from the date of “due date” of furnishing of return and thus
multiplies to the penal burden on deductor who has furished a late return.
Since the system is now online it is very easy for department to issue
notices and to trace and force the compliance. TDS department has
already started sending notice on emails.
 (TCS) is the tax payable by a seller which he
collects from the buyer at the time of sale
When the below-mentioned goods are utilized for the purpose of
manufacturing, processing, or producing things, the taxes are not
payable. If the same goods are utilized for trading purposes then
tax is payable. The tax payable is collected by the seller at the
point of sale.

TCS( Tax Type of Goods Rate

Collected Scrap 1%
At Purchase of Motor vehicle 1%
Source) exceeding Rs. 10 Lakhs

Parking lot, Toll Plaza and 2%

Mining and Quarrying
HOW TO DOWNLOAD FORM NO-16 A